TranscriptGFoster arvey
TRANSCRIPT OF PROCEEDINGS
KODIAK ISLAND BOROUGH, ALASKA
$1,21 5,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
Dated Date: June 16, 2021
Closing Date: June 16, 2021
Bond Counsel
Foster Garvey PC
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
INDEX OF PROCEEDINGS
JUNE 16, 2021
Document Tab
Certificate of Borough Clerk ............................................................................................ 1
A. Resolution No. FY2012-06 (the Refunded Bond Resolution)
B. Resolution No. FY2020-30 (the Bond Resolution)
C. Notice of Borough Assembly Meeting May 7, 2020
D. Minutes of Borough Assembly Meeting May 7, 2020
Original Loan Agreement ................................................................................................. 2
Amendatory Loan Agreement ......................................................................................... 3
Reserve Subaccount Depositary Agreement and Incumbency Certificate ...................... 4
Official Statement ............................................................................................................ 5
Tax Exemption and Nonarbitrage Certificate ................................................................... 6
Exhibit A- Issue Price Certificate
Exhibit B - Post Issuance Compliance Procedures
IRS Form 8038-G ............................................................................................................ 7
No Litigation Certificate ................................................................................................... 8
Signature Certificate ........................................................................................................ 9
Specimen Bond ............................................................................................................. 10
Specimen Replacement Bond ....................................................................................... 11
Parity Certificate ............................................................................................................ 12
Certificate of Finance Director ....................................................................................... 13
Payment, Delivery, and Application of Proceeds Certificate .......................................... 14
Subordination Agreement .............................................................................................. 15
Opinion of Foster Garvey PC, Bond Counsel ................................................................ 16
FG:54305940.1
CERTIFICATE OF BOROUGH CLERK
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, ALISE L. RICE, Borough Clerk of Kodiak Island Borough (the "Borough"),
hereby certify as follows on behalf of the Borough in connection with the above-
referenced bond:
The Borough was duly incorporated as a second-class borough under the
Constitution and laws of the State of Alaska on September 24, 1963.
The members of the Borough Assembly during the period from May 7, 2020, to
the present, and the date of beginning and the date of expiration of their terms,
are as follows:
Andrew Schroeder
Rebecca Skinner
Dennis Symmons
James Turner
Scott Arndt
Duane Dvorak
Julie Kavanaugh
Geoffrey Smith
Aimee Williams
October 2017 to
October 2017 to
October 2018 to
October 2018 to
October 2019 to
October 2019 to
November 2020
November 2020
November 2020
October 2020
October 2020
October 2021
October 2021
October 2022
October 2022
to October 2023
to October 2023
to October 2023
Each of the foregoing members of the Borough Assembly was duly elected or
appointed and qualified, and held office as a member of the Borough Assembly
as stated in the foregoing paragraph.
Since October 2019, William Roberts has been, and now is, the duly elected,
qualified, and acting Mayor of the Borough.
o
o
Since May 2016, Michael Powers has been, and now is, the duly appointed,
qualified, and acting Manager of the Borough.
From March 2019 to May 2020, Tara Welinsky was the duly appointed,
qualified, and acting Borough Clerk of the Borough.
Since May 2020, Alise L. Rice has been, and now is, the duly appointed,
qualified, and acting Borough Clerk of the Borough.
Since November 2018, Scott Brandt-Erichsen has been, and now is, the duly
appointed, qualified, and acting Borough Attorney of the Borough.
FG:54305940.1
Since May 2016, Dora Cross has been, and now is, the duly appointed,
qualified, and acting Finance Director of the Borough.
10. Attached hereto as Exhibit"A" is a true and correct copy of Resolution
No. FY2012-06, as adopted at a regular meeting of the Borough Assembly held
on August 4, 2011, and duly recorded in my office.
11. Attached hereto as Exhibit"B" is a true and correct copy of Resolution
No. FY2020-30 (the "Bond Resolution"), as adopted at a regular meeting of the
Borough Assembly held on May 5, 2020, and duly recorded in my office.
12. Attached hereto as Exhibit"C" is a true and correct copy of proof of notice of
the May 5, 2020 Borough Assembly meeting.
13. Attached hereto as Exhibit "D" is a true and correct copy of the minutes of the
regular meeting of the Borough Assembly held on May 5, 2020, reflecting
adoption of the Bond Resolution.
14. Each of the meetings at which the resolutions referred to paragraphs 10
through 13 were adopted was duly convened and held in all respects in
accordance with law, and to the extent required by law, due and proper notice
of such meetings was given; a quorum of the Borough Assembly was present
throughout such meetings and a legally sufficient number of members of the
Borough Assembly voted in the proper manner for adoption of such resolutions;
such resolutions have not been amended, modified, superseded, rescinded, or
repealed since the respective dates of adoption thereof; and all other
requirements and proceedings incident to the proper adoption of such
resolutions have been duly fulfilled, carried out, and otherwise observed.
Dated: June 16, 2021.
KODIAK ISLAND BOROUGH, ALASKA
~orough Cler-----~k
FG:54305940,1 j
A. Resolution No. FY2012-06 (the Refunded Bond
Resolution)
CERTIFICATE OF CLERK
I, NOVA JAVIER, Clerk of the Kodiak Island Borough (the "Borough") HEREBY
CERTIFY that the document attached hereto is an accurate and complete copy of
Resolution FY 2012-06 of the Borough adopted by the Borough Assembly at a meeting
duly called and held August 4, 2011, and that Resolution FY 2012-06 has not been
modified, amended, repealed, or rescinded, but is in full force and effect on the date
hereof.
IN WITNESS WHEREOF, I have executed this certificate this 15th day of
September, 2011.
N( ~C
Borough Clerk
Kodiak Island "ough
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Introduced by: Borough Assembly
Requested by: Borough Assembly
Drafted by: Borough Attorney
Introduced on: 08/04/2011
Adopled on: 08t04/20!1
KODIAK ISLAND BOROUGH
RESOLUTION NO. FY2012-06
A RESOLUTION OF THE ASSEMBLY OF THE KODIAK ISLAND
BOROUGH PROVIDING FOR THE ISSUANCE OF SOLID WASTE
DISPOSAL FACILITY REVENUE BONDS OF THE BOROUGH FOR THE
PURPOSE OF PROVIDING AMOUNTS TO ACQUIRE, ENGINEER,
DESIGN, AND CONSTRUCT NECESSARY ADDITIONS AND
IMPROVEMENTS TO THE BOROUGH’S SOLID WASTE DISPOSAL
FACILITY; AND PROVIDING FOR THE DETAILS THEREOF
WHEREAS, the Kodiak Island Borough, Alaska, (the "Borough") owns, operates and
maintains a solid waste disposal facility which is in need of certain additions, improvements
and extensions; and
WHEREAS, the Constitution and statutes of the State of Alaska and the ordinances of the
Borough permit the Borough to issue revenue bonds to finance any project which serves a
public purpose which bonds are secured only by the revenues of the project and which do
not constitute a debt or pledge of the faith and credit or taxing power of the Borough and
which may be authorized by the Assembly; and
WHEREAS, it is necessary to establish the form, conditions, covenants and method of sale
of such bonds and to make provision for establishing the amount, maturities, interest rates
and redemption rights and other terms;
NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KODIAK ISLAND
BOROUGH, ALASKA:
Section 1. Purpose. The purpose of this resolution is to authorize the issuance and sale
of not to exceed $3,650,000 of solid waste disposal facility revenue bonds, to fix the form,
covenants and method of sale of the bonds, to provide for establishing the amount,
maturities, interest rates, redemption rights and other terms of the bonds and to fix the
conditions under which additional solid waste disposal facility revenue bonds may be issued
on a parity with the bonds.
Section 2. Definitions. As used in this resolution, unless a different meaning clearly
appears from the context:
Kodiak Island Borough Resolution No. FY2012o06
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"Arbitrage and Tax Certificate" means the certificale executed and delivered by the
Borough at the time of issuance and delivery of the Bonds setting forth the Borough’s
expectations as to the use of Bond proceeds.
"Annual Debt Service Requirement" means, with respect to any particular Fiscal
Year and to any specified bonds, an amount equal to (i) interest accruing during such Fiscal
Year on such bonds, except to the extent such interest is to be paid from deposits in the
Debt Service Subaccount from bond proceeds, (ii) the principal amount of such bonds due
during such Fiscal Year for which no sinking fund installments have been established, plus
(iii) the unsatisfied balance of any sinking fund installment for such bonds due during such
Fiscal Year.
"Assembly" means the general legislative authority of the Borough, as the same may
be constituted from time to time.
"Bond Account" means the Solid Waste Disposal Revenue Bond Account created by
Section 12 of this resolution.
"Bond Register" means the registration books maintained by the Registrar containing
the names and addresses of the owners of the Bonds.
"Bonds" means the Kodiak island Borough, Alaska, Solid Waste Disposal Facility
Revenue Bonds, 2011.
"Bond Year" has the meaning given such term in the Arbitrage and Tax Certificate.
"Borough" means the Kodiak Island Borough, Alaska, a municipal corporation
organized and existing under the Constitution and laws of the State of Alaska.
"Code" means the Internal Revenue Code of 1986, as amended, and all applicable
regulations thereunder.
"Consulting Engineer" means an independent consulting engineer or engineering
firm licensed to practice in the State of Alaska, retained and appointed pursuant to Section
15(F).
"Debt Service Subaccount" means the Debt Service Subaccount created in the Bond
Account by Section 12 hereof.
"Facility" means the Borough’s solid waste disposal facility.
"Fiscal Year" means the 12-month period commencing on July 1 each year through
and including June 30 of the following calendar year.
Kodiak Island Borough Resolution No. FY2012-06
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88 "Future Parity Bonds" means any solid waste disposal revenue bonds, notes or other
89 obligations of the Borough, other than the Bonds, issued under a resolution wherein the
90 Borough pledges that the payments to be made out of the Pledged Revenues into the Bond
91 Account and Reserve Subaccount therein to pay and secure the payment of the principal of
92 and interest on such revenue bonds, notes or other obligations will be on a parity with lhe
93 payments required by this resolution to be made out of such Pledged Revenues into such
Bond Account and Reserve Subaccount to pay and secure the payment of the principal of
and interest on the Bonds.
"Government Obligations" means direct obligations, or obligations on which the
payment of and interest on are unconditionally guaranteed by the United States.
"Loan Agreement" means the Loan Agreement between the Borough and the Alaska
Municipal Bond Bank.
"Net Revenues" means, for any Fiscal Year, all amounts received by the Borough
and deposited in the Solid Waste Disposal Fund and interest and profits derived from the
investment of moneys held in the Solid Waste Disposal Fund during such period, less
Operating Expenses for such period.
"Operating Expenses" means, for any Fiscal Year, the expenses incurred for
operation, maintenance or repair of the Facility. Operating Expenses shall not include any
allowances for depreciation or amortization or any principal, redemption price or purchase
price of, or interest on, any obligations of the Borough incurred in connection with and
payable from Pledged Revenues or any fee or charge in lieu of Borough taxes.
"Parity Bonds" means the Bonds and any Future Parity Bonds.
"Pledged Revenues" means Net Revenues and interest received and profits derived
from the investment of moneys obtained from moneys held in any fund solely to pay or
secure the payment of any Parity Bonds issued under this resolution.
"Registered Owner" means the person named as the registered owner of a Parity
Bond in the Bond Register.
"Registrar" means the Finance Director of the Borough.
"Reserve Subaccount" means the Reserve Subaccount created in the Bond Account
by Section 12 hereof.
"Reserve Subaccount Requirement" means an amount equal to the least of (i) 10%
of the initial principal amount of all outstanding Parity Bonds, (ii) 125% of the average
Kodiak Island Borough Resolution No. FY2012-06
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Annual Debt Service Requirement for all outstanding Parity Bonds, and (iii) the maximum
Annual Debt Service Requirement on all outstanding Parity Bonds.
Section 3. Authorization of Bonds and Purpose of Issuance. The Borough shall enter
into the Loan Agreement and issue and sell an issue of revenue bonds designated "Kodiak
Island Borough, Alaska Solid Waste Disposal Facility Revenue Bonds, 2011" (the "Bonds")
in the aggregate, principal amount of not to exceed $3,650,000. The proceeds of the Bonds
shall be used to pay the costs of certain additions, betterments and extensions of the Facility
consisting principally of design, engineering, reconstruction and installation of a portion of
the Borough’s Facility. These projects serve a public purpose of the Borough.
Section 4. Date, Maturities, Interest Rates and Other Details of the Bonds. The Bonds
shall be dated on su~:h dates, and mature on such dates not later than December 31, 2026,
and shall bear interest from their date payable on such dates, and at such rates, not
exceeding 6% per annum, as the Manager or Finance Director may fix and determine at or
prior to the time of sale of the Bonds.
The Bonds shall be fully registered as to both principal and interest, shall be in the
denomination of $5,000 each, or any integral multiple thereof, and shall be numbered
separately in such manner and with any additional designation as the Registrar deems
necessary for purposes of identification.
Section 5. Place and Medium of Payment. Both principal of and interest on the Bonds
shall be payable in lawful money of the United States of America. For so long as all
outstanding Bonds are registered in the name of the Alaska Municipal Bond Bank, payments
of principal and interest thereon shall be made as provided in the Loan Agreement. In the
event that the Bonds are no longer registered in the name of the Alaska Municipal Bond
Bank, interest on the Bonds shall be paid to the Registered Owners of the Bonds at the
addresses for such Registered Owners appearing on the Bond Register on the 20th day of
the month preceding the interest payment date. Principal of the Bonds shall be payable
upon presentation and surrender of the Bonds by the Registered Owners at the principal
office of the Registrar.
Section 6. Reqistration.
A. Bond Register. The Bonds shall be issued only in registered form as to both
principal and interest. The Registrar shall keep, or cause to be kept, a bond register.
B. Registered Ownership. The Borough and the Registrar, each in its discretion,
may deem and treat the Registered Owner of each Bond as the absolute owner thereof for
all purposes, and neither the Borough nor the Registrar shall be affected by any notice to
the contrary. Payment of any such Bond shall be made only as described in Section 5
hereof, but such registration may be transferred as herein provided. All such payments
Kodiak Island Borough Resolution No. FY2012-06
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made as described in Section 5 shall be valid and shall satisfy and discharge the liability of
the Borough upon such Bored to the extent of the amount or amounts so paid.
C. Transfer or Exchange. Bonds shall be transferred only upon the Bond
Register kept by the Registrar. Upon surrender for transfer or exchange of any Bond at the
office of the Registrar, with a written instrument of transfer or authorization for exchange in
form and with guaranty of signature satisfactory to the Registrar, duly executed by the
registered owner or its duly authorized attorney, the Borough shall execute and the
Regis[rar shall deliver an equal aggregate principal amount of Bonds of the same maturity of
any authorized denominations, subject to such reasonable regulations as the Registrar may
prescribe and upon payment sufficient to reimburse it for any tax, fee or other governmental
charge required to be paid in connection with such transfer or exchange. All Bonds
surrendered for transfer or exchange shall be cancelled by the Registrar. The Registrar
shall not be required to transfer or exchange Bonds subject to redemption during the 15
days preceding any principal or interest payment date or the date of mailing of notice of
redemption of such Bonds, or any Bond after such Bond has been called for redemption.
D. Registration Covenant. The Borough covenants that, until all Bonds have
been surrendered and cancelled, it will maintain a system for recording the ownership of
each Bond that complies with the provisions of Section 149 of the Code.
Section 7. Redemption. The Bonds maturing on or after September 1, 2022 are subject
to redemption on or after September 1, 2021, and may be redeemed at the times and in the
manner described in the Loan Agreement. When the Borough determines to redeem any
Bonds not owned by the Bond Bank:
A. The Borough shall give notice of such redemption, which notice shall state
the redemption date and identify the Bonds to be redeemed by reference to their numbers
and further state that on such redemption date there shall become due and payable upon
each such Bond the principal amount thereof plus the applicable premium, if any (the
"Redemption Price"), together with interest accrued to the redemption date, and that from
and after such date interest thereon shall cease to accrue. Such notice shall be given at
least thirty (30) days but not more than forty-five (45) days prior to the redemption date by
first class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the
address appearing on the Bond Register.
B. Notice of Redemption having been given in the manner provided in this
Resolution, the Bonds so called for redemption shall become due and payable on the
redemption date stated in the notice at the applicable Redemption Price plus interest
accrued and unpaid to the redemption date upon presentation and surrender thereof,
together with a written instrument of transfer duly executed by the registered owner or the
owner’s duly authorized attorney.
Kodiak Island Borough Resolution No. FY2012-06
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Section 8. Form of Bonds. The form of the Bonds shall be substantially as follows:
No. $
UNITED STATES OF AMERICA
KODIAK ISLAND BOROUGH, ALASKA
SOLID WASTE DISPOSAL FACILITY REVENUE BOND, 2011
REGISTERED OWNER:
PRINCIPAL AMOUNT:
The Kodiak Island Borough, Alaska (the "Borough"), a municipal corporation of the State of
Alaska, hereby acknowledges itself to owe and for value received promises to pay to the
Registered Owner identified above, or its registered assigns, from the sources stated herein,
the Principal Amount indicated above in the following installments on of each
of the following years, and to pay, from the sources stated herein, interest on such
installments from the date hereof, payable on . , 2012 and semiannually
thereafter on the first days of each and of each year, at the
rates per annum as follows:
Maturity Principal Interest
Date Amount Rate
For so long as this Bond is owned by the Alaska Municipal Bond Bank (the "Bond
Bank"), payment of principal and interest shall be made as provided in the Loan Agreement
between the Bond Bank and the Borough. In the event that this Bond is no longer owned by
the Bond Bank, payment of principal of and interest on this Bond will be made by check or
draft mailed by first class mail to the registered owner at the address appearing on the bond
register of the Borough, provided that the final installment of principal and interest on this
Bond will be payable at the office of the Finance Director (the "Registrar") upon surrender of
this Bond. Interest shall be computed on the basis of a 360-day year composed of twelve
30-day months. Both principal of and interest on this bond are payable in lawful money of
the United States of America so~ely out of the special fund of the Borough known as the
"Solid Waste Disposal Revenue Bond Account" created by Section 12 of Resolution No. FY
2012-
This bond is one of an issue of bonds (the "Bonds") of like date and tenor except as
to number, rate of interest, and date of maturity, aggregating the principal sum of
$ and is issued pursuant to the Constitution and statutes of the State of Alaska
and the duly adopted resolutions and ordinances of the Borough, including Resolution No.
FY 2012- (the "Bond Resolution"). The definitions contained in the Bond Resolution
Kodiak Island Borough Resolution No. FY2012-06
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shall apply to capitalized terms contained herein. The Bonds are being issued for the
purpose of financing certain design, engineering, and capital improvements to the Borough’s
Solid Waste Disposal Facility.
Bonds owned by the Bond Bank, or its registered assigns, maturing on or after
_, may be called for redemption on or after ~ __, 20__on any
date, in whole or in part, at the option of the Borough at a price equal to 100% of the
principal amount thereof to be redeemed plus accrued interest to the date of redemption as
described in the Loan Agreement.
Bonds not owned by the Bond Bank maturing on or after September 1, 2022 may be
called for redemption by or on behalf of the Borough prior to maturity and upon notice as set
forth in the Bond Resolution as a whole on any date or in part on or after September 1, 2021
at a redemption price of 100% of the principal amounts thereof, together with interest
thereon to the redemption date.
The Borough does hereby pledge and bind itself to set aside out of Pledged
Revenues of the Borough and to pay into the Bond Account the various amounts required
by the Bond Resolution to be paid into and maintained in the Bond Account all within the
times provided in the Bond Resolution.
The pledge of Pledged Revenues contained herein and in the Bond Resolution may
be discharged by making provision, at any time, for the payment of the principal of and
interest on this Bond in the manner provided in the Bond Resolution.
The pledge of amounts to be paid into the Bond Account is hereby declared to be a
lien and charge upon the Pledged Revenues superior to all other charges of any kind or
nature and equal in rank to the lien and charge thereon for amounts pledged to the payment
of any Future Parity Bonds hereafter issued.
The Borough has further bound itself to maintain the Facility in good condition and
repair, to operate the same in an efficient manner and at a reasonable cost, and to
establish, maintain and collect fees for as long as any Parity Bonds are outstanding that will
provide Pledged Revenues in an amount equal to at least 1.25 times the maximum Debt
Service Requirement for such year on all outstanding Parity Bonds.
It is hereby certified that all acts, conditions and things required by the Constitution
and statutes of the State of Alaska and the resolutions of the Borough to be done precedent
to and in the issuance of this bond have happened, been done and performed.
IN WITNESS WHEREOF, the Kodiak Island Borough, Alaska, has caused this bond
to be executed with the manual or facsimile signature of its Mayor and to be countersigned
Kodiak Island Borough Resolution No. FY2012-06
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with the manual or facsimile signature of its Clerk and the official seal of the Borough to be
impressed or imprinted hereon, as of this day of ,2011.
KODIAK ISLAND BOROUGH, ALASKA
ATTEST:
Jerome M. Selby, Borough Mayor
Nova M. Javier, MMC, Borough Clerk
Section 9. Execution of Bonds. The Bonds shall be executed on behalf of the Borough
with the manual or facsimile signature of the Mayor of the Borough, attested by the manual
or facsimile signature of the Clerk. The official seal of the Borough shall be impressed or
imprinted on each Bond. The execution of a Bond on behalf of the Borough by persons that
at the time of the execution are duly authorized to hold the proper offices shall be valid and
sufficient for all purposes, regardless of whether any such person shall have ceased to hold
office at the time of issuance and delivery of the Bond or shall not have held office on the
date of the Bond.
Section 10. Mutilated, Destroyed, Stolen or Lost Bonds. Upon surrender to the Registrar
of a mutilated Bond, the Borough shall execute and deliver a new Bond of like maturity and
principal amount. Upon filing with the Registrar of evidence satisfactory to the Borough that
a Bond has been destroyed, stolen or lost and of the ownership thereof, and upon furnishing
the Borough with indemnity satisfactory to it, the Borough shall execute and deliver a new
Bond of like maturity and principal amount. The person requesting the authentication and
delivery of a new Bond pursuant to this section shall comply with such other reasonable
regulations as the Borough may .prescribe and pay such expenses as the Borough may
incur. Any Bonds issued pursuant to this section in substitution for Bonds alleged to be
destroyed, stolen or lost shall constitute original additional contractual obligations on the part
of the Borough, whether or not the Bonds alleged to be destroyed, stolen or lost be at any
time enforceable by anyone, and shall be equally and proportionately secured with all other
Bonds issued hereunder.
Section 11. Priority of Use of P edged Revenues. Pledged Revenues are hereby pledged
to and shall be used only for the following purposes and in the following order of priority:
Kodiak Island Borough Resolution No. FY2012-06
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First, to make all payments, including sinking fund payments, required to be made
into the Debt Service Subaccount for the payment of the principal of and interest on Padty
Bonds;
Second, to make all payments required to be made into the Reserve Subaccount;
Third, to make all payments, including sinking fund payments, required to be made
into a subordinate lien debt service account for the payment of the principal of and interest
on any subordinate lien bonds;
Fourth, to make all payments required to be made into a reserve account for
subordinate lien bonds; and
Fifth, to pay the costs of additions, betterments, improvements and repairs to and
extensions and replacements of the Facility, to purchase or redeem Facility improvement
revenue bonds or notes of the Borough, or for any other proper purpose in connection with
the operalion of the Facility.
Section 12. Solid Waste Dis.posal Revenue Bond Account and Subaccounts Therein.
There is hereby created a special restricted account within the Solid Waste Fund of the
Borough known as the "Solid Waste Disposal Revenue Bond Account" (the "Bond
Account"), which account is to be drawn upon for the sole purpose of paying the principal of
and interest and premium, if any, on all Parity Bonds. The Bond Account consists of two
subaccounts, the Debt Service Subaccount and the Reserve Subaccount. Amounts
pledged to be paid into the Bond Account are hereby declared to be a lien and charge upon
Pledged Revenues superior to all other charges of any kind or nature and equal in rank to
the charge thereon to pay and secure the payment of the principal of and interest on all
Parity Bonds.
From and after the time of issuance and delivery of the Bonds and as long thereafter
as any of the same remain outstanding, the Borough hereby irrevocably obligates and binds
itself to set aside and pay the following each month into the Debt Service Subaccount out of
Pledged Revenues on or before the date due:
A. Such amounts, in approximately equal monthly installments, as will be
sufficient to accumulate the amount required to pay the interest scheduled to become due
on Parity Bonds on the next inlerest payment date; and
B. Such amounts, in approximately equal monthly installments, as will be
sufficient to accumulate (i) the principal amount of all Parity Bonds due for which no sinking
fund installments have been established, plus (it) the unsatisfied balance of any sinking fund
installment for Parity Bonds, in each case during the next 12 months.
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C. For so long as Parity Bonds are held by the Bond Bank, the Borough will pay
such amounts into the Debt Service Subaccount out of Pledged Revenues as may be
required by the Loan Agreement.
Moneys in the Debl Service Subaccount may be held in cash or invested in
accordance with Borough policy such that investments will mature prior to the time such
money is required for the payment of the principal of or interest on the Parity Bonds. All
interest earned on and profits derived from such investments shall remain in and become a
part of the Debt Service Subaccount.
Section 13. Reserve Subaccount. The Borough hereby covenants and agrees that it will
at the time of issuance of the Bonds cause amounts to be paid into the Reserve Subaccount
such that the total amount in the Reserve Subaccount will be equal to the Reserve
Subaccount Requirement.
The Borough further covenants and agrees that it will set aside and pay into the
Reserve Subaccount amounts from Pledged Revenues, commencing wilh the first month
following the closing and delivery of the Bonds, so that the amount on deposit in the
Reserve Subaccount will at all times be at least equal to the Reserve Subaccount
Requirement.
The Borough further covenants and agrees that in the event it issues any Future
Parity Bonds hereafter it will provide in each resolution authorizing the same that at the time
of issuance of such Future Parily Bonds payments will be made into the Reserve
Subaccount such that the total amount of such payments together with the money already in
the Reserve Subaccount will be equal to the Reserve Subaccount Requirement.
The Borough further covenants and agrees that it will at all times maintain therein an
amount at least equal to the Reserve Subaccount Requirement until there is a sufficient
amount in the Bond Account and Reserve Subaccount to pay the principal of, premium, if
any, and interest on all outstanding Parity Bonds in the manner set forth in Section 19
hereof, at which time the money in the Reserve Subaccount may be used to pay such
principal, premium, if any, and interest; provided, however, that moneys in the Reserve
Subaccount may be withdrawn, or set aside in a special account in the Bond Account
pursuant to Section 19 of this resolution, to pay (with or without other available funds) the
principal, premium, if any, and interest on all of the outstanding Parity Bonds of any single
issue or series payable out of the Bond Account, so long as the moneys remaining on
deposit in the Reserve Subaccount are al least equal to the Reserve Subaccount
Requirement on all of the remaining outstanding Parity Bonds. The Borough may, from time
to time, transfer from the Reserve Subaccount to the Debt Service Subaccount amounts in
excess of the Reserve Subaccount Requirement.
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In the event there shall be a deficiency in the Debt Service Subaccount for meeting
maturing installments of either principal of or interest on Parity Bonds, such deficiency shall
be made up from the Reserve Subaccount by the withdrawal of cash therefrom. Any
deficiency created in the Reserve Subaccount by reason of any such withdrawal shall then
be made up from Pledged Revenues first available therefor after making necessary
provision for the required payments into the Debt Service Subaccount.
All money in the Reserve Subaccount may be kept in cash or invested in accordance
with the Arbitrage and Tax Certificate. Such investments shall mature not later than the last
maturity of Parity Bonds outstanding at the time of their purchase. Interest on any such
investments and/or any profits realized from the sale thereof shall be deposited in and
become a part of the Debt Service Subaccount.
Section 14. Investment of Certain Accounts. Moneys held in the Bond Account and in the
Reserve Subaccount shall be invested and reinvested to the fullest extent practicable in
accordance with Borough policy, such investments to mature not later than at such times as
shall be necessary to provide moneys when needed for payments to be made from such
Accounts, and in the case of the Reserve Subaccount not later than November 1, 2026.
Nothing in this resolution shall prevent any Government Obligations from being
issued or held in book-entry form on the books of the Department of the Treasury of the
United States.
Obligations purchased as an investment of moneys in any Account or Subaccount
created under this resolution shall be deemed at all times to be a part of such Account or
Subaccount and any profit realized from the liquidation of such investment shall be credited
to such Account or Subaccount and any loss resulting from the liquidation of such
investment shall be charged to the respective Account or Subaccount.
Section 15. Specific Covenants. The Borough hereby covenants with the owners of each
of the Parity Bonds for so long as any of the same remain outstanding as follows:
A. The Borough will establish, maintain, and collect Facility fees and Net
Revenues in each Fiscal Year that will provide Pledged Revenues in an amount equal to the
amount of the Annual Debt Service Requirement for such year on al! outstanding Parity
Bonds. For so long as the Parity Bonds are held by the Alaska Municipal Bond Bank, the
Borough will establish, maintain, and collect Facility fees and Net Revenues as required by
the terms of the Loan Agreement, and the Finance Director will provide a certificate annually
to the Bond Bank as to compliance with this covenant.
B. The Borough will at all times maintain, preserve and keep the Facility and
every part and parcel thereof in good repair, working order and condition; will from time to
time make or cause to be made all necessary and proper repairs, renewals and
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replacements thereto so that the business carried on in connection therewith may be
properly and advantageously conducted; and will at all times operate the Facility in an
efficient manner and at a reasonable cost.
C. The Borough will at all times carry such forms of insurance on such of the
buildings, equipment, and properly of the Facility as are ordinarily insured in such amounts
and with such deductibles as under good business practice are ordinarily carried on such
facilities. All such insurance shall be carried with responsible insurers and the policies shall
be payable to the Borough.
D. The Borough will keep and maintain proper books and accounts with respect
to the operation of the Facility in such manner as prescribed by any authorities having
jurisdiction over the Facility; will cause its books and accounts to be audited annually be a
certified public accountant not later than 210 days following the end of each Fiscal Year,
copies of which audits shall, upon request, be furnished to the owners of the Parity Bonds.
The audit shall show whether or not the Borough has in all respects performed and complied
with the covenants set forth in this resolution, including the payments into the Debt Service
Subaccount and Reserve Subaccount provided for herein.
E. All employees and agents of the Borough collecting or handling money of the
Borough in connection with the management and operation of the Facility shall be bonded in
an amount commensurate with the funds they handle and in an amount sufficient to protect
the Borough from loss,
F. The Borough will not sell or otherwise dispose of the Facility unless
contemporaneously with such sale or disposal there shall be paid into the Bond Account a
sum sufficient to pay the principal of and interest on a!l Parity Bonds then outstanding to the
date or dates on which they first may be redeemed, nor will it sell or otherwise dispose of
any part of the Facility which is material to the production of Pledged Revenues unless, in
the opinion of a Consulting Engineer, the remaining Facility will generate Pledged Revenues
sufficient to enable the Borough to comply with the requirements of this resolution and each
resolution authorizing the issuance of Future Parity Bonds.
G. The Borough will not at any time create or permit to accrue or exist any lien or
other encumbrance or indebtedness upon the Facility or the Pledged Revenues, or any part
thereof, or upon any Account or Subaccount created hereunder, prior or superior to the lien
thereon for the payment of the Parity Bonds, and will pay and discharge, or cause to be paid
and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid,
might become a lien or charge upon the Pledged Revenue, or any part thereof, or upon any
Account or Subaccount in the hands of the Borough, prior or superior to the lien of the Parity
Bonds, or which might impair the security of the Parity Bonds.
Kodiak Island Borough Resolution No. FY2012-06
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H. The Borough will not expend any of the Pledged Revenues or the proceeds
of any indebtedness payable from Pledged Revenues for any additions, betterments or
improvements to the Facility which are not economically sound and which will not properly
and advantageously contribute to the conduct of the business of the Facility in an efficient
and economical manner.
I. At any and all times the Borough shall, as far as it ma~ be authorized by law,
make, do, execute, acknowledge, and deliver all further resolutions, acts, deeds,
conveyances, assignments, transfers, and assurances as may be necessary or desirable for
better assuring, conveying, granting, pledging, assigning, and confirming all and singular the
rights, revenues, and other funds, moneys, and securities pledged or assigned under the
resolution, or intended so to be, or which the Borough may become bound to pledge or
assign.
J. The Borough is duly authorized under all applicable laws to create and issue
the Bonds and to adopt this resolution and to pledge the Pledged Revenues and other
funds, moneys, and securities purported to be pledged by this resolution in the manner and
to the extent provided in this resolution. The Pledged Revenues and other funds, moneys,
and securities so pledged are and will be free and clear of any pledge, lien, charge, or
encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and
assignment created by this resolution, and all corporate or other action on the part of the
Borough to that end has been and will be duly and validly taken. The Bonds and the
provisions of this resolution are and will be the valid and legally enforceable obligations of
the Borough in accordance with their terms and the terms of this resolution.
K. The Borough has, and will have so long as any Parity Bonds are outstanding,
good right, and lawful power to operate, maintain, and repair the Facility and to fix and
collect rates, fees, and other charges related to the Facility.
L. The Borough shall do and perform or cause to be done and performed all
acts and things required to be done or performed by or on behalf of the Borough under
applicable laws and this resolution.
Section 16. Parity Bonds. As described in this Section 16, the Borough may issue Parity
Bonds. The Borough hereby covenants with the owners of each of the Parity Bonds for so
long as the same remain outstandihg that it will not issue any bonds having a greater or
equal lien on Pledged Revenues to pay and secure the payment of the princip.al of and
interest on such bonds than the lien created thereon to pay and secure the payment of the
principal of and interest on the Parity Bonds except that the Borough reserves the right to
issue future Parity Bonds as follows:
A. For the purpose of acquiring, constructing and installing additions,
betterments and improvements to and extensions of, acquiring necessary property and
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equipment for, or making necessary replacements or repairs to the Facility, for funding
interest and reserves and for the purpose of refunding at or prior to their redemption or
maturity any outstanding revenue bonds or notes of the Borough that have a lien on
Pledged Revenues for the payment of the principal thereof and interest thereon junior and
inferior to the lien on Pledged Revenues for the payment of the principal of and interest on
the Bonds and upon compliance with the following conditions:
(1) The Borough will covenant in each resolution authorizing the issuance of
Future Parity Bonds that it will pay into and maintain in the Reserve Subaccount the
amounts required by Section 13 of this resolution to be paid into and maintained in the
Reserve Subaccount in the event Future Parity Bonds are issued.
(2) At the time of the issuance of such Future Parity Bonds the Borough shall
have on file a certificate of the Finance Director showing that the "annual income available
for revenue bond debt service," as hereinafter set forth, shall be at least equal to 1.25 times
the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the
Future Parity Bonds being issued.
Such "annual income available for revenue bond debt service" shall be determined
by adding the following:
(i) The historical Pledged Revenues for any 12 consecutive
months out of the 24 months immediately preceding the month of delivery of the Future
Parity Bonds being issued.
(ii) The estimated annual Pledged Revenues to be derived from
the operation of any additions or improvements to or extensions of the Facility under
construction but not completed at the time of such certificate and not being paid for out of
the proceeds of sale of such Future Parity 8onds being, issued, and which Pledged
Revenues are not otherwise included in any of the sources of Pledged Revenues described
in this subsection (2).
(iii) The estimated Pledged Revenues to be derived from the
operation of any additions and improvements to or extensions of the Facility being paid for
out of the proceeds of sale of such Future Parity Bonds being issued.
The computation of "annual income available for revenue bond debt service" shall be
adjusted to reflect the Facility fees effective on the date of such certificate or approved by
the regulatory authority with jurisdiction to become effective thereafter if there has been any
change in such rates and charges put into effect or so approved during or after such 12-
consecutive-month base period.
Kodiak Island Borough Resolution No. FY2012-06
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Notwithstanding the preceding provisions of this subparagraph (2), the certificate
referred to above shall not be required if one-half of Pledged Revenues, verified from certain
financial statements of the Facility, for a period of any consecutive two out of the three
Fiscal Years immediately preceding the issuance and delivery of such Fulure Parity Bonds,
was equal to at least 1.25 times the maximum Annual Debt Service required to be paid in
any Fiscal Year succeeding the date of issuance of such Future Parity Bonds on all
outstanding Parity Bonds and the Future Parity Bonds being issued.
Further, notwithstanding the preceding provisions of this subparagraph (2), Future
Parity Bonds may be issued if the Borough shall have on file a certificate stating that the
Pledged Revenues for the next full Fiscal Year after the initial operation of any additions or
improvements to or extensions of the Facility being paid for out of the proceeds of the
Future Parity Bonds will be at least equal to [1.25] times the maximum Annual Debt Service
Requirement on all outstanding Parity Bonds and the Future Parity Bonds being issued; and
that at the time of the issuance of such Future Parity Bonds there is no deficiency in the
Debt Service Subaccount or Reserve Subaccount.
B. For the purpose of refunding at or prior to their redemption or maturity any
part or all of the then outstanding Parity Bonds if the issuance of such refunding Future
Parity Bonds does not require a greater amount to be paid out of Pledged Revenues for
principal and interest over the life of such refunding Future Parity Bonds being refunded,
and if the conditions required in subsections (a)(1) and (a)(3) of this section are complied
with.
Proceeds of Parity Bonds to be used to fund interest or reserves shall be deposited
in the Debt Service Subaccount or the Reserve Subaccount, as the case may be.
Section 17. Subordinate Lien Bonds. Nothing contained herein shall prevent the Borough
from issuing revenue bonds or notes which are a charge upon P~edged Revenues
subordinate or inferior to the payments required herein to be made therefrom into the Debt
Service Subaccount and Reserve Subaccount, or from issuing solid waste disposal revenue
bonds to refund maturing bonds for the payment of which moneys are not otherwise
available.
Section 18. Covenants Re.qardin.q Arbit.r.acle and Private Activity Bonds. The Borough
hereby covenants that it will not make any use of the proceeds of sale of the Bonds or any
other funds of the Borough which may be deemed to be proceeds of such Bonds pursuant
to Section 148 of the Code which will cause the Bonds to be "arbitrage bonds" within the
meaning of such section and the regulations applicable thereunder. The Borough will
comply with the requirements of Section 148 of the Code (or any successor provision
thereof applicable to the Bonds) and the applicable regulations thereunder throughout the
term of the Bonds.
Kodiak Island Borough Resolution No. FY2012-06
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The Borough further covenants that it will not take any action or permit any action to
be taken that would cause the Bonds to constitute "private activity bonds" under Section 141
of the Code. The Borough will take any action determined by the Borough, after
consultation with its bond counsel, to be legal and practicable and required to be taken by
the Borough under fulure federal laws or regulations in order to maintain the exemption of
the interest on the Bonds from federal income taxation.
Section 19. Defeasance. In the event that money and/or Government Obligations
maturing at such time or times and bearing interest to be earned thereon in amounts
sufficient to redeem and retire any or all of the Bonds in accordance with their terms are set
aside in a special restricted account in the Bond Account to effect such redemption or
retirement and such money and the principal of and interest on such obligations are
irrevocably set aside and pledged for such purpose, then no further payments need to be
made into the Bond Account for the payment of the principal of and interest on such Bonds,
and such Bonds shall cease to be entitled to any lien, benefit or security of this resolution
except the right to receive the funds so set aside and pledged, and such Bonds shall be
deemed not to be outstanding hereunder or under any other resolution authorizing the
issuance of Future Parity Bonds.
Section 20. General Authorization to Municipal Officials. After the sale of the Bonds, the
proper officials of the Borough are hereby authorized and directed to do everything
necessary to complete such sale and to deliver the Bonds to the purchaser thereof upon
payment of the purchase price thereof.
Section 21. Amendatory and Supplemental Resolutions.
A. The Assembly from time to time and at any time may pass a resolution or
resolutions supplemental hereof, which resolution or resolutions thereafter shall become a
part of this resolution, for any one or more of the following purposes:
(1) To add to the covenants and agreements of the Borough contained in
this resolution, other covenants and agreements thereafter to be observed, or to surrender
any right or power herein reserved to or conferred upon the Borough.
(2) To make such provisions for the purpose of curing any ambiguities or
of curing, correcting or supplementing any defective provision contained in this resolution or
in regard to matters or questions arising under this resolution as the Assembly may deem
necessary or desirable and not inconsistent with this resolution and which shall not
adversely affect the interest of the owners of Parity Bonds.
Any such supplemental resolution of the Assembly may be adopted without the
consent of the owner of any Parity Bonds at any time outstanding, notwithstanding any of
the provisions of subsection B of this section.
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B. With the consent of the owners of not less than 60% in aggregate principal
amount of Parity Bonds at the time outstanding, the Assembly may pass a resolution or
resolutions supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this resolution or of any supplemental
resolulion; provided, however, that no such supplemental resolution shall:
(1) Extend the fixed maturity of any of the Parity Bonds, or reduce the
rate of interest thereon, or reduce the amount or change the date of any sinking fund
installment requirement, or extend the time of payments of interest from their due date, or
reduce the amount of the principal thereof, or reduce any pre.mium payable on the
redemption thereof, without the consent of the owner of each Parity Bond so affected; or
(2) Reduce the aforesaid percentage of owners of Parity Bonds required
to approve any such supplemental resolution without the consent of the owners of all of the
Parity Bonds then outstanding; or
(3) Remove the pledge and lien of this resolution on Pledged Revenues.
It shall not be necessary for the consent of the owners of Parity Bonds under
this subsection B to approve the particular form of any proposed supplemental resolution,
but it shall be sufficient if such consent shall approve the substance thereof.
C. Upon the passage of any supplemental resolution pursuant to the provisions
of this section, this resolution shall be deemed to be modified and amended in accordance
therewith, and the respective rights, duties and obligations of the Borough under this
resolution and all owners of Parity Bonds outstanding hereunder shall thereafter be
determined, exercised and enforced thereunder, subject in all respects to such modification
and amendment, and all the terms and conditions of any such supplemental resolution shall
be deemed to be part of the terms and conditions of this resolution for any and all purposes.
D. Parity Bonds executed and delivered after the execution of any supplemental
resolution adopted pursuant to the provisions of this section may bear a notation as to any
matter provided for in such supplemental resolution, and if such supplemental resolution
shall so provide, new Parity Bonds so modified as to conform, in the opinion of the
Assembly, to any modification of this resolution contained in any such supplemental
resolution, may be prepared by the Borough and delivered without cost to the owners of
Parity Bonds then outstanding, upon surrender for cancellation of such Parity Bonds in
equal aggregate principal amounts.
Section 22. Disposition of the Proceeds of Sale of the Bonds. The proceeds received
from the sale of the Bonds (exclusive of accrued interest, if any, which shall be paid into the
Debt Service Subaccount) shall be deposited into the fund of the Borough designated by the
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Finance Director and shall be used to pay afl costs allocable to the issuance of the Bonds
and to undertake improvements authorized by Section 3 of this resolution.
Section 23. Loan Aqreement. The Manager and Finance Director are each authorized to
enter into a Loan Agreement with the Alaska Municipal Bond Bank providing for and relating
to the sale of the Bonds to the Alaska Municipal Bond Bank and the Manager and Finance
Director are authorized to cause the same to be executed and delivered on behalf of the
Borough.
Section 24. Continuin.q Disclosure. The Borough acknowledges that, under Rule 15c2-12
of the Securities and Exchange Commission (the "Rule") the Borough may now or in the
future be an "obligated person" with respect to the Bond Bank bonds. In accordance with
the Rule, and as set forth in the Loan Agreement, the Borough shall undedake to provide
certain annual financial information and operating data and execute a continuing disclosure
agreement. Notwithstanding any other provision of this Resolution, failure of the Borough to
comply with the continuing disclosure obligations shall not be considered a default of the
Borough’s obligalions under this Resolution or the Parity Bonds; however the beneficial
owner of any Parity Bond may bring an action for specific performance, to cause the
Borough to comply with its continuing disclosure obligations under the Rule.
Section 25. Severability. If any one or more of the covenants or agreemenls provided in
this resolution to be performed on the part of the Borough shall be declared by any court of
competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or
agreements shall be null and void and shall be deemed separable from the remaining
covenants and agreements in this resolution and shall in no way affect the validity of the
other provisions of this resolution or of the Bonds.
Section 26. Effective Date. This resolution shall become effective immediately.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS FOURTH DAY OF AUGUST, 2011
ATTEST:
Nova M2 Javier,MM Borough Clerk
KODIAK ISLAND BOROUGH
M. Selby,
Kodiak Island Borough Resolution No. FY2012-06
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Resolution No. FY2020-30 (the Bond
Resolution)
CERTIFICATE OF CLERK
I, TARA WELtNSKY, Clerk of the Kodiak Island Borough (the "Borough"), HEREBY CERTIFY
that the document attached hereto is an accurate and complete copy of Resolution No. FY2020-30 of
the Borough adopted by the Borough Assembly at a meeting duly called and held on May 7, 2020, and
that Resolution No. FY2020-30 has not been modified, amended, repealed, or rescinded, but is in full
force and effect on the date hereof.
IN WITNESS WHEREOF, I have executed this certificate this eighth day of May, 2020.
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Introduced by: Borough Manager
Requested by: Finance Director
Drafted by: Bond Counsel
Introduced on: 05/07/2020
Adopted on: 05/0712020
KODIAK ISLAND BOROUGH
RESOLUTION NO. FY2020-30
A RESOLUTION OF THE KODIAK ISLAND BOROUGH ASSEMBLY AUTHORIZING
THE BOROUGH TO ISSUE A REFUNDING REVENUE BOND TO REFUND ALL OR A
PORTION OF THE PRINCIPAL INSTALLMENTS OF THE OUTSTANDING SOLID
WASTE DISPOSAL FACILITY REVENUE BOND, 2011, OF THE BOROUGH AND TO
PAY COSTS OF ISSUING THE BOND; FIXING CERTAIN DETAILS OF SUCH BOND;
AUTHORIZING ITS SALE; AND PROVIDING FOR RELATED MATTERS
WHEREAS, pursuant to Resolution No. FY2012-06, adopted by the Assembly on
August 4, 2011 (the "2011 Bond Resolution"), the Borough issued its Solid Waste Disposal
Facility Revenue Bond, 2011 (the "2011 Bond"), maturing on June 1, 2033, with principal
installments due on September 1 of each of the years 2012 through 2026, inclusive, in the
original principal amount of $3,275,000, of which ; and
WHEREAS, the principal installments of the 2011 Bond due in each of the years 2022
through 2026, inclusive, currently outstanding in the aggregate principal amount of
$1,355,000 (the "Refundable Principal Installments"), are subject to prepayment in whole
or in part at the option of the Borough on any date on or after September 1, 2021, at a
price of 100% of the principal amount thereof to be prepaid, plus accrued interest to the
date of prepayment; and
WHEREAS, under AS 29.47.300, if the Borough has outstanding revenue bonds and
the Assembly determines it would be financially advantageous to refund those bonds, the
Borough may provide by resolution for the issuance of revenue refunding bonds, and
under AS 29.47.320, no election is required to authorize the issuance and sale of
refunding bonds; and
WHEREAS, under AS 29.47.340, refunding bonds may be exchanged for the bonds
being refunded; and
WHEREAS, the Borough sold the 2011 Bond to the Alaska Municipal Bond Bank (the
"Bond Bank"), as authorized by the 2011 Bond Resolution, on the terms and conditions
set forth in the 2011 Bond Resolution and in the loan agreement between the Borough
and the Bond Bank dated as of September 1,2011 (the "2011 Loan Agreement"); and
Kodiak Island Borough, Alaska
FG:53728747.1
Resolution No. FY2020-30
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WHEREAS, the Bond Bank issued its General Obligation and Refunding Bonds, 2011
Series Three (the "Bond Bank Bonds"), among other purposes, to provide funds to
purchase the 2011 Bond, as provided in the 2011 Loan Agreement; and
WHEREAS, the Bond Bank has expressed its intent to issue refunding bonds (the "Bond
Bank Refunding Bonds") for the purpose of refunding a portion of the Bond Bank Bonds
and achieving a debt service savings; and
WHEREAS, Section 6 of the 2011 Loan Agreement provides that payments of principal
of and interest on the 2011 Bond may be adjusted to reduce debt service on the 2011
Bond if the Bond Bank is able to achieve debt service savings by refunding the Bond Bank
Bonds; and
WHEREAS, the Bond Bank has offered to enter into an Amendatory Loan Agreement
(the "Amendatory Loan Agreement") to effect a reduction in debt service on all or a portion
of the Refundable Principal Installments; and
WHEREAS, the Assembly wishes to effect a reduction in debt service on all or a portion
of the Refundable Principal Installments by entering into the Amendatory Loan Agreement,
issuing a refunding bond (and a replacement 2011 Bond) in exchange for the 2011 Bond,
and participating in the refunding of a portion of the Bond Bank Bonds; and
WHEREAS, the Assembly finds that it is necessary and appropriate to delegate to each
of the Borough Manager and Borough Finance Director authority to determine the maturity
amounts, interest rates, and other details of the bond, and to determine other matters that
are not provided for in this Resolution;
NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KODIAK ISLAND
BOROUGH THAT:
Section 1: Definitions. In addition to terms which are defined in the recitals above, the
following terms shall have the following meanings in this Resolution:
(a) "2011 Bond" means the Solid Waste Disposal Facility Revenue
Bond, 2011, issued by the Borough pursuant to the 2011 Bond Resolution.
(b) "2011 Bond Resolution" means Resolution No. FY2012-06 of the
Borough, adopted by the Assembly on August 4, 2011.
(c) "2011 Loan Aqreement" means the loan agreement between the
Borough and the Bond Bank dated as of September !, 2011.
(d) "Amendatory Loan Aqreement" means the amendatory loan
agreement to be entered into between the Borough and the Bond Bank to
effect a reduction in debt service on all or a portion of the Refundable
Principal Installments.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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(e) "Amended Loan A,,qreement" means the Loan Agreement as
amended by the Amendatory Loan Agreement.
(f) "Annual Debt Service Requirement" means, with respect to any
particular Fiscal Year and to any specified bonds, an amount equal to (i)
interest accruing during such Fiscal Year on such bonds, except to the
extent such interest is to be paid from deposits in the Debt Service
Subaccount from bond proceeds; (ii) the principal amount of such bonds
due during such Fiscal Year for which no sinking fund installments have
been established; plus (iii) the unsatisfied balance of any sinking fund
installment for such bonds due during such Fiscal Year.
(g) "Assembly" means the Assembly of the Kodiak Island Borough, as
the general legislative authority of the Kodiak Island Borough, as the same
shall be duly and regularly constituted from time to time.
(h) "Bond." means the "Solid Waste Disposal Facility Refunding
Revenue Bond" of the Kodiak Island Borough, the issuance and sale of
which are authorized herein.
(i) "Bond Account" means the Solid Waste Disposal Revenue Bond
Account created by Section 12 of the 2011 Bond Resolution.
(j) "Bond Bank" means the Alaska Municipal Bond Bank.
(k) "Bond Bank Bonds" means the General Obligation and Refunding
Bonds, 2011 Series Three, issued by the Bond Bank.
(I) "Bond Bank Refundinq Bonds" means the series of general
obligation bonds issued by the Bond Bank, a portion of the proceeds of
which are used to purchase the Bond.
(m) "Bond Reqister" means the registration books maintained by the
Registrar, which include the names and addresses of the Registered
Owners of the Bond or their nominees.
(n) "Borouqh" means the Kodiak Island Borough, a municipal
corporation of the State of Alaska, organized as a second class borough
under Title 29 of the Alaska Statutes.
(o) "Borouqh Manaqer" means the Manager or Administrative Official
of the Borough.
(p) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, together with all regulations applicable thereto.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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(q) "Consultin,q En.qineer" means an independent consulting engineer
or engineering firm licensed to practice in the State of Alaska, retained and
appointed pursuant to Section 14(F) (and, so long as the 2011 Bond is
outstanding, pursuant to Section 15(F) of the 2011 Resolution).
(r) "Debt Service Subaccount" means the Debt Service Subaccount
created in the Bond Account by Section 12 of the 2011 Bond Resolution.
(s) "Facility" means the Borough’s solid waste disposal facility.
(t) "Fiscal Year" means the 12-month period commencing on July 1
each year through and including June 30 of the following calendar year.
(u) "Future Parity Bonds" means any solid waste disposal revenue
bonds, notes, or other obligations of the Borough, other than the 2011 Bond
and the Bond, issued under a resolution wherein the Borough pledges that
the payments to be made out of the Pledged Revenues into the Bond
Account and Reserve Subaccount therein to pay and secure the payment
of the principal of and interest on such revenue bonds, notes, or other
obligations will be on a parity with the payments required by this Resolution
to be made out of such Pledged Revenues into such Bond Account and
Reserve Subaccount to pay and secure the payment of the principal of and
interest on the 2011 Bond and the Bond.
(v) "Government Obliqations" means obligations that are either
(i) direct obligations of the United States of America or (ii) obligations of an
agency or instrumentality of the United States of America the timely
payment of the principal of and interest on which are unconditionally
guaranteed by the United States of America.
(w) "Net Revenues" means, for any Fiscal Year, all amounts received
by the Borough and deposited in the Solid Waste Disposal Fund and
interest and profits derived from the investment of money held in the Solid
Waste Disposal Fund during such period, less Operating Expenses for
such period.
(x) "Operatin.q Expenses" means, for any Fiscal Year, the expenses
incurred for operation, maintenance, or repair of the Facility. Operating
Expenses shall not include any allowances for depreciation or amortization
or any principal, redemption price, or purchase price of, or interest on, any
obligations of the Borough incurred in connection with and payable from
Pledged Revenues or any fee or charge in lieu of Borough taxes.
(y) "Parity Bonds" means the 2011 Bond, the Bond, and any Future
Parity Bonds.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 2:
(z) "Pledqed Revenues" means Net Revenues and interest received
and profits derived from the investment of money obtained from money
held in any fund solely to pay or secure the payment of the 2011 Bond and
the Bond.
(aa) "Refundable Principal Installments" means the principal
installments of the 2011 Bond due in each of the years 2022 through 2026,
inclusive, currently outstanding in the aggregate principal amount of
$1,355,000.
(bb) ",Registered Owner" means the person named as the registered
owner of a Parity Bond in the Bond Register.
(cc) "Reqistrar" means the Borough Finance Director, or any successor
that the Borough may appoint by resolution.
(dd) "Reserve Subaccount" means the Reserve Subaccount created in
the Bond Account by Section 12 of the 2011 Bond Resolution.
(ee) "Reserve Subaccount Requirement" means an amount equal to the
least of (i) 10% of the initial principal amount of all outstanding Parity
Bonds; (ii) 125% of the average Annual Debt Service Requirement for all
outstanding Parity Bonds; and (iii) the maximum Annual Debt Service
Requirement on all outstanding Parity Bonds.
(if) "Resolution" means this Resolution No. FY2020-30 of the Borough.
Authorization of Bond and Purpose of Issuance. The Assembly hereby
determines it would be financially advantageous to refund all or a portion
of the Refundable Principal Installments by issuing the Bond (and a
replacement 2011 Bond) on the terms and conditions provided in this
Resolution. For the purpose of providing the funds required to refund all or
a portion of the Refundable Principal Installments and to pay all costs
incidental thereto and to the issuance of the Bond, the Borough hereby
authorizes and determines to issue and sell the Bond. The Bond shall be
designated "Solid Waste Disposal Facility Refunding Revenue Bond," with
such additional series and year designation as the Borough Manager or the
Borough Finance Director may fix and determine.
The Borough Manager and/or the Borough Finance Director are hereby
authorized to fix and determine which of the Refundable Principal
Installments are to be refunded by issuing the Bond (and a replacement
2011 Bond) in exchange therefor.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 3:
Section 4:
Section 5:
Date, Maturity, Interest Rates, and Other Details of the Bond. Each
principal installment of the Bond shall be in the denomination of $5,000 or
any integral multiple thereof. The Bond shall be numbered in the manner
and with such additional designation as the Registrar deems necessary for
purposes of identification, and may have endorsed thereon such legends
or text as may be necessary or appropriate to conform to the rules and
regulations of any governmental authority or any usage or requirement of
law with respect thereto.
The Bond shall bear interest payable semi-annually on the dates and shall
mature on the date and each principal installment shall be payable annually
in the amount and on the dates, all as shall be set forth in the Amendatory
Loan Agreement. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
Subject to Section 2 and the remainder of this Section, the dated date, the
principal installment and interest payment dates, the record dates for
interest payments, the aggregate principal amount, the amount of each
principal installment, and the interest rate on each principal installment
shall be determined at the time of execution of the Amendatory Loan
Agreement under Section 18, provided that (i) no rate of interest on any
principal installment shall exceed the rate of interest on the corresponding
maturity of the Bond Bank Refunding Bonds; and (ii) the net present value
of the savings to the Borough effected by issuing the Bond (and a
replacement 2011 Bond) and refunding the Refundable Principal
Installments that are refunded shall be at least 3 percent of the aggregate
principal amount of the Refundable Principal Installments that are
refunded; and (iii) the Bond shall mature on or before the date that is six
months after the date on which the last Refundable Principal Installment
that is refunded is payable.
,Optional Prepayment. The principal installments of the Bond shall be
subject to prepayment, at the Borough’s option, on the dates and at the
prices to be set forth in the Amendatory Loan Agreement. If fewer than all
of the principal installments of the Bond are to be prepaid, the principal
installments to be prepaid shall be determined by the Borough. Notice of
any such prepayment shall be sent by the Borough not less than 50 days
prior to the date fixed for prepayment by first class mail to the Registered
Owner at the Registered Owner’s address as it then appears on the Bond
Register. Notice of prepayment having been duly given and the
prepayment having been duly effected, interest on the principal
installments to be prepaid shall cease to accrue on the date fixed for
prepayment.
Form of Bond. The Bond shall be in substantially the following form, subject
to the provisions of the Amendatory Loan Agreement and with such
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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variations, omissions, and insertions as may be required or permitted by
this Resolution:
UNITED STATES OF AMERICA
KODIAK ISLAND BOROUGH, ALASKA
NO. $
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND
REGISTERED OWNER: ALASKA MUNICIPAL BOND BANK
PRINCIPAL AMOUNT:
The Kodiak Island Borough (the "Borough"), a municipal
corporation of the State of Alaska, hereby acknowledges itself to owe and
for value received promises to pay to the Registered Owner identified
above, or its registered assigns, but only from the sources stated herein,
the principal amount identified above in the following installments in each
of the following years, and to pay, from the sources stated herein, interest
on such installments from the date hereof, payable on. 1, 20 ........ and
semiannually thereafter on ~ 1, and ~ 1, of each year, at the rates
per annum as follows:
Maturity Principal Interest
Date Amount Rate
For so long as the Alaska Municipal Bond Bank (the "Bond Bank")
is the Registered Owner, payment of principal and interest shall be made
as provided in the Loan Agreement between the Bond Bank and the
Borough, as amended (the "Amended Loan Agreement"). When and if this
Bond is not owned by the Bond Bank, installments of principal of and
interest on this Bond shall be paid by check or draft mailed by first class
mail to the Registered Owner as of the close of business on the 15th day
of the month before each installment payment date; provided, that the final
installment of principal of and interest on this Bond shall be payable upon
presentation and surrender of this Bond by the Registered Owner at the
office of the Registrar. Interest will be computed on the basis of a 360-day
year consisting of twelve 30-day months. Both principal of and interest on
this Bond are payable in lawful money of the United States of America
which, on the respective dates of payment thereof, shall be legal tender for
the payment of public and private debts, solely out of the special fund of
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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the Borough known as the "Solid Waste Disposal Revenue Bond Account"
created by Section 12 of Resolution No. FY2012-06.
This Bond is the Solid Waste Disposal Facility Refunding Revenue
Bond issued by the Borough, and is authorized for the purpose of refunding
certain principal installments of an outstanding revenue bond of the
Borough under Resolution No. FY2020-30 of the Borough entitled:
A RESOLUTION OF THE KODIAK ISLAND BOROUGH
ASSEMBLY AUTHORIZING THE BOROUGH TO ISSUE A
REFUNDING REVENUE BOND TO REFUND ALL OR A
PORTION OF THE PRINCIPAL INSTALLMENTS OF THE
OUTSTANDING SOLID WASTE DISPOSAL FACILITY
REVENUE BOND, 2011, OF THE BOROUGH AND TO PAY
COSTS OF ISSUING THE BOND; FIXING CERTAIN
DETAILS OF SUCH BOND; AUTHORIZING ITS SALE; AND
PROVIDING FOR RELATED MATTERS
(the "Resolution").
Installments of principal of this Bond maturing on and after
1, 20__, shall be subject to prepayment on and after 1, 20__, at the
option of the Borough (subject to any applicable provisions of the Amended
Loan Agreement), in such principal amounts and from such maturities as
the Borough may determine, and by lot within a maturity, at a redemption
price equal to the principal amount to be prepaid, plus accrued interest to
the date of prepayment.
This Bond is transferable as provided in the Resolution, (i) only
upon the Bond Register of the Borough, and (ii) upon surrender of this Bond
together with a written instrument of transfer duly executed by the
Registered Owner or the duly authorized attorney of the Registered Owner,
and thereupon a new fully registered Bond in the same aggregate principal
amount and maturity shall be issued to the transferee in exchange therefor
as provided in the Resolution and upon the payment of charges, if any, as
therein prescribed. The Borough may treat and consider the person in
whose name this Bond is registered as the absolute owner hereof for the
purpose of receiving payment of, or on account of, the principal or
redemption price, if any, hereof and interest due hereon and for all other
purposes whatsoever.
This Bond is a special, limited obligation of the Borough giving rise
to no charge against the Borough’s general credit, and is payable solely
from, and constitute a claim of the owner hereof against, only the revenues,
funds, and assets of the Borough pledged under the Resolution. This Bond
shall never constitute a debt or indebtedness of the State of Alaska within
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 6:
the meaning of any provision or limitation of the Constitution or statutes of
the State of Alaska or the Borough, or of any political subdivision thereof,
and shall never constitute nor give rise to a general pecuniary liability of the
State or the Borough or a charge against their general credit or taxing
powers.
No officer, agent, or employee of the Borough, and no officer,
official, agent, or employee of the State of Alaska, nor any person executing
this Bond, shall in any event be subject to any personal liability or
accountability by reason of the issuance of this Bond.
tT IS HEREBY CERTIFIED AND RECITED that all conditions, acts
or things required by the constitution or statutes of the State of Alaska to
exist, to have happened or to have been performed precedent to or in the
issuance of this Bond exist, have happened and have been performed, and
that this Bond, together with all other indebtedness of the Borough, is within
every debt and other limit prescribed by such constitution or statutes.
IN WITNESS WHEREOF, THE KODIAK ISLAND BOROUGH,
ALASKA, has caused this Bond to be signed in its name and on its behalf
by the manual or facsimile signature of its Mayor and its corporate seal (or
a facsimile thereof) to be impressed or otherwise reproduced hereon and
attested by the manual or facsimile signature of its Clerk, all as of the
day of ....
KODIAK ISLAND BOROUGH
ATTEST:
/specimen/
Borough Mayor
/specimen/
Borough Clerk
Execution. The Bond shall be executed in the name of the Borough by the
manual or facsimile signature of the Mayor, and its corporate seal (or a
facsimile thereof) shall be impressed or otherwise reproduced thereon and
attested by the manual or facsimile signature of the Borough Clerk. The
execution of the Bond on behalf of the Borough by persons who at the time
of the execution are duly authorized to hold the proper offices shall be valid
and sufficient for all purposes, although any such person shall have ceased
to hold office at the time of delivery of the Bond or shall not have held office
on the date of the Bond.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 7:
Section 8:
Section 9:
Section 10:
Payment of Principal Installments and Interest. The Bond shall be payable
in lawful money of the United States of America which at the time of
payment is legal tender for the payment of public and private debts. For so
long as the Bond Bank is the Registered Owner of the Bond, payment of
principal installments of and interest on the Bond shall be made as provided
in the Amended Loan Agreement. When and if the Bond Bank is not the
Registered Owner of the Bond, installments of principal of and interest on
the Bond shall be paid by check mailed by first class mail to the Registered
Owner as of the record date for the installment payment at the address
appearing on the Bond Register; provided, that the final installment of
principal and interest on the Bond shall be payable upon presentation and
surrender of the Bond by the Registered Owner at the office of the
Registrar.
Reqistration. The Bond shall be issued only in registered form as to both
principal and interest. The Borough designates the Borough Finance
Director as Registrar for the Bond. The Registrar shall keep, or cause to be
kept, the Bond Register at the principal office of the Borough. The Borough
covenants that, until the Bond has been surrendered and canceled, it will
maintain a system for recording the ownership of the Bond that complies
with the provisions of Section 149 of the Code. The Borough and the
Registrar may treat the person in whose name the Bond shall be registered
as the absolute owner of such Bond for all purposes, whether or not the
Bond shall be overdue, and all payments of principal of and interest on the
Bond made to the Registered Owner thereof or upon its order shall be valid
and effectual to satisfy and discharge the liability upon such Bond to the
extent of the sum or sums so paid, and neither the Borough nor the
Registrar shall be affected by any notice to the contrary.
Transfer and Exchanqe. The Bond shall be transferred only upon the Bond
Register. Upon surrender for transfer or exchange of the Bond at the office
of the Registrar, together with a written instrument of transfer or
authorization for exchange in form and with guaranty of signature
satisfactory to the Registrar, duly executed by the Registered Owner or the
duly authorized attorney of the Registered Owner, the Borough shall
execute and deliver a replacement Bond in equal aggregate principal
amount, subject to such reasonable regulations as the Borough may
prescribe and upon payment sufficient to reimburse it for any tax, fee, or
other governmental charge required to be paid in connection with such
transfer or exchange. If the Bond is surrendered for transfer or exchange it
shall be canceled by the Registrar.
Bond Mutilated. Destroyed, Stolen, o..[.......L0st. Upon surrender to the
Registrar of a mutilated Bond, the Borough shall execute and deliver a new
Bond of like maturity and principal amount. Upon filing with the Registrar of
evidence satisfactory to the Borough that the Bond has been destroyed,
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 11:
Section 12:
stolen, or lost and of the ownership thereof, and upon furnishing the
Borough with indemnity satisfactory to it, the Borough shall execute and
deliver a new Bond of like maturity and principal amount. The person
requesting the execution and delivery of a new Bond under this Section
shall comply with such other reasonable regulations as the Borough may
prescribe and shall pay such expenses as the Borough may incur in
connection therewith.
Priority of Use of Pledqed Revenues. Pledged Revenues are hereby
pledged to and shall be used only for the following purposes and in the
following order of priority:
First, to make all payments, including sinking fund payments,
required to be made into the Debt Service Subaccount for the payment of
the principal of and interest on Parity Bonds;
Second, to make all payments required to be made into the Reserve
Subaccount;
Third, to make all payments, including sinking fund payments,
required to be made into a subordinate lien debt service account for the
payment of the principal of and interest on any subordinate lien bonds;
Fourth, to make all payments required to be made into a reserve
account for any subordinate lien bonds; and
Fifth, to pay the costs of additions, betterments, improvements, and
repairs to and extensions and replacements of the Facility, to purchase or
redeem Facility improvement revenue bonds or notes of the Borough, or
for any other proper purpose in connection with the operation of the Facility.
Solid Waste Disposal Revenue Bond Account and Accounts Therein.
There has been heretofore created by Section 12 of the 2011 Bond
Resolution a special restricted account within the Solid Waste Fund of the
Borough known as the "Solid Waste Disposal Revenue Bond Account" (the
"Bond Account"), which account is to be drawn upon for the sole purpose
of paying the principal of and interest and premium, if any, on all Parity
Bonds. The Bond Account consists of two subaccounts, the Debt Service
Subaccount and the Reserve Subaccount. Amounts pledged to be paid into
the Bond Account are hereby declared to be a lien and charge upon
Pledged Revenues superior to all other charges of any kind or nature and
equal in rank to the charge thereon to pay and secure the payment of the
principal of and interest on all Parity Bonds.
Kodiak Island Borough, Alaska Resolution No. FY2020.30
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Section 13:
The Borough hereby irrevocably obligates and binds itself to set aside and
pay into the Debt Service Subaccount out of Pledged Revenues on or
before the date due:
A. Such amounts, in approximately equal monthly installments,
as will be sufficient to accumulate the amount required to pay the interest
scheduled to become due on Parity Bonds on the next interest payment
date; and
B. Such amounts, in approximately equal monthly installments,
as will be sufficient to accumulate (i) the principal amount of Parity Bonds
due for which no sinking fund installments have been established; plus (ii)
the unsatisfied balance of any sinking fund installment for Parity Bonds, in
each case during the next 12 months.
C. For so long as Parity Bonds are held by the Bond Bank, the
Borough will pay such amounts into the Debt Service Subaccount out of
Pledged Revenues as may be required by the Amended Loan Agreement.
Money in the Debt Service Subaccount may be held in cash or invested in
accordance with Borough policy such that investments will mature prior to
the time such money is required for the payment of the principal of or
interest on the Parity Bonds. All interest earned on and profits derived from
such investments shall remain in and become part of the Debt Service
Subaccount.
Reserve Subaccount. The Borough hereby covenants and agrees that it
will, at the time of issuance of the Bond, cause amounts to be paid into the
Reserve Subaccount such that the total amount in the Reserve Subaccount
will be equal he Reserve Subaccount Requirement.
The Borough further covenants and agrees that it will set aside and pay
into the Reserve Subaccount amounts from Pledged Revenues,
commencing with the first month following the closing and delivery of the
Bond, so that the amount on deposit in the Reserve Subaccount will at all
times be at least equal to the Reserve Subaccount Requirement.
The Borough further covenants and agrees that in the event it issues any
Future Panty Bonds hereafter it will provide in each resolution authorizing
the same that at the time of issuance of such Future Parity Bonds payments
will be made into the Reserve Subaccount such that the total amount of
such payments together with the money already in the Reserve
Subaccount will be equal to the Reserve Subaccount Requirement.
The Borough further covenants and agrees that it will at all times maintain
therein an amount at least equal to the Reserve Subaccount Requirement
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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Section 14:
until there is a sufficient amount in the Bond Account and Reserve
Subaccount to pay the principal of, premium, if any, and interest on all
outstanding Parity Bonds, at which time the money in the Reserve
Subaccount may be used to pay such principal, premium, if any, and
interest; provided, however, that money in the Reserve Subaccount may
be withdrawn or set aside in a special account in the Bond Account
pursuant to Section 19 to pay (with or without other available funds) the
principal, premium, if any, and interest on all of the outstanding Parity
Bonds of any single issue or series of Parity Bonds, so long as the money
remaining on deposit in the Reserve Subaccount is at least equal to the
Reserve Subaccount Requirement for all of the remaining outstanding
Parity Bonds. The Borough may, from time to time, transfer from the
Reserve Subaccount to the Debt Service Subaccount amounts in excess
of the Reserve Subaccount Requirement.
In the event there shall be a deficiency in the Debt Service Subaccount for
meeting maturing installments of either principal of or interest on Parity
Bonds, such deficiency shall be made up from the Reserve Subaccount by
the withdrawal of cash therefrom. Any deficiency created in the Reserve
Subaccount by reason of any such withdrawal shall then be made up from
Pledged Revenues first available therefor after making necessary provision
for the required payments into the Debt Service Subaccount.
All money in the Reserve Subaccount may be kept in cash or invested in
accordance with Borough policy, Such investments shall mature not later
than the last maturity of the Parity Bonds outstanding at the time of their
purchase. Interest on any such investments and/or any profits realized from
the sale thereof shall be deposited in and become part of the Debt Service
Subaccount.
,Specific Covenants. The Borough hereby covenants with the owners of
each of the Parity Bonds for so long as any of the same remain outstanding
as follows:
A. The Borough will establish, maintain, and collect Facility
fees and Net Revenues in each Fiscal Year that will provide Pledged
Revenues in an amount equal to the amount of the Annual Debt Service
Requirement for such year on all outstanding Parity Bonds. For so long as
the Parity Bonds are held by the Bond Bank, the Borough will establish,
maintain, and collect Facility fees and Net Revenues as required by the
terms of the Amended Loan Agreement, and the Finance Director will
provide a certificate annually to the Bond Bank as to compliance with this
covenant.
B. The Borough will at all times maintain, preserve and keep
the Facility and every part and parcel thereof in good repair, working order,
Kodiak Island Borough, Alaska Resolution No. FY2020-30
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and condition; will from time to time make or cause to be made all
necessary and proper repairs, renewals, and replacements thereto so that
the business carried on in connection therewith may be properly and
advantageously conducted; and will at all times operate the Facility in an
efficient manner and at a reasonable cost.
Co The Borough will at all times carry such forms of insurance
on such of the buildings, equipment, and property of the Facility as are
ordinarily insured in such amounts and with such deductibles as under
good business practice are ordinarily carried on such facilities. All such
insurance shall be carried with responsible insurers and the policies shall
be payable to the Borough.
D. The Borough will keep and maintain proper books and
accounts with respect to the operation of the Facility in such manner as
prescribed by any authorities having jurisdiction over the Facility; will cause
its books and accounts to be audited annually be a certified public
accountant not later than 210 days following the end of each Fiscal Year,
copies of which audits shall, upon request, be furnished to the owners of
the Parity Bonds. The audit shall show whether or not the Borough has in
all respects performed and complied with the covenants set forth in this
Resolution, including the payments into the Debt Service Subaccount and
Reserve Subaccount provided for herein.
E. All employees and agents of the Borough collecting or
handling money of the Borough in connection with the management and
operation of the Facility shall be bonded in an amount commensurate with
the funds they handle and in an amount sufficient to protect the Borough
from loss.
F. The Borough will not sell or otherwise dispose of the Facility
unless contemporaneously with such sale or disposal there shall be paid
into the Bond Account a sum sufficient to pay the principal of and interest
on all Parity Bonds then outstanding to the date or dates on which they first
may be redeemed, nor will it sell or otherwise dispose of any part of the
Facility which is material to the production of Pledged Revenues unless, in
the opinion of a Consulting Engineer, the remaining Facility will generate
Pledged Revenues sufficient to enable the Borough to comply with the
requirements of this Resolution and each resolution authorizing the
issuance of Future Parity Bonds.
G. The Borough will not at any time create or permit to accrue
or exist any lien or other encumbrance or indebtedness upon the Facility or
the Pledged Revenues, or any part thereof, or upon any Account or
Subaccount created hereunder, prior or superior to the lien thereon for the
payment of the Parity Bonds, and will pay and discharge, or cause to be
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paid and discharged, any and all lawful claims for labor, materials or
supplies which, if unpaid, might become a lien or charge upon the Pledged
Revenue. or any part thereof, or upon any Account or Subaccount in the
hands of the Borough, prior or superior to the lien of the Parity Bonds, or
which might impair the security of the Parity Bonds.
H. The Borough will not expend any of the Pledged Revenues
or the proceeds of any indebtedness payable from Pledged Revenues for
any additions, betterments or improvements to the Facility which are not
economically sound and which will not properly and advantageously
contribute to the conduct of the business of the Facility in an efficient and
economical manner.
I. At any and all times the Borough shall, as far as it may be
authorized by law, make, do, execute, acknowledge, and deliver all further
resolutions, acts, deeds, conveyances, assignments, transfers, and
assurances as may be necessary or desirable for better assuring,
conveying, granting, pledging, assigning, and confirming all and singular
the rights, revenues, and other funds, moneys, and securities pledged or
assigned under this Resolution, or intended so to be, or which the Borough
may become bound to pledge or assign.
J. The Borough is duly authorized under all applicable laws to
create and issue the Bonds and to adopt this Resolution and to pledge the
Pledged Revenues and other funds, moneys, and securities purported to
be pledged by this Resolution in the manner and to the extent provided in
this Resolution. The Pledged Revenues and other funds, moneys, and
securities so pledged are and will be free and clear of any pledge, lien,
charge, or encumbrance thereon or with respect thereto prior to, or of equal
rank with, the pledge and assignment created by this Resolution, and all
corporate or other action on the part of the Borough to that end has been
and will be duly and validly taken. The Bonds and the provisions of this
Resolution are and will be the valid and legally enforceable obligations of
the Borough in accordance with their terms and the terms of this
Resolution.
K. The Borough has, and will have so long as any Parity Bonds
are outstanding, good, right, and lawful power to operate, maintain, and
repair the Facility and to fix and collect rates, fees, and other charges
related to the Facility.
L. The Borough shall do and perform or cause to be done and
performed all acts and things required to be done or performed by or on
behalf of the Borough under applicable laws and this Resolution.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 15 of 21
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Parity Bonds. As described in this Section, the Borough may issue Parity
Bonds. The Borough hereby covenants with the owners of each of the
Parity Bonds for so long as the same remain outstanding that it will not
issue any bonds having a greater or equal lien on Pledged Revenues to
pay and secure the payment of the principal of and interest on such bonds
than the lien created thereon to pay and secure the payment of the principal
of and interest on the Parity Bonds except that the Borough reserves the
right to issue future Parity Bonds as follows:
A. For the purpose of acquiring, constructing, and installing
additions, betterments, and improvements to and extensions of, acquiring
necessary property and equipment for, or making necessary replacements
or repairs to the Facility, for funding interest and reserves and for the
purpose of refunding at or prior to their redemption or maturity any
outstanding revenue bonds or notes of the Borough that have a lien on
Pledged Revenues for the payment of the principal thereof and interest
thereon junior and inferior to the lien on Pledged Revenues for the payment
of the principal of and interest on the Bonds and upon compliance with the
following conditions:
(1) The Borough will covenant in each resolution
authorizing the issuance of Future Parity Bonds that it will pay into and
maintain in the Reserve Subaccount the amounts required by Section 13
of this Resolution to be paid into and maintained in the Reserve
Subaccount in the event Future Parity Bonds are issued.
(2) At the time of the issuance of such Future Parity
Bonds the Borough shall have on file a certificate of the Finance Director
showing that the "annual income available for revenue bond debt service,"
as hereinafter set forth, shall be at least equal to 1.25 times the maximum
Annual Debt Service Requirement on all outstanding Parity Bonds and the
Future Parity Bonds being issued.
Such "annual income available for revenue bond debt
service" shall be determined by adding the following:
(a) The historical Pledged Revenues for any 12
consecutive months out of the 24 months immediately preceding the month
of delivery of the Future Parity Bonds being issued.
(b) The estimated annual Pledged Revenues to
be derived from the operation of any additions or improvements to or
extensions of the Facility under construction but not completed at the time
of such certificate and not being paid for out of the proceeds of sale of such
Future Parity Bonds being, issued, and which Pledged Revenues are not
otherwise included in any of the sources of Pledged Revenues described
in this subparagraph (2).
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Page 16 of 21
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(c) The estimated Pledged Revenues to be
derived from the operation of any additions and improvements to or
extensions of the Facility being paid for out of the proceeds of sale of such
Future Parity Bonds being issued.
The computation of "annual income available for revenue
bond debt service" shall be adjusted to reflect the Facility fees effective on
the date of such certificate or approved by the regulatory authority with
jurisdiction to become effective thereafter if there has been any change in
such rates and charges put into effect or so approved during or after such
12-consecutive-month base period.
Notwithstanding the preceding provisions of this
subparagraph (2), the certificate referred to above shall not be required if
one-half of Pledged Revenues, verified from certain financial statements of
the Facility, for a period of any consecutive two out of the three Fiscal Years
immediately preceding the issuance and delivery of such Future Parity
Bonds, was equal to at least 1.25 times the maximum Annual Debt Service
required to be paid in any Fiscal Year succeeding the date of issuance of
such Future Parity Bonds on all outstanding Parity Bonds and the Future
Parity Bonds being issued.
Further, notwithstanding the preceding provisions of this
subparagraph (2), Future Parity Bonds may be issued if the Borough shall
have on file a certificate stating that the Pledged Revenues for the next full
Fiscal Year after the initial operation of any additions or improvements to
or extensions of the Facility being paid for out of the proceeds of the Future
Parity Bonds will be at least equal to 1.25 times the maximum Annual Debt
Service Requirement on all outstanding Parity Bonds and the Future Parity
Bonds being issued; and that at the time of the issuance of such Future
Parity Bonds there is no deficiency in the Debt Service Subaccount or
Reserve Subaccount.
B. For the purpose of refunding at or prior to their redemption
or maturity any part or all of the then outstanding Parity Bonds if the
issuance of such refunding Future Parity Bonds does not require a greater
amount to be paid out of Pledged Revenues for principal and interest over
the life of such refunding Future Parity Bonds being refunded, and if the
conditions required in subsection (A)(1) of this section are complied with.
Proceeds of Parity Bonds to be used to fund interest or reserves
shall be deposited in the Debt Service Subaccount or the Reserve
Subaccount, as the case may be.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 17 of 21
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Section 16:
Section 17:
Section 18:
Subordinate Lien Bonds. Nothing contained herein shall prevent the
Borough from issuing revenue bonds or notes which are a charge upon
Pledged Revenues subordinate or inferior to the payments required herein
to be made therefrom into the Debt Service Subaccount and Reserve
Subaccount, or from issuing long-term care center revenue bonds to refund
maturing bonds for the payment of which moneys are not otherwise
available.
Permitted Tax Covenants. The Borough may, but need not, covenant in
the Amended Loan Agreement to comply with any and all applicable
requirements set forth in the Code in effect from time to time to the extent
that such compliance shall be necessary for the exclusion of the interest
on the Bond from gross income for federal income tax purposes. The
Borough may, but need not, covenant in the Amended Loan Agreement
that it will make no use of the proceeds of the Bond which will cause the
Bond to be an "arbitrage bond" subject to federal income taxation by reason
of Section 148 of the Code. The Borough may, but need not, covenant in
the Amended Loan Agreement that it will not take or permit any action that
would cause the Bond to be a "private activity bond" as defined in Section
141 of the Code.
Amendatory and Supplemental Resolutions.
A. The Assembly from time to time and at any time may adopt
a resolution or resolutions supplemental hereto, which resolution or
resolutions thereafter shall become a part of this Resolution, for any one or
more of the following purposes:
(1) To add to the covenants and agreements of the
Borough in this Resolution, other covenants and agreements thereafter to
be observed or to surrender any right or power herein reserved to or
conferred upon the Borough.
(2) To make such provisions for the purpose of curing
any ambiguities or of curing, correcting, or supplementing any defective
provision contained in this Resolution or in regard to matters or questions
arising under this Resolution as the Assembly may deem necessary or
desirable and not inconsistent with this Resolution and which shall not
adversely affect the interests of the owners of Parity Bonds.
Any such supplemental resolution may be adopted without the
consent of the owner of any Parity Bonds at any time outstanding,
notwithstanding any of the provisions of subsection (B) of this Section.
B. With the consent of the owners of not less than 60% in
aggregate principal amount of Parity Bonds at the time outstanding, the
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 18 of 21
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Assembly may pass a resolution or resolutions supplemental hereto for the
purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Resolution or of any supplemental
resolution; provided, however, that no such supplemental resolution shall:
(1) Extend the fixed maturity of any of the Parity Bonds,
or reduce the rate of interest thereon, or reduce the amount or change the
date of any sinking fund installment requirement, or extend the time of
payments of interest from their due date, or reduce the amount of the
principal thereof, or reduce any premium payable on the redemption
thereof, without the consent of the owner of each Parity Bond so affected;
or
(2) Reduce the aforesaid percentage of owners of Parity
Bonds required to approve any such supplemental resolution without the
consent of the owners of all of the Parity Bonds then outstanding; or
(3) Remove the pledge and lien of this Resolution on
Pledged Revenues.
It shall not be necessary for the consent of the owners of Parity
Bonds under this subsection to approve the particular form of any proposed
supplemental resolution, but it shall be sufficient if such consent approves
the substance thereof.
Co Upon the passage of any supplemental resolution adopted
pursuant to the provisions of this Section, this Resolution shall be deemed
to be modified and amended in accordance therewith, and the respective
rights, duties, and obligations of the Borough under this Resolution and all
owners of Parity Bonds outstanding shall thereafter be determined,
exercised, and enforced thereunder, subject in all respects to such
modification and amendment, and all the terms and conditions of any such
supplemental resolution shall be deemed to be part of the terms and
conditions of this Resolution for any and all purposes.
D. Parity Bonds executed and delivered after the passage of
any supplemental resolution adopted pursuant to the provisions of this
Section may bear a notation as to any matter provided for in such
supplemental resolution, and if such supplemental resolution shall so
provide, new Parity Bonds so modified as to conform, in the opinion of the
Assembly, to any modification of this Resolution contained in any such
supplemental resolution may be prepared by the Borough and delivered
without cost to the owners of Parity Bonds then outstanding, upon
surrender for cancellation of such Parity Bonds in an equal aggregate
principal amounts.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 19 of 21
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Section 19:
Section 20:
Section 21:
Section 22:
Section 23:
Defeasance. In the event money and/or non-callable Government
Obligations maturing at such times and bearing interest to be earned
thereon in amounts sufficient to redeem and retire the Bond in accordance
with its terms are set aside in a special trust account to effect such
redemption or retirement and such moneys and the principal of and interest
on such Government Obligations are irrevocably set aside and pledged for
such purpose, then no further payments need be made to pay or secure
the payment of the principal of and interest on the Bond and the Bond shall
be deemed not to be outstanding.
Exchange of the Bond; Amendatory Loan Aqreement; Continuing
Disclosure Certificate. The exchange of the Bond for all the Refundable
Principal Installments that are refunded (and the issuance of a replacement
2011 Bond), as provided in the Amendatory Loan Agreement and this
Resolution, is hereby authorized and approved. The Amendatory Loan
Agreement and the Continuing Disclosure Certificate in substantially the
form filed with this Resolution are hereby approved. The Mayor and the
Borough Manager are each hereby authorized to execute and deliver the
Amendatory Loan Agreement and the Continuing Disclosure Certificate in
such forms, together with such changes not inconsistent herewith as may
be approved by the Mayor or the Borough Manager (such approval to be
conclusively evidenced by such official’s execution and delivery of such
document).
Authority of Officers. The Mayor, the Borough Manager, the Borough
Finance Director, the Borough Clerk, the Borough Attorney, and bond
counsel to the Borough each is authorized and directed to do and perform
all things and determine all matters not determined by this Resolution, to
the end that the Borough may carry out its obligations under the Bond and
this Resolution.
Onqoinq Disclosure. The Borough acknowledges that under Rule 15c2-12
of the Securities and Exchange Commission (the "Rule") the Borough may
now or in the future be an "obligated person." In accordance with the Rule,
and as the Bond Bank may require, the Borough shall undertake to provide
certain annual financial information and operating data as shall be set forth
in the Amendatory Loan Agreement.
Miscellaneous. No recourse shall be had for the payment of the principal
of or the interest on the Bond or for any claim based thereon or on this
Resolution against any member of the Assembly or officer of the Borough
or any person executing the Bond. The Bond is not and shall not be in any
way a debt or liability of the State of Alaska or of any political subdivision
thereof, except the Borough, and does not and shall not create or constitute
an indebtedness or obligation, either legal, moral, or otherwise, of such
state or of any political subdivision thereof, except the Borough.
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 20 of 21
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Section 24: Severability. If any one or more of the provisions of this Resolution shall
be declared by any court of competent jurisdiction to be contrary to law,
then such provision shall be null and void and shall be deemed separable
from the remaining provisions of this Resolution and shall in no way affect
the validity of the other provisions of this Resolution or of the Bond.
Section 25: Effective Date. This Resolution shall become effective upon passage and
approval.
ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH
THIS SEVENTH DAY OF MAY, 2020
KODIAK ISLAND BOROUGH
ATTEST:
~erts, Mayor
Welinsky, Borough
VOTES:
Ayes: Symmons, Turner, Arndt, Dvorak, Kavanaugh, Schroeder, Skinner
Noes:
Kodiak Island Borough, Alaska Resolution No. FY2020-30
Page 21 of 21
C. Notice of Borough Assembly Meeting May 7,
2020
Kodiak Island Borough
Assembly Regular Meeting Agenda
Thursday, May 7, 2020, 6:30 p.m., Teleconference
LIVE STREAMED on ourUstreamTV Internet Channel
For Citizen Comment Please Call:
(907) 486-3231 or Toll Free 1-855-492-9202
In our efforts to implement "Social Distance" practices you can request a
PDF of the Agenda Packet via email at clerk~..kodiakak.us or go online to
the
Borough Website at kodiakak.us
1. INVOCATION
2. PLEDGE OF ALLEGIANCE
3. ROLL CALL
APPROVAL OF AGENDA AND CONSENT AGENDA
All items listed with an asterisk (*) are considered to be routine and non-
controversial by the Assembly and will be approved by one motion.
There will be no separate discussion of these items unless an Assembly
member so requests, in which case the item will be removed from the
Consent Agenda and considered in its normal sequence on the agenda.
*APPROVAL OF MINUTES
A= *Regular Meeting Minutes Of April 16, 2020.
2020-04-16 RM Minutes
*Special Meeting Minutes Of April 23, 2020.
2020-04-23 SM Minutes
*Special Meeting Minutes Of April 30, 2020.
2020-04-30 SM Minutes
Meeting broadcast live over radio station KMXT 100.1 FM. Citizens’ Comments and Public Hearing
Numbers: Toll Free (855) 492-9202 and Local 486-3231,
Visit our website at
www.kodiakak,us ~ www.facebook.comiKodiakislandborouqh @KodiakBorough
CITIZENS’ COMMENTS (Limited To Three Minutes Per Speaker)
A. Agenda Items Not Scheduled For Public Hearing And General
Comments
AWARDS AND PRESENTATIONS
A. *Municipal Clerks Week Proclamation
Municipal Clerks Week 2020
B. *Mental Health Awareness Month Proclamation
Mental Health Month 2020
*Longevity Awards
10 Years - Martha Barnett, Projects Assistant
10 Years - Eddie Arellano, KFRC Maintenance Engineer
15 Years - Sheila Smith, CDD Secretary III
Third Quarter Budget Presentation From Dora Cross, Finance
Director.
Output Document (AS - 1150) - Pdf
8. COMMITTEE REPORTS
PUBLIC HEARING
A. Ordinance No. FY 2020-19 Amending Kodiak Island Borough
Code Section 2.30.020, General Rules
Ordinance No. FY 2020-19 Version 1
10. BOROUGH MANAGER’S REPORT
A. Borough Manager’s Report For May 7, 2020
2020-05-07 Manager’s Report
11. MESSAGES FROM THE BOROUGH MAYOR
12. UNFINISHED BUSINESS
13. NEW BUSINESS
Meeting broadcast live over radio station KMXT 100.1 FM. Citizens’ Comments and Public Hearing
Numbers: Toll Free (855) 492-9202 and Local 486-3231.
Visit our website at ~
www.kodiakak.us Et www.facebook.comiKodiakislandborouqh
@KodiakBorough
13.A.
13.B.
Contracts
Contract No. FY2020-34 Kodiak Outdoor Warning Siren
System Replacement Project.
Output Document (AS - 1154) - Pdf
o Change Order No. 5 Amending Contract No. FY2018-28
Architectural and Engineering Services Term Contract for
the Providence Kodiak Island Medical Center Retaining
Wall Repair Project.
Output Document (AS - 1152) - Pdf
Resolutions
Resolution No. FY2020-25 Authorizing Terms And
Conditions For Sale Of A Tax Foreclosed Property Legally
Described As The SE1/4 NElt4 SEl/4 WITHIN SECTION
30, TOWNSHIP 30 SOUTH, RANGE 29 WEST SEWARD
MERIDAN, LARSEN BAY Formally Owned by Dorothy
Beeching. As A Result Of The Tax Foreclosure Procedure
The Parcel Was Attained by Clerks Deed Case Number
3KO-08-27 CI Signed June 22, 2009 Recorded As
Document 2009-001136-0 on 6/26/2009.
Output Document (AS - 1148) - Pdf
o Resolution No. FY2020-26 Authorizing Terms And
Conditions For Sale Of A Tax Foreclosed Property Legally
Described As FRACTIONAL W ½ E ½ NE ¼ SE ¼ SE ¼;
W ½ NE ¼ SE ¼ SE ¼ AND FRACTIONAL NW ¼ SE 1/4
SE 1/4 OF PROTRACTED SECTION 14, T31S R29W
SEWARD MERIDAN; Formally Owned By The Estate Of
Willie Norell. As A Result Of The Tax Foreclosure
Procedure This Parcel Was Attained by Clerks Deed Case
Number 3KO-08-27 CI Signed June 22, 2009 Recorded As
Document 2009-001136-0 on 6/2612009.
Output Document (AS - 1159) - Pdf
Resolution No. FY2020-27 Mandating Electronic-Only
Distribution Of Non-Privileged Meeting Materials And
Communications.
Resolution No. FY2020-27 Mandating Electronic-Only
Distribution
Resolution FY2020-30 Of The Kodiak Island Borough
Assembly Authorizing The Borough To Issue A Refunding
Meeting broadcast live over radio station KMXT 100.1 FM. Citizens’ Comments and Public Hearing
Numbers: Toll Free (855) 492-9202 and Local 486-3231.
Visit our website at ~
www.kodiakak.us JJ www,facebook,com/Kodiakislandborouqh O @KodiakBorough
13.C.
13.D.
Revenue Bond To Refund All Or A Portion Of The
Principal Installments Of The Outstanding Solid Waste
Disposal Facility Revenue Bond, 2011, Of The Borough
And To Pay Costs Of Issuing The Bond; Fixing Certain
Details Of Such Bond; Authorizing Its Sale; And Providing
For Related Matters
Output Document (AS - 1156) - Pdf
Resolution FY2020-31 Of The Kodiak Island Borough
Assembly Authorizing The Borough To Issue A General
Obligation School Refunding Bond To Refund .Certain
Principal Installments Of Outstanding General Obligation
School Bonds Of The Borough And To Pay Costs Of
Issuing The Bond, Fixing Certain Details Of Such Bond,
Authorizing Its Sale, And Providing For Related Matters.
Output Document (AS - 1157) - Pdf
Ordinances for Introduction
Other Items
Letter To Alaska Delegation Regarding Assistance To
Municipalities Related to COVID-19
Letter Murkowski COVID-19 Municipal Assistance
Letter Sullivan COVID-19 Municipal Assistance
Letter Young COVID-19 Municipal Assistance
Salary Range Adjustment For Hiring Of New GIS Analyst.
Output Document (AS - 1155)- Pdf
CITIZENS’ COMMENTS (Limited To Three Minutes Per Speaker)
ASSEMBLY MEMBERS’ COMMENTS.
16. ADJOURNMENT
17. EXECUTIVE SESSION
A. Borough Manager’s Performance Evaluation
18. INFORMATIONAL MATERIALS (No Action Required)
18.A. Minutes of Other Meetings
Meeting broadcast live over radio station KMXT 100.1 FM. Citizens’ Comments and Public Hearing
Numbers: Toll Free (855) 492-9202 and Local 486-3231.
Visit our website at
v,~.vw.kodiakak.us E] www.facebook.comtKodiakislandborough @KodiakBorough
18.B. Reports
1. *Discover Kodiak 3rd Quarter Report from Aimee Williams,
Executive Director.
Discover Kodiak 3rd Quarter Report
Meeting broadcast live over radio station KMXT 100.1 FM. Citizens’ Comments and Public Hearing
Numbers: Toll Free (855) 492-9202 and Local 486-3231.
Visit our website at ~ www.face book.comlKodia kisla nd boroug.~_ www.kodiakak.us @KodiakBorough
D. Minutes of Borough Assembly Meeting May 7,
2020
KODIAK ISLAND BOROUGH
Assembly Regular Meeting
Teleconference
May 7, 2020
A regular meeting of the Kodiak Island Borough Assembly was held on May 7, 2020 via
teleconference. The meeting was called to order at 6:30 p.m.
The invocation was given by Major David Davis of the Salvation Army. Mayor Roberts led the
Pledge of Allegiance.
Present via teleconference were Mayor Bill Roberts, Assembly members Scott Arndt, Duane
Dvorak, Julie Kavanaugh, Andy Schroeder, Rebecca Skinner, Dennis Symmons, and James
Turner. Also present were Borough Manager Michael Powers, Borough Clerk Tara Welinsky and
Deputy Clerk Alise Rice.
ATTENDANCE BY ROLL CALL: Arndt, Dvorak, Kavanaugh, Schroeder, Skinner, Symmons, and
Turner.
APPROVAL OF AGENDA AND CONSENT AGENDA
All items listed with an asterisk (*) are considered to be routine and non-controversial by the
Assembly and will be approved by one motion. There will be no separate discussion of these
items unless an Assembly member so requests, in which case the item will be removed from the
Consent Agenda and considered in its normal sequence on the agenda.
* Regular Meeting Minutes Of April 16, 2020.
* Special Meeting Minutes Of April 23, 2020.
* Special Meeting Minutes Of April 30, 2020.
* Municipal Clerks Week Proclamation.
* Mental Health Awareness Month Proclamation.
* Longevity Awards
10 Years - Martha Barnett, Projects Assistant
10 Years - Eddie Arellano, Kodiak Fisheries Research Center Maintenance Engineer
15 Years - Sheila Smith, Community Development Secretary III
ARNDT moved to approve the agenda and consent agenda.
ARNDT moved to amend the agenda and consent agenda by moving Municipal Clerks Week
Proclamation, Mental Health Awareness Month Proclamation, and Longevity Awards under
Awards and Presentations for discussion.
ROLL CALL VOTE ON MOTION TO AMEND THE AGENDA AND CONSENT AGENDA
CARRIED UNANIMOUSLY: Dvorak, Kavanaugh, Schroeder, Skinner, Symmons, Turner, and
Arndt.
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Pase 3. of 8
ROLL CALL VOTE ON MOTION TO APPROVE THE AGENDA AND CONSENT AGENDA AS
AMENDED CARRIED UNANIMOUSLY: Kavanaugh, Schroeder, Skinner, Symmons, Turner,
Arndt, and Dvorak.
APPROVAL OF MINUTES
*Regular Meeting Minutes Of April 16, 2020, Special Meeting Minutes Of April 23, 2020, and
Special Meeting Minutes of April 30, 2020 were approved under consent agenda.
CITIZENS’ COMMENTS
None.
AWARDS AND PRESENTATIONS
¯ *Municipal Clerks Week Proclamation was approved under consent agenda.
Mayor Roberts Proclaimed May 2020 As Mental Health Awareness Month And Urge All
Citizens, Government Agencies, Public And Private Institutions, Businesses And Schools
In Kodiak To Increase Awareness And Understanding Of Mental Health, Recommit To
The Steps Our Citizens Can Take To Protect Their Mental Health, And The Need For
Appropriate And Accessible Services For All People With Mental Illnesses At All Stages.
Manager Powers announced the Longevity Award recipients. Ten Year Longevity Award
to Martha Barnett, Ten Year Longevity Award to Eddie Arellano, Kodiak Fisheries
Research Center Maintenance Engineer, and a Fifteen Year Longevity Award to Sheila
Smith, Community Development Secretary I11.
¯ Third Quarter Budget Presentation- Received a presentation for the Third Quarter Budget
from Dora Cross, Finance Director.
COMMITTEE REPORTS
None.
PUBLIC HEARING
1. Ordinance No. FY2020-19 Amending Kodiak Island Borough Code Section 2.30.020,
General Rules.
DVORAK moved to adopt Ordinance No. FY2020-19 Amending Kodiak Island Borough Code
Section 2.30.020, General Rules.
Mayor Roberts opened the public hearing.
Hearing and seeing none Mayor Roberts closed the public hearing and reconvened the
meeting.
DVORAK moved to amend section E line 84 to change to the word Mayor to Manager.
Mayor Roberts recessed the meeting at 7:22 p.m.
Mayor Roberts reconvened at 7:27 p.m.
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Page 2 of 8
KAVANAUGH moved to amend the main motion by inserting on line 83 ’which makes
attendance by the assembly and mayor inappropriate, issued by the President the Governor of
Alaska or the Mayor which includes areas within the borough of Alaska and insert on line 84
the word Borough in front of the word Mayor.
KAVANAUGH moved to amend the main motion to extend the existing emergency ordinance
for an additional 30 days.
KAVANAUGH moved to table until next Thursday’s work session and call for a special meeting.
ROLL CALL VOTE ON MOTION TO TABLE UNTIL NEXT THURSDAY’S WORK SESSION
AND CALL FOR A SPECIAL MEETING CARRIED FOUR TO THREE: Skinner, Dvorak,
Kavanaugh, and Schroeder (AYES); Symmons, Turner, and Arndt (NOES).
KAVANAUGH withdrew her motion to extend the existing emergency ordinance for an
additional 30 days.
KAVANAUGH withdrew her motion to amend the main motion by inserting on line 83 ’which
makes attendance by the assembly and mayor inappropriate, issued by the President the
Governor of Alaska or the Mayor which includes areas within the borough of Alaska and insert
on line 84 the word Borough in front of the word Mayor.
ROLL CALL VOTE ON MOTION TO AMEND SECTION E LINE 84 TO CHANGE TO THE
WORD MAYOR TO MANAGER FAILED SEVEN TO ZERO: Schroeder, Skinner, Symmons,
Turner, Arndt, Dvorak, and Kavanaugh (NOES).
BOROUGH MANAGER’S REPORT
Manager Powers reported on the following:
¯ Governor Dunleavy’s Phase II reopening and how it the affects the Borough.
¯ Working towards re-opening the Borough Building, Kodiak Fisheries Research Center,
and the Landfill.
¯ Cares Funding update on how monies can be disbursed, and the guidance received.
¯ The Community of Karluk has been in contact in regards to community assistance.
¯ The number of cruises ships coming to Kodiak is now to six, and expecting more
cancellations.
¯ Reminded the public of the budget workshop on Saturday.
¯ The Bayside Siding project has begun.
¯ The travel ban for the Borough employees is still in effect until June Ist.
¯ The Alaska Municipal League Summer Meeting is going forward as ’in person’.
¯ International City/County Management Association Annual Fall Conference will be an
electronic event this year.
MESSAGES FROM THE BOROUGH MAYOR
Mayor Roberts spoke on the Cares Act monies and the school bond debt reimbursement.
UNFINISHED BUSINESS
None.
NEW BUSINESS
Contracts
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Page ~, of 8
1. Contract No. FY2020-34 Kodiak Outdoor Warning Siren System Replacement Project.
ARNDT moved authorize the Borough Manager to execute Contract No. FY2020-34 with
Federal Signal Corporation for the Kodiak Island Borough Outdoor Warning Siren Replacement
in an amount not to exceed $530,741.54.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Symmons, Turner, Arndt, Dvorak,
Kavanaugh, Schroeder, and Skinner.
2. Change Order No. 5 Amending Contract No. FY2018-28 Architectural and Engineering
Services Term Contract for the Providence Kodiak Island Medical Center Retaining Walt
Repair Project.
KAVANAUGH moved to authorize the Borough Manager to execute Change Order No. 5
Amending Contract FY2018-28 with Jensen Yorba Wall, Inc. of Juneau, Alaska forArchitectural
and Engineering Services Term Contract in an amount not to exceed $112,491.
ARNDT moved to postpone indefinitely.
SKINNER moved to amend the motion and postpone to the regular meeting of July 2, 2020.
Mayor Roberts recessed the meeting at 8:52 p.m.
Mayor Roberts reconvened the regular meeting at 9:00 p.m.
KAVANAUGH moved to reconsider the vote on the amended motion to postpone to the regular
meeting on July 2, 2020.
*clerk note: Mayor Roberts called for the vote to amend the motion and postpone to July 2, 2020.
ROLL CALL VOTE ON MOTION TO AMEND THE MOTION AND POSTPONE TILL JULY 2,
2020 CARRIED FOUR TO THREE: Skinner, Symmons, Tumer, and Arndt (AYES); Dvorak,
Kavanaugh, and Schroeder (NOES).
ROLL CALL VOTE ON MOTION TO RECONSIDER CARRIED FOUR TO THREE: Dvorak,
Kavanaugh, Schroeder, and Symmons (AYES); Arndt, Skinner, and Turner (NOES).
ROLL CALL VOTE TO AMEND THE MOTION AND POSTPONE TO JULY 2, 2020 CARRIED
UNANIMOUSLY: Turner, Arndt, Dvorak, Kavanaugh, Schroeder, Skinner, and Symmons.
Resolutions
1. Resolution No. FY2020-25 Authorizing Terms And Conditions For Sale Of A Tax Foreclosed
Property Legally Described As The SE1/4 NE1/4 SE1/4 WITHIN SECTION 30, TOWNSHIP
30 SOUTH, RANGE 29 WEST SEWARD MERIDAN, LARSEN BAY Formally Owned by
Dorothy Beeching. As A Result Of The Tax Foreclosure Procedure The Parcel Was Attained
by Clerks Deed Case Number 3KO-08-27 CI Signed June 22, 2009 Recorded As Document
2009-001136-0 on 6/26/2009.
DVORAK moved to adopt Resolution No. FY2020-25.
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Page 4 of 8
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Kavanaugh, Schroeder, Skinner,
Symmons, Turner, Arndt, and Dvorak.
Resolution No. FY2020-26 Authorizing Terms And Conditions For Sale Of A Tax Foreclosed
Property Legally Described As FRACTIONAL W ½ E ½ NE ¼ SE ¼ SE ¼; W ½ NE ¼ SE
¼ SE ¼ AND FRACTIONAL NW ¼ SE ¼ SE ¼ OF PROTRACTED SECTION 14, T31S
R29W SEWARD MERIDAN; Formally Owned By The Estate Of Willie Norell. As A Result
Of The Tax Foreclosure Procedure This Parcel Was Attained by Clerks Deed Case Number
3KO-08-27 CI Signed June 22, 2009 Recorded As Document 2009-001136-0 on 6/26/2009.
KAVANAUGH moved to adopt Resolution No. FY2020-26.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Schroeder, Skinner, Symmons,
Turner, Arndt, Dvorak, and Kavanaugh.
3. Resolution No. FY2020-27 Mandating Electronic-Only Distribution Of Non-Privileged
Meeting Materials And Communications.
DVORAK moved to adopt Resolution No. FY2020-27.
ROLL CALL VOTE ON MOTION FAILED FOUR TO THREE: Symmons, Turner, Arndt, and
Kavanaugh (NOES); Skinner, Dvorak, and Schroeder (AYES).
o Resolution No. FY2020-30 Of The Kodiak Island Borough Assembly Authorizing The
Borough To Issue A Refunding Revenue Bond To Refund All Or A Portion Of The Principal
Installments Of The Outstanding Solid Waste Disposal Facility Revenue Bond, 2011, Of The
Borough And To Pay Costs Of Issuing The Bond; Fixing Certain Details Of Such Bond;
Authorizing Its Sale; And Providing For Related Matters.
ARNDT moved to adopt Resolution No. FY2020-30.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Symmons, Turner, Arndt, Dvorak,
Kavanaugh, Schroeder, and Skinner.
Resolution No. FY2020-31 Of The Kodiak island Borough Assembly Authorizing The
Borough To Issue A General Obligation School Refunding Bond To Refund Certain Principal
Installments Of Outstanding General Obligation School Bonds Of The Borough And To Pay
Costs Of Issuing The Bond, Fixing Certain Details Of Such Bond, Authorizing Its Sale, And
Providing For Related Matters.
KAVANAUGH moved to adopt Resolution No. FY2020-31.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Turner, Amdt, Dvorak, Kavanaugh,
Schroeder, Skinner, and Symmons.
Ordinances for Introduction
None.
Other Items
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Page 5 of 8
1. Letter To Alaska Delegation Regarding Assistance To Municipalities Related to COVID-
19.
KAVANAUGH moved to approve Letter To Alaska Delegation Regarding Assistance To
Municipalities Related to COVID-19.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Arndt, Dvorak, Kavanaugh,
Schroeder, Skinner, Symmons, and Turner.
2. Salary Range Adjustment For Hiring Of New GIS Analyst.
ARNDT moved approve salary Range 19 Step D for hiring of new GIS Analyst.
DVORAK moved to amend the motion to reflect Range 19 Step F.
ROLL CALL VOTE ON MOTION TO AMEND TO RANGE 19 STEP F CARRIED FOUR TO
THREE: Dvorak, Kavanaugh, Schroeder, and Skinner (AYES); Symmons, Turner, and Arndt
(NOES).
ROLL CALL VOTE ON MAIN MOTION AS AMENDED CARRIED FOUR TO THREE;
Kavanaugh, Schroeder, Skinner, and Dvorak (AYES); Symmons, Turner, and Arndt (NOES).
CITIZENS’ COMMENTS
None.
ASSEMBLY MEMBERS’ COMMENTS
¯ Assembly Member Dvorak commented on the Manager’s budget and protocols for re-
opening the Borough.
Assembly Member Kavanaugh spoke on the Cares Act and mental health advocates
due to COVID-19. Thanked the Borough Manager for his work on the mitigation plan for
re-opening the Borough building. Encouraged that they will be able to meet in person
again.
¯ Assembly Member Turner spoke about his activities with the City of Kodiak to create
grants from the Cares Act monies.
¯ Assembly Member Arndt suggested meeting in person for the budget work session on
Saturday or postpone till the following Saturday.
Assembly Member Schroeder expressed his concern that the Assembly may be
postponing meetings to often. Supportive of Assembly Member Turner’s participation
with the city in creating grants from the Care Act. Requested the Assembly bring the fire
station location discussion back to the agenda for discussion.
¯ Assembly Member Skinner shared her concerns on the Governor’s new mandate for
meeting in person. Spoke on the budget and the time constraints they are facing.
¯ Assembly Member Symmons thanked the Assembly for their dedicated participation
over the past few months.
Kodiak Island Borough Assembly Regular Meeting Minutes
May 7, 2020 Page 6 of 8
SKINNER moved to extend the meeting to 11:00 p.m.
ROLL CALL VOTE ON MOTION CARRIED FOUR TO THREE: Kavanaugh, Schroeder,
Skinner, and Dvorak (AYES); Symmons, Turner, and Arndt (NOES).
ANNOUNCEMENTS
The next Assembly work session is scheduled on Thursday, May 14, 2020 at 6:30 p.m. The
next regular meeting is scheduled on Thursday, May 21, 2020 at 6:30 p.m. in the Borough
Assembly Chambers.
Notice of Public Meetings and Assembly meeting agendas are available on the KIB website,
posted on the KIB Facebook page, and posted at Safeway. For those who do not have internet,
you may call the Borough meeting notification line at (907) 486-9315.
EXECUTIVE SESSION
1. Execution Session - Borough Manager’s Performance Evaluation.
SKINNER moved to convene into executive session to discuss the Borough Manager’s
Performance Evaluation. A subject that qualifies for executive session under the authority of KIBC
2.30.030(F)(1 )(c) for the purpose of discussing matters which may tend to prejudice the reputation
or character of a person.
ROLL CALL VOTE ON MOTION CARRIED FOUR TO THREE: Schroeder, Skinner, Dvorak, and
Kavanaugh (AYES); Symmons, Turner, and Arndt (NOES).
The Mayor inquired whether each member was situated such a location where they were able to
participate in the executive session without breaching the security of the executive session by
aflowing other persons who are not authorized to be in the meeting to hear the executive session.
All Assembly Members stated that they were in a secure location.
KAVANAUGH moved to invite the Borough Mayor and those members of the Assembly who
chose to participate from a secure location into executive session.
ROLL CALL VOTE ON MOTION CARRIED UNANIMOUSLY: Skinner, Symmons, Turner, Arndt,
Dvorak, Kavanaugh, and Schroeder.
After the vote, Mayor Roberts recessed the regular meeting and convened the executive session.
Upon returning from the executive session, Mayor Roberts reconvened the regular meeting and
announced that no action was to be taken as a result of the executive session.
ADJOURNMENT
KAVANAUGH moved to adjourn the meeting.
ADJOURNMENT BY ROLL CALL: Symmons, Turner, Arndt, Dvorak, Kavanaugh, Schroeder, and
Skinner.
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Page 7 of 8
The meeting adjourned at 11:00 p.m.
KODIAK ISLAND BOROUGH
Roberts Mayor
ATTEST:
L.~Alise’~. Rice~"bepUty Clerk, Acting Clerk
Kodiak Island Borough
May 7, 2020
Assembly Regular Meeting Minutes
Pase 8 of 8
LOAN AGREEMENT
THIS AGREEMENT, dated as of the 1st day of September 201t, between the
Alaska Municipal Bond Bank (the "Bank"), a body corporate and politic constituted as an
instrumentality of the State of Alaska (the "State") exercising public and essential
governmental functions, created pursuant to the provisions of Chapter 85, Title 44,
Alaska Statutes, as amended (the "Act"), having its principal place of business at
Juneau, Alaska, and the Kodiak Island Borough, Alaska, a duly constituted second
class borough of the State ("Borough"):
Wt T N ES S ETH:
WHEREAS, pursuant to the Act, the Bank is authorized to loan money (the
"Loan" or "Loans") to governmental units; and
WHEREAS, the Borough is a Governmental Unit as defined in the General Bond
Resolution of the Bank hereinafter mentioned and pursuant to the Act is authorized to
accept a Loan from the Bank to be evidenced by its municipal bonds; and
WHEREAS, the Borough desires to borrow money from the Bank in the amount
of not to exceed $3,650,000 and has submitted an application to the Bank for a Loan in
the amount of not to exceed $3,650,000, and the Borough has duly authorized the
issuance of its fully registered bond in the aggregate principal amount of $3,275,000
(the "Municipal Bond"), which bond is to be purchased by the Bank as evidence of the
Loan in accordance with this Agreement; and
WHEREAS, the application of the Borough contains the information requested by
the Bank; and
WHEREAS, to provide for the issuance of bonds of the Bank in order to obtain
from time to time money with which to make Loans, the Bank has adopted the General
Obligation Bond Resolution on July 13, 2005, as amended August 19, 2009 (the
"General Bond Resolution") and Series Resolution No. 2011-04, approved on July 26,
2011 (together with the General Bond Resolution, the "Bond Resolution"), authorizing
the making of such Loan to the Borough and the purchase of the Municipal Bond.
NOW, THEREFORE, the parties agree:
1. The Bank hereby makes the Loan and the Borough accepts the Loan in
the aggregate principal amount of $3,275,000. As evidence of the Loan made to the
Borough and such money borrowed from the Bank by the Borough, the Borough hereby
sells to the Bank the Municipal Bond in the principal amount, with the principal
installment payments, and bearing interest from its date at the rate or rates per annum,
stated in Exhibit A appended hereto. For purposes of this Loan Agreement, the interest
on the Municipal Bond will be computed without regard to the provision in Section 7
hereof for the Borough to make funds available to the Trustee acting under the General
Bond Resolution for the payment of principal and interest due at least seven (7)
business days prior to each respective principal and interest payment date.
2. The Borough represents that it has duly adopted or will adopt all
necessary ordinances or resolutions, including Resolution No. FY 2012-06, adopted on
August 4, 2011 (the "Borough Resolution"), and has taken or will take all proceedings
required by law to enable it to enter into this Loan Agreement and issue its Municipal
Bond to the Bank and that the Municipal Bond will constitute a revenue bond, a special
and limited obligation of the Borough secured by a net revenue pledge of amounts
received by the Borough and deposited in the Borough’s Solid Waste Disposal Fund,
duly authorized by Borough’s Resolution.
3. Subject to any applicable legal limitations, the amounts to be paid by the
Borough pursuant to this Loan Agreement representing interest due on its Municipal
Bond (the "Municipal Bond Interest Payments") shall be computed at the same rate or
rates of interest borne by the corresponding maturities of the bonds sold by the Bank in
order to obtain the money with which to make the Loan and to purchase the Municipal
Bond (the "Loan Obligations") and shall be paid by the Borough at least seven (7)
business days before the interest payment date so as to provide funds sufficient to pay
interest as the same becomes due on the Loan Obligation.
4. The amounts to be paid by the Borough pursuant to this Loan Agreement
representing principal due on its Municipal Bond (the "Municipal Bond Principal
Payments"), shall be paid at least seven (7) business days before the payment date
stated in the Municipal Bond so as to provide funds sufficient to pay the principal of the
Loan Obligations as the same matures based upon the maturity schedule stated in
Exhibit A appended hereto.
5. In the event the amounts referred to in Sections 3 and 4 hereof to be paid
by the Borough pursuant to this Loan Agreement are not made available at any time
specified herein, the Borough agrees that any money payable to it by any department or
agency of the State may be withheld from it and paid over directly to the Trustee acting
under the General Bond Resolution, and this Loan Agreement shall be full warrant,
authority and direction to make such payment upon notice to such department or
agency by the Bank, with a copy provided to the Borough, as provided in the Act.
6. In the event Loan Obligations have been refunded and the interest rates
the Bank is required to pay on its refunding bonds in any year are less than the interest
rates payable by the Borough on the Municipal Bond for the corresponding year
pursuant to the terms of the Municipal Bond, then both the Municipal Bond Interest
AMBBtGeneral Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
I:\Docs\37421725\Loan Agreement (KIB).Docx
Page 2
Payments and the Municipal Bond Principal Payments wilt be adjusted in such a
manner that (i) the interest rate paid by the Borough on any principal installment of the
Municipal Bond is equal to the interest rate paid by the Bank on the corresponding
principal installment of the Bank’s refunding bonds and (ii) on a present value basis the
sum of the adjusted Municipal Bond Interest Payments and Municipal Bond Principal
Payments is equal to or less than the sum of the Municipal Bond Interest Payments and
Municipal Bond Principal Payments due over the remaining term of the Municipal Bond
as previously established under this Loan Agreement. In the event of such a refunding
of Loan Obligations, the Bank shall present to the Borough for the Borough’s approval, a
revised schedule of principal installment amounts and interest rates for the Municipal
Bond. If approved by the Borough the revised schedule shall be attached hereto as
Exhibit A and incorporated herein in replacement of the previous Exhibit A detailing said
principal installment amounts and interest rates.
7. The Borough is obligated to pay to the Bank Fees and Charges. Such
Fees and Charges actually collected from the Borough shall be in an amount sufficient,
together with the Borough’s Allocable Proportion (as defined below) of other money
available therefor under the provisions of the Bond Resolution, and other money
available therefor, including any specific grants made by the United States of America
or any agency or instrumentality thereof or by the State or any agency or instrumentality
thereof and amounts applied therefor from amounts transferred to the Operating Fund
pursuant to Section 606 of the General Bond Resolution:
(a) to pay, as the same become due, the Borough’s Allocable
Proportion of the Administrative Expenses of the Bank; and
(b) to pay, as the same become due, the Borough’s Allocable
Proportion of the fees and expenses of the Trustee and paying agent for the Loan
Obligations.
The Borough’s Allocable Proportion as used herein shall mean the proportionate
amount of the total requirement in respect to which the term is used determined by the
ratio that the principal amount of the Municipal Bond outstanding bears to the total of all
Loans then outstanding to all Governmental Units under the General Bond Resolution,
as certified by the Bank. The waiver by the Bank of any fees payable pursuant to this
Section 7 shall not constitute a subsequent waiver thereof.
8. The Borough is obligated to make the Municipal Bond Principal Payments
scheduled by the Bank. The first such Municipal Bond Principal Payment is due at least
seven (7) business days prior to the date indicated on Exhibit A appended hereto, and
thereafter on the anniversary thereof each year. The Borough is obligated to make the
Municipal Bond Interest Payments scheduled by the Bank on a semi-annual basis
commencing seven (7) business days prior to the date indicated on Exhibit A appended
AMBB/General Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
l:\Docs\37421725\Loan Agreement (KIB).Docx
Page 3
hereto, and to pay any Fees and Charges imposed by the Bank within 30 days of
receiving the invoice of the Bank therefor.
9. The Bank shall not sell and the Borough shall not redeem prior to maturity
any portion of the Municipal Bond in an amount greater than the Loan Obligations which
are then outstanding and which are then redeemable, and in the event of any such sale
or redemption, the same shall be in an amount not less than the aggregate of (i) the
principal amount of the Municipal Bond (or portion thereof) to be redeemed, (ii) the
interest to accrue on the Municipal Bond (or portion thereof) to be redeemed to the next
redemption date thereof not previously paid, (iii) the applicable premium, if any, payable
on the Municipal Bond (or portion thereo0 to be redeemed, and (iv) the cost and
expenses of the Bank in effecting the redemption of the Municipal Bond (or portion
thereof) to be redeemed. The Borough shall give the Bank at least 50 days’ notice of
intention to redeem its Municipal Bond.
In the event the Loan Obligations with respect to which the sale or redemption
prior to maturity of such Municipal Bond is being made have been refunded and the
refunding bonds of the Bank issued for the purpose of refunding such Loan Obligations
were issued in a principal amount in excess of or less than the principal amount of the
Municipal Bond remaining unpaid at the date of issuance of such refunding bonds, the
amount which the Borough shall be obligated to pay or the Bank shall receive under
item (i) above shall be the principal amount of such refunding bonds outstanding.
in the event the Loan Obligations have been refunded and the interest the Bank
is required to pay on the refunding bonds is less than the interest the Bank was required
to pay on the Loan Obligations, the amount which the Borough shall be obligated to pay
or the Bank shall receive under item (ii) above shall be the amount of interest to accrue
on such refunding bonds outstanding.
In the event the Loan Obligations have been refunded, the amount which the
Borough shall be obligated to pay or the Bank shall receive under item (iii) above, when
the refunded Loan Obligations are to be redeemed, shall be the applicable premium, if
any, on the Loan Obligations to be redeemed.
Nothing in this Section shall be construed as preventing the Borough from
refunding the Municipal Bond in exchange for a new Municipal Bond in conjunction with
a refunding of the Loan Obligations.
10. Simultaneously with the delivery of the Municipal Bond to the Bank, the
Borough shall furnish to the Bank evidence satisfactory to the Bank which shall set
forth, among other things, that the Municipal Bond will constitute a valid and binding
special and limited obligation of the Borough, secured by the revenue of the Solid
Waste Disposal Facility of the Borough.
AMBBtGeneral Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
!:\Docs\37421725\Loan Agreement (KIB).Docx
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11. Invoices for payments under this Loan Agreement shall be addressed to
the Kodiak Island Borough, Attention: Finance Director, 710 Mill Bay Road, Kodiak, AK
99615. The Borough shall give the Bank and the corporate trust office of the Trustee
under the General Bond Resolution at least 30 days’ written notice of any change in
such address.
12. The Borough hereby agrees that it shall fully fund, at the time of loan
funding, its debt service reserve fund (in an amount equal to $302,500) which secures
payment of principal and interest on its Municipal Bond and that such fund shall be held
in the name of the Borough with the Loan Trustee.
13. The Borough hereby agrees to keep and retain, until the date six years
after the retirement of the Municipal Bond, or any bond issued to refund the Municipal
Bond, or such longer period as may be required by the Borough’s record retention
policies and procedures, records with respect to the investment, expenditure and use of
the proceeds derived from the sale of its Municipal Bond, including without limitation,
records, schedules, bills, invoices, check registers, cancelled checks and supporting
documentation evidencing use of proceeds, and investments and/or reinvestments of
proceeds. The Borough agrees that all records required by the preceding sentence shall
be made available to the Bond Bank upon request.
14. Prior to payment of the amount of the Loan or any portion thereof, and the
delivery of the Municipal Bond to the Bank or its designee, the Bank shall have the right
to cancel all or any part of its obligations hereunder if:
(a) Any representation, warranty or other statement made by the
Borough to the Bank in connection with its application to the Bank for a Loan shall be
incorrect or incomplete in any material respect.
(b) The Borough has violated commitments made by it in the terms of
this Loan Agreement.
(c) The financial position of the Borough has, in the opinion of the
Bank, suffered a materially adverse change between the date of this Loan Agreement
and the scheduled time of delivery of the Municipal Bond to the Bank.
15. The obligation of the Bank under this Loan Agreement is contingent upon
delivery of its General Obligation and Refunding Bonds, 2011 Series Three (the "2011
Series Three Bonds") and receipt of the proceeds thereof.
AMBB!General Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
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Page 5
16. The Borough agrees that it will provide the Bank with written notice of any
default in covenants under the Borough’s Resolution within 30 days from the date
thereof.
17. The Borough shall not take, or omit to take, any action lawful and within its
power to take, which action or omission would cause interest on the Municipal Bond to
become subject to federal income taxes in addition to federal income taxes to which
interest on such Municipal Bond is subject on the date of original issuance thereof.
The Borough shall not permit any of the proceeds of the Municipal Bond, or any
facilities financed with such proceeds, to be used in any manner that would cause the
Municipal Bond to constitute a "private activity bond" within the meaning of Section 141
of the Code.
The Borough shall make no use or investment of the proceeds of the Municipal
Bond which will cause the Municipal Bond to be an "arbitrage bond" under Section 148
of the Code. So long as the Municipal Bond is outstanding, the Borough, shall comply
with all requirements of said Section 148 and all regulations of the United States
Department of Treasury issued thereunder, to the extent that such requirements are, at
the time, applicable and in effect. The Borough shall indemnify and hold harmless the
Bank from any obligation of the Borough to make rebate payments to the United States
under said Section 148 arising from the Borough’s use or investment of the proceeds of
the Municipal Bond.
18. The Borough agrees that if it is one of the Governmental Units that has a
ten percent or greater amount of outstanding bonds held by the Bank under its General
Bond Resolution, it shall execute a continuing disclosure agreement for purposes of
Securities and Exchange Commission Rule 15c2-12, adopted under the Securities and
Exchange Act of 1934, and provide the Bank for inclusion in future official statements,
upon request, financial information generally of the type included in Appendix D, under
the heading "Summaries of Borrowers Representing 10% or More of Outstanding
Principal of Bonds Issued Under the 2005 General Bond Resolution," to the Official
Statement and attached hereto as Exhibit B.
19, The Borough secured a loan with the State of Alaska Department of
Environmental Conservation ("DEC") in the amount of two million six hundred twelve
thousand dollars ($2,612,000) for purposes of making certain improvements to the
Borough’s Solid Waste Disposal Facility. Repayment of the loan is secured by a net
revenue pledge of the Borough’s Solid Waste Disposal Facility. The Borough
represents and warrants that its loan arrangement with DEC does not restrict or
otherwise encumber its ability to issue the Municipal Bond or its pledge of net revenues
of the Borough’s Solid Waste Disposal Facility for the payment thereof. The Borough
AMBBlGeneral Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
t:\Docs\37421725’,Loan Agreement (KIB).Docx Page 6
further represents and warrants that its repayment obligation under the DEC loan is
subordinate to its Municipal Bond payment obligation.
20. The Borough agrees that each year, for the term of the Municipal Bond, it
will deposit with the Bank trustee an amount sufficient to advance fund the debt service
requirement for the Municipal Bond ("Advance Funding Requirement"). The first such
deposit shall be made on the date the Municipal Bond is issued, and thereafter on each
September 1.
tn any year in which the Borough is required to comply, and has complied, with
the Advance Funding Requirement, the Borough is not required to make monthly
deposits in its debt service account for payment of the principal of, and interest on, the
Municipal Bond.
21. The Borough agrees to establish, maintain and collect solid waste facility
system net revenues (gross revenues less operating and maintenance costs, not
including depreciation, interest or principal amortization) in each fiscal year that will
provide net revenues in an amount not less than 1.25 of the annual debt service
requirement for such year on the outstanding Municipal Bond and all bonds issued on a
parity therewith ("Rate Covenant"). Gross revenues do not include State-support
funding or interest earnings.
The Borough agrees to provide the Bank annually with written notice that it has,
or has not, satisfied the Rate Covenant. Such notice is to be provided by the Borough to
the Bank within sixty (60) days of the end of the Borough’s fiscal year.
If the Rate Covenant is satisfied for three (3) consecutive fiscal years, the
Advance Funding Requirement will no longer be required until, or unless, the Borough
fails to meet the Rate Covenant in any fiscal year. Upon the Borough’s failure to satisfy
the Rate Covenant, the Borough shall immediately (by September 1 of such calendar
year) make a deposit with the Bank’s trustee sufficient to pay the Municipal Bond debt
service for the following twelve months.
22. If any provision of this Loan Agreement shall for any reason be held to be
invalid or unenforceable, the invalidity or unenforceability of such provision shall not
affect any of the remaining provisions of this Loan Agreement and this Loan Agreement
shall be construed and enforced as if such invalid or unenforceable provision had not
been contained herein.
23. This Loan Agreement may be executed in one or more counterparts, any
of which shall be regarded for all purposes as an original and all of which constitute but
one and the same instrument. Each party agrees that it will execute any and all
AMBB/General Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
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documents or other instruments, and take such other actions as are necessary, to give
effect to the terms of this Loan Agreement.
24. No waiver by either party of any term or condition of this Loan Agreement
shall be deemed or construed as a waiver of any other term or condition hereof, nor
shall a waiver of any breach of this Loan Agreement be deemed to constitute a waiver
of any subsequent breach, whether of the same or of a different section, subsection,
paragraph, clause, phrase or other provision of this Loan Agreement.
25. In this Loan Agreement, unless otherwise defined herein, all capitalized
terms which are defined in Article I of the General Bond Resolution shall have the same
meanings, respectively, as such terms are given in Article I of the General Bond
Resolution.
26. This Loan Agreement merges and supersedes all prior negotiations,
representations and agreements between the parties hereto relating to the subject
matter hereof and constitutes the entire agreement between the parties hereto in
respect thereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above written.
ALASKA MUlk
:’VEN J. MITCHELL
Director
KODIAK ISLAND BOROUGH, ALASKA
KARLETON SHORT
Finance Director
AMBB/General Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement
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Page 8
EXHIBIT A
$3,275,000
Kodiak Island Borough, Alaska
Solid Waste Disposal Facility Revenue Bond, 2011
("Municipal Bond")
Due Principal Interest
Sep~mberl Amount Rate
2012 $155,000 3.00%
2013 160,000 4.00
2014 170,000 5.00
2015 175,000 4.00
2016 185,000 5.00
2017 195,000 5.00
2018 205,000 5.00
2019 215,000 4.00
2020 225,000 5.00
2021 235,000 5.00
2022 245,000 5.00
2023 260,000 5.00
2024 270,000 4.00
2025 285,000 4.00
2026 295,000 4.00
Principal installments shall be payable on September 1 in each of the years, and in the
amounts set forth above. Interest on the Municipal Bond shall be payable on March 1,
2012, and thereafter on September I and March 1 of each year.
Optional Prepayment: The Municipal Bond principal payments due on or after
September 1, 2022 are subject to prepayment in whole or in part at the option of the
Borough on any date on or after September 1, 2021, at a price of 100% of the principal
amount thereof to be prepaid, plus accrued interest to the date of prepayment.
AMBBiGeneral Obligation and Refunding Bonds, 2011 Series Three
Loan Agreement- Exhibit A
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EXHIBIT B
APPENDIX D
Summaries of Bon-owers Representing
10% or More of Outstanding Principa! of Bonds
Issued Under the 2005 General Bond Resolution
Page 1 of 6
EXHIBIT B
(211 ¥ OF- KE]CHIKAN
GENERAL OBLIGATION FINANCIAL SUMMARY
Municipal Financial Position
t’rop~rty t ax ~ol!~d,or~ ..............
Borrower’s Properly Tax Rale,per $1,000
Murdcipal Levy
Curt~nt Year’s CoLlections
Current Collection Rat6
Toil) Year’s Collections ........
,Tota, [ Collection
General Fund
-o~erv~a En~g V~d Balanc~
E×penditures
Fu.nd Batance/]~pendilures ....
Total Revenues
’ i~t~6~errtmental Revenues ’ ’
PErcentage lntergoverrtm~ntal.
Overall MUnieipzil Deb~,l?0sition
Revenue Debt - En!erprise Funds
Revenue Debt 2 Governmental FtmdS "
General Obl~ gallon DeSt’ Governmental Funds
General ~8ti ~ati~n Debt - Ent’erpris6 t~uncLs
Total General Obligation Debt ’" To~aJ Revenue and General Obligation Debt
Governmental GO Debt/Assessed Value
"Eni~rprise GO’ D~bt / Assessda value (mr}t)"
Total General Obligation Debt/A.V. (mr),)
"Tota~Revenue ar~ GO Debt/A.V, (mzy) ......
General Obli~v~ation Debt Fer Capita
Total Revenue and ’GO Deb~ Per Capita
2001/ 2007 2008
$4,053,256 $4,253,726 $4,689,323
..... $4,0~,013 $4~172,267 ~,~4~308
~9,4o% 98.~% 99.04% ~,o~,oo~ ~,~6,o~ ~,6~,o~ z~:~’~ ........... ,,’:,’:, ~,#as ........ ~.;~~
$ ........ )5,671,819 $ 16,13~631 ’~’ 18A76,~
36% ~% 27%
$ 1~54E~1 $ 13,129,1~ $ 15,082,~4
2009
$6.10
$4,868,459
S~t,79~,974
98A7%
$~84~,090 ,9’~.~o~
$ 4,649A09
$ ........5g,080,000 $ 58,089,266 S 5Z697,106 $ 56,44.%~ $ 56,063,232[ $ - $ - $ - $ - $ - $ ’ ’ 7;180~71 $ 6,617377 ’g" 6,044,33b [
$’ i;6~,000" ’"’$ ’" 2,283,278 ’~ 2,u2,so~ ] $ 1,9~s,a~8 $ ~,~,967’|
$ 67,945.571 $ 66,989,~1 $ ~,B53;~I $ ~3Z~ $ "~3,086,i99[
.......... t23% ’0.95% 0~% 0.~%
~0,73~ ’ 9~61% 8.57% 8.~%
Geueral Economic and Data 2006 Demographic
[" ’Pop~latidn ....................... 7,662
l Assessed Value $ 633,321,3~0
] Assessed Value Per Capita ~ L_Top 10Tax Payers as a % of Tot~ ~kssessed Value 10,12%
l(rn~): n~ost recent year
Annual
Growth Rate
7.29~
D-1
Page 2 of 6
EXHIBIT B
CITY OF KETCHIKAN
KETCHtKAN PUBLIC UTILITIES ENTERPRISE FUND
FINANCIAL SUMMARY
2006
Audited
2007
Audited
2008
Restated
2009
Audited
2010
Audited ASSETS
Utility Plan In-Service $63,472,399 $65,675,153 $65,397,934 $89,718,266 $67,177,925
Construction Work in Progress 3,720,I38 3,046,020 8,748,881 8,017,706 14,788,563 Cash 18,036,431 17,271,704 15,351,432 t3,958,874 12,566,005
Restricted Assets 3,592,407 3,881,216 5,128,164 4.062,167 3,050,592 Other Assets 7,537,978 9,709,775 11,890,125 8,686,219 12,118,366
Total Assets 96,359.353 99.583,868 106,516.536 t04.443,032 109,701,451
20.580,000 20,214.266 20,574.802 19.902.223 20,233,232
4,243.388 5,320,524 6,782.025 40045,215 3,983,215
24,823,388 25,534,790 27,356.827 23.947.438 24,216,447
LIABILITIES AND NET ASSETS
Revenue Bonds Payable
Other Liabilities
71,535,965 74,049,078 79, t59,709 80,495,594 85,485,004
Total Liabilities
31,085,610 30,786,551 33,275,983 33,310,537 32,975,154
!5,188,374 17,777,974 19,912,114 20,861,336 19,060,639
5,635,363 5,076,384 5,634,660 6,034A76 5,603,405
6,861,088 6,624,656 5,728,819 6,086,514 5,932,099
NET ASSETS
Operating Revenues
Operation and Maintenance
Administrative and General
Depreciation
Payment in Lieu of Taxes
3,400,785 1,307.537 2,000,390 328,211 2,379,011
(108,~87) 197,069 75,885 (402,557) (479,652)
3,291,898 1,504,606 2,076,275 (74,346) 1,899,359
907,076 1,658,507 3,601,635 2,085,231 3,818,051
82,721
Operating Income (Loss)
(650,000) (650,000) .......... (650,000) ......... (675,000) (728,,000)
3,548,974 2 513 1t~ 5,1t0.631 10335,885 4,989,410
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
13,174 13.166 12.993 12,984 !3,477
7,662 7.732 7,508 7,503 8,050
7,251 7,305 7,346 7,365 7,418
9.554 9.039 8,122 7,467 6,994
3.035 3,230 3.223 3,217 3.207
Contributions
Special Item
Transfer of Net Assets - Swan
Lake -Lake Tyee tntertie Project
Transfer - Payment In Lieu of Taxes
Change in Net Assets
3.92 3.21 2.93 2.30 2.80
Population of Service Area
Population of City
# of Electric Customers
# of Telephone Access Lines
# of Water Customers
Revenue Bond Coverage
Water is only provided within the City
Change in accounting standards payment in lieu of tax must be reported as a transfer
D-2
Page 3 of 6
EXHIBIT B
CITY OF KETCHIKAN
PORT FINANCIAL SUMMARY
ASSETS
Cash
Port Facilities (net)
Construction Work in Progress
Restricted Assets
Other Assets
Total Assets
LIABILITIES AND NET ASSETS
General Obligation Bonds Payable
Revenue Bonds Payable
Other Liabilities
Total Liabilities
NET ASSETS
Operating Revenues
Operation and Maintenance
Depreciation
Property Taxes
Payment in Lieu of Taxes ""
2006 2007 2008 2009 2010
Audited Audited Audited Audited Audited
$4,529,687 $8,471,112 $4,939,650 $4,827,125 $4,364,226
10,405,568 41,226,714 46,312,527 44,947,620 43,642,947
26,082,665 3,493,927 832,620 963,018 1,1t6,782
19,872,348 4,743,690 4,2!5,907 4,819,708 5,307,521
515,697 560,772 2,103,049 1,730,443 1,281,312
6t,405,965" 58,496,215 58,403,753 57,~87,914 55,712,788
1,685,000 1,480,000 1,265,000 1,035,000 795,000
38,500,000 37,875,000 37,220,000 36,540,000 35,830,000
7,105,081 5,130,176 4,191,404 3,147,957 3,134,814
47,290,081 .... 44,485,176 ........ ~2,676,404
14,115,884 14,011,039 56,063,232
6,427,2~7 7,895,063 8,839,267
2,299,099 1,506,749 3,653,251
657,485 985,775 1,390,850
40,722,957
16,564,957
8,922,228
5,368,009
1,460,265
154,041
39,759,814
15,952,974
8,000,492
5,319,252
1,446,527
167,219
Operating Income (Loss)
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
Contributions and Capital Grants
Extraordinary Item
Special !tem
Transfers
Transfer - Payment in Lieu of Taxes
Change in Net Assets
1.25 x Annual Debt Service
3,470,623 5,402,539
(277,726) (1,681,716)
3,192,897 3,720,823
9,44B 1,848,5D0
(1,853,659) (5,572,069)
(102,100) (102,100)
1,246,586 .... (104,846)
6.59 2.67
3,795,t66
(t,896,558)
1,898,608
703,308
14,789
(617,625)
(282,770)
1,716,310
3,42
1,939,913
_ (1,718,248)
221,665
905,943
(290,000)
837,608
2.78
1,067,494
(1,903,421)
(835,927)
518,944
(295,000)
(611,983[
2,23
1.0 x Annual Debt
ServicelReserves Account/Repair
and Replacement FundlSPH
Lease Payments N/A N/A 1,61 1.31 t .10
* Unaudited
# of Ships 36 36 37 36 26 # of Calls/Stops 503 499 502 496 429
# of Water Passengers 838=880 899,638 941,910 937,419 828,929
Reflects statistical information provided by the Ketchikan Visitors Bureau
Page 4 of 6
EXHIBIT B
,,.;I I Y AND ~URUUf3H OF ,SITKA
:GENERAL OBLIGATION FINANCIAL SUMMARY
Municipal Finan~ia! Position
Property Tax Collations.
8orrower’s Pr0p..e..r.ty Tax Rate Mu~cip~ ~vy ’
C~ent Yea~s Co~ec~o~
~u~rent Collection
Total Ye~s
~I~t~ Co~ec~oa.’Rate
General Fund
~pendi~r~
~d Ba!a~ce/Expendi~es
Total I~venues
lntergove~ent~ Revenues
2007 2008 ,,, 2009 2,0!9 , Average
s6.oo s6.oo ~.oo ~,oo~
55,003,463 $5,558,821 $50.735,000 .$5,768,}~1 $5,516,404 $4,983A38 $5,50’1,591 $5,689,030 $5,735,962 $5,477~505 99.60% 98.97% 99.20~ 99.44% 99.30%
$5 013,706 $5,525,653 $5",737,6,t7 ! $5,777,183 i $5,513,547 100.20% 99.40% 100.05% 10015%! 99.95%
$ 8,766,337 $ 6,389,357 $ Z!93,254 S 8,853,936 $7,800,721 ’ ~ 23,002,35~ $ 23,575,260 $ . 23,8"~7o458 .$ ’~3,597,?03 $23A98,070
38% 27% 30% 38% 33%
........ I ~$ 23,513,736 $ 24,718,668 S 25,925,306 $ 24 882,306 $24,760,004
$ 1,949,569 $ ......... ~,174,717 $ ~393,~57’ $ ’ .......... 2,21%501 S2A8236 Percentage ]nt6rg0vemm~ntai 8% 9% 9% 9% 9%
Revenue Debt :Enterprise Funds $ ,6 ~0 $ 50,247,039 $ 50,517,063 $ 48A67,078 ~v~nue Debt- (%vemm~n~ Funds ......... $ - S .... 195,000 S G.,eneral Obligation Debt - Governmental Fmads $ 30,540,000 S ’ 29 035,000 $ 34;410~000" $ 32,550,000
" ~eneral Obligati°n Debt - Ent~rFrrise Fun~l~ $ ~ ’i $ - S ......... - .... $
$ 30,540,’~00I $’ 29,O35,000 ~ ~A10,000 $ 32,550,000 ........ Total General Obligation Deb[
S 79,165,6-08 1 $ 79,47~,039 g ....... .... Total Revenue and General ob]igafion Debt $ 81o19Z578
Total Revenue and ~O Debt! A.V. 9.18% 8.49% " 9~04% ........ 8.~%
-Total Reven6~ and G(~’ b~bt"Per Capita ’ " $9,158 ........... ~9,225 "’$9,866 $9,142
General Economic and Demographic Data 2007 2008 2009 2010 An’nual Growth
........ Rate PopvJation 8,644 8,6~5 8,627 8,881 ........... 2,94%
WaxabJe Assessed Value ’"~ ’8g~’~9’78,476 935,894126 S 941,464,880 $ ’ 952,574,~’ i.18%
To t0 Tax Pa era as a ,% o~ Assessed Value ~,~ " ~o ~u ~ax~?~ssed Value
- 6.51%
6.35%
D-4
Page 5 of 6
EXHIBIT B
City and Borough of Sitka
Electric Enterprise Fund
Financial Summary
2004 2005 2006 2007 2008 2009 2010
Audited Audited Audited Audited Audited Audited Audited
Assets
Cash 8,143,639 9,387,420 7,413,414 8o458,918 9,393,512 8,993,721 8,868,159
Restricted Asset s 6,388,3.55 6,412,431 6,893,530 6,964,401 7,020,244 7,376,785 7,149,277
Other Assets 1,984,033 1,821,898 2,:188,653 2,189,489 3,185,865 3,602,067 4,256,023
Construction in Progress 1,220,488 1,580,484 1,504,573. ],524,810 i,!30,584 2,883,684 5,555,467
Utility Plant in Service 71,247,965 69,529,520 69,974,445 69,898,054 67,869,782 66,094,407 64,914,83~3
total Assets 88,984,480 88,731,753 87,974,613 89,035,672 88,599,987 88,950,664 90,743,759
.labilities and Net Assets
Liabilities
Other Liabilities 320,698 492,294 471,531 663,351 654,181 419,304 636,920
Revenue Bonds Payable 39,600,000 38,050,000 36,390,O00 34,570,000 32,550,000 30,395,000
Deferred loss on bonds (1,650,996) (:1,511,558) tt,372,J.20) (1,232,682) (I,093,244) (954,781) (815,343)
Revenue Note Payable 10,386,520 20,287,213 9,977,213 9,760,076 9,534,167 9,299,130 9,054,598~
Total Uabilities 48,656,222 47,317,949 45,466,624 43,760,745 41,645,104 39,258,653 36,966,17~5
Net Assets 40,328,258 41,413,804 42,507,989 45,274,927 46,954,883 49,792,011 53,777,584
Operating Revenues 9,538,911 9,976,533 9,999,043 10,7!6,798 10,939,726 11,846,117 10,852,9;14
Operating Expenses
Administrative and General 1,309,195 1,204,058 1,334,555 1,392,512 1,799,393 1,955,508 1,699,737
Operation and Maintenance 2,946,610 3,582,937 3,282,047 3,752,626 4,144,733 4,465,023 4,366,1:15
Depreciation 1,815,328 1,877,245 1,920,919 2,006,972 2,024,708 !,998,438 1,994,177
Operating Income 3,467,778 3,312,293 3,461,522 3,564,688 2,970,892 3,427,148 2,792,885
~onoperatlng revenue (expense]
Investment income
Interest Expense
Other
~let Income before
contributions and transfers
:apital contributions
Extraordinary Item:
Net Pension Obligation Relief
Transfer In (Out) net
Change In Net Assets
248,638 751,273 450,992 791,965 1,020,133 642°422 523,298
(3,045,4!1) {2,976,520) (2,88!,055} (2,741,335) (2,621,198) 12,469,192) (2,369,426)
62,726 50,73.7 315 931 351,823 208,9~2
671,005 1,087,046 1,094,185 1,666,035 1,685,758 !,952,201 1,155,719
1,300,914 603,582 2,853,752
281,345
(186,823) (I,500) (5.,.802) 123,898)
484,182 1,085,546 1,094,!85 2,966,949 1,679,956 2,837,128 3,985,57~~3
Population of City and
Borough 8,805 8,947 8,833 8,644 8,615 8,627 "
# of electric customers 4,975 5,012 5,061 5,.t13 5,197 5,257 5,278
KwH Sold 94,634,990 95,844,639 98,405,781 106,491,085 109,997,183 114,866~192 208,739,970
Revenue Bond Debt Service
Revenue Bond Coverage (> 1.25)
* Data not available
3,949,208 3,987,436 4,Ii1,182 4,024.958 4,113,594 4,106.690 4.108.407
1.40 1,49 1.43 1,59 1,54 1,56 1.34
D-5
Page 6 of 6
AMENDATORY LOAN AGREEMENT
THIS AMENDATORY LOAN AGREEMENT, dated the 16th day of June 2021
(the "Amendatory Loan Agreement"), between the Alaska Municipal Bond Bank (the "Bank"), a
body corporate and politic constituted as an instrumentality of the State of Alaska (the "State")
exercising public and essential governmental functions, created pursuant to the provisions of
Chapter 85, Title 44, Alaska Statutes, as amended (the "Act"), having its principal place of
business at Juneau, Alaska, and the Kodiak Island Borough, Alaska, a duly constituted second
class borough of the State (the "Borough"):
WITNESSETH:
WHEREAS, pursuant to the Act, the Bank is authorized to issue bonds and loan money
(the "Loans") to governmental units; and
WHEREAS, the Borough is a "Governmental Unit" as defined in the General Bond
Resolution of the Bank hereinafter mentioned and is authorized to accept a Loan from the Bank,
evidenced by its municipal bond; and
WHEREAS, to provide for the issuance of bonds of the Bank to obtain from time to time
money with which to make, and/or to refinance, municipal Loans, the Board of Directors of the
Bank (the "Board") adopted its General Obligation Bond Resolution on July 13, 2005 (as
amended, the "General Bond Resolution"); and
WHEREAS, the Board approved certain modifications to the General Bond Resolution,
effective on the date when all bonds issued under the terms of the General Bond Resolution,
prior to February 19, 2013, cease to be outstanding; and
WHEREAS, the Bank made a Loan to the Borough from proceeds of the Bank’s General
Obligation and Refunding Bonds, 2011 Series Three ("2011 Series Three Bonds") in the amount
of $3,275,000, evidenced by a Loan Agreement, dated as of September 1,2011 (the "2011 Loan
Agreement"), between the Bank and the Borough; and
WHEREAS, the Bank’s 2011 Series Three Bonds were issued pursuant to the terms of
the Bank’s General Bond Resolution, as amended and supplemented by a Series Resolution; and
WHEREAS, as security for repayment of the Loan and as provided in the 2011 Loan
Agreement, the Borough issued its Solid Waste Disposal Facility Revenue Bond, 2011, dated
September 15, 2011 (the "2011 Municipal Bond"), of which the Bank is the registered owner;
and
WHEREAS, the Bank has determined that refunding a portion of the outstanding 2011
Series Three Bonds will result in a debt service savings thereon and on the 2011 Municipal
Bond; and
4137-3730-9990.6
WHEREAS, on April 15, 2021, the Board adopted Series Resolution No. 2021-01
(the "2021 Series Resolution" and, together with the General Bond Resolution, the "Bond
Resolution") authorizing, among other things, the issuance of its General Obligation and
Refunding Bonds, 2021 Series One (the "Refunding Bonds"), in part to refund a portion of the
2011 Series Three Bonds; and
WHEREAS, to effect the proposed refunding and resulting debt service savings on the
2011 Series Three Bonds and the 2011 Municipal Bond, and to conform the terms of the 2011
Loan Agreement to the current practices of the Bank, it is necessary to amend the terms of the
2011 Loan Agreement and to provide for the issuance by the Borough to the Bank of the
Borough’s Solid Waste Disposal Facility Refunding Revenue Bond, 2021 (the "2021 Municipal
Bond" and together with the 2011 Municipal Bond, the "Municipal Bond") and for the refunding
of the Borough’s 2011 Municipal Bond as provided herein.
NOW, THEREFORE, the parties agree as follows:
1. The Bank will refund a portion of the outstanding 2011 Series Three Bonds as
provided in the 2021 Series Resolution. The amounts of the principal installments of the 2011
Municipal Bond corresponding to the refunded maturities of the 2011 Series Three Bonds, and
the interest payable thereon, shall be adjusted pro rata in accordance with the debt service
payable on the Refunding Bonds, as set forth in the 2021 Municipal Bond delivered to the Bank
in exchange for the 2011 Municipal Bond. The 2021 Municipal Bond, together with the
replacement 2011 Municipal Bond delivered in exchange for the original 2011 Municipal Bond,
shall mature in the principal amounts and bear interest at the rates per annum as stated on Exhibit
A appended hereto.
2. Section 2 of the 2011 Loan Agreement is amended by replacing the current
language with the following:
The Borough represents that it has duly adopted or will adopt all necessary ordinances or
resolutions, including Resolution No. FY2012-06, adopted on August 4, 2011 (the "2011
Resolution"), and that the 2011 Resolution is in full force and effect, and has taken or will take
all proceedings required by law to enable it to enter into the 2011 Loan Agreement and issue its
2011 Municipal Bond to the Bank and that the 2011 Municipal Bond constitutes a revenue bond,
a special and limited obligation of the Borough secured by a net revenue pledge of the amounts
received by the Borough and deposited in the Borough’s Bond Account (as such term is defined
in the 2011 Resolution), duly authorized by the 2011 Resolution.
The Borough represents that it has duly adopted or will adopt all necessary ordinances or
resolutions, including Resolution No. FY2020-30, adopted on May 7, 2020 (the "Borough
Refunding Resolution" and together with the 2011 Resolution, the "Borough Resolution"), and
has taken or will take all proceedings required by law to enable it to enter into this Amendatory
Loan Agreement and to issue its 2021 Municipal Bond to the Bank and that the 2021 Municipal
Bond will constitute a revenue bond, a special and limited obligation of the Borough secured by
a net revenue pledge of amounts received by the Borough and deposited in the Borough’s Bond
Account, all duly authorized by the Borough Refunding Resolution.
4137-3730-9990.6
The Borough represents that the Borough Resolution is in full force and effect and has
not been amended, supplemented or otherwise modified, other than by the Borough Refunding
Resolution and as previously certified by the Borough to the Bank.
maturity.
The 2021 Municipal Bond shall not be subject to optional prepayment prior to
4. Section 12 of the 2011 Loan Agreement is amended by replacing the current
language with the following:
The Borough hereby agrees that amounts held in its debt service reserve account (an
aggregate amount equal to $312,330) satisfies the Borough’s debt service reserve account
requirement, which secures payment of principal of and interest on the Municipal Bond and
other bonds secured on a parity basis. The Borough agrees that such account shall be held in the
name of the Borough with the Trustee. The Borough further agrees that the yield on amounts
held in such debt service reserve account and allocated to the 2021 Municipal Bond shall be
restricted to a yield not in excess of 1.295859 percent. Any releases from the debt service
reserve account shall be made in compliance with the requirements of any tax certificate
executed by the Borough in connection with the Loan.
5. Section 13 of the 2011 Loan Agreement is amended by replacing the current
language with the following:
The Borough hereby agrees to keep and retain, until the date six years after the retirement
of the 2021 Municipal Bond, or any bond issued to refund the 2021 Municipal Bond, or such
longer period as may be required by the Borough’s record retention policies and procedures,
records with respect to the investment, expenditure and use of the proceeds derived from the sale
of its 2021 Municipal Bond, including without limitation, records, schedules, bills, invoices,
check registers, cancelled checks and supporting documentation evidencing use of proceeds, and
investments and/or reinvestments of proceeds. The Borough agrees that all records required by
the preceding sentence shall be made available to the Bank upon request.
6. Section 18 of the 2011 Loan Agreement is amended by replacing the current
language with the following:
The Borough agrees that if its bonds constitute twenty percent (20%) or more of the
outstanding principal of municipal bonds held by the Bank under its General Bond Resolution it
shall provide to the Bank for inclusion in future official statements of the Bank and the Bank’s
annual reports, to the extent required by the Bank’s continuing disclosure undertakings, financial
and operating information of the Borough of the type and in the form requested by the Bank.
The Borough further agrees that if its bonds constitute twenty percent (20%) or more of
the outstanding principal of municipal bonds held by the Bank under its General Bond
Resolution, it shall execute a continuing disclosure agreement prepared by the Bank for purpose
of Securities and Exchange Commission Rule 15c2-12, adopted under the Securities and
Exchange Act of 1934.
4137-3730-9990.6
7. A new Section 27 is added to the 2011 Loan Agreement, as follows:
Except as heretofore amended and as amended hereby, the 2011 Loan Agreement will
remain in full force and effect so long as either the 2011 Municipal Bond or the 2021 Municipal
Bond remain outstanding.
[SIGNATURE PAGE FOLLOWS]
4137-3730-9990.6
IN WITNESS WHEREOF, the parties hereto have executed this Amendatory Loan
Agreement as of the date first set forth above.
ALASKA MUNICIPAL
By:
l Executive Director
KODIAK ISLAND BOROUGH, ALASKA
By:
DORA CROSS
Finance Director
SIGNATURE PAGE - AMENDATORY LOAN AGREEMENT
4137-3730-9990
1N WITNESS WHEREOF, the parties hereto have executed this Amendatory Loan
Agreement as of the date first set forth above.
ALASKA MUNICIPAL BOND BANK
By:
DEVEN MITCHELL
Executive Director
KODIAK ISLAND BOROUGH, ALASKA
DORA CROSS
Finance Director
SIGNATURE PAGE - AMENDATORY LOAN AGREEMENT
4137-3730-9990.5
EXHIBIT A
Kodiak Island Borough, Alaska
Solid Waste Disposal Facility Revenue Bond, 2011
Issued on September 15, 2011 (the "2011 Municipal Bond")
Principal Sum of $235,000
Principal Payment Date Principal Interest
(September 1) Amount Rate
2021 $ 235,000 5.00%
A principal installment shall be payable on September 1 in the amount set forth above. Interest
on the 2011 Municipal Bond shall be payable on September 1, 2021.
The 2011 Municipal Bond principal installment is not subject to prepayment prior to maturity.
[Remainder of page intentionally left blank]
EXHIBIT A - AMENDATORY LOAN AGREEMENT
4137-3730-9990.6
Kodiak Island Borough, Alaska
Solid Waste Disposal Facility Refunding Revenue Bond, 2021
Issued on June 16, 2021 (the "2021 Municipal Bond")
Principal Sum of $1,215,000
Principal Payment Date Principal Interest
(December l) Amount Rate
2022 $ 220,000 5.00%
2023 230,000 5.00
2024 240,000 5.00
2025 255,000 5.00
2026 270,000 5.00
Principal installments shall be payable on December 1 in each of the years, and in the amounts
set forth above. Interest on the 2021 Municipal Bond shall be payable on December 1, 2021, and
thereafter on June 1 and December 1 of each year.
The 2021 Municipal Bond principal installments are not subject to prepayment prior to maturity.
[Remainder of page intentionally left blank]
EXHIBIT A - AMENDATORY LOAN AGREEMENT
4137-3730-9990.6
AMENDED AND RESTATED
RESERVE SUBACCOUNT DEPOSITARY AGREEMENT
KODIAK ISLAND BOROUGH, ALASKA
$235,000
SOLID WASTE DISPOSAL FACILITY REVENUE BOND, 2011
$1,215,000
SOLID WASTE DISPOSAL FACILITY REVENUE REFUNDING BOND, 2021
This Amended and Restated Reserve Account Depositary Agreement dated as
of June 16, 2021 (this "Agreement"), is entered into by and between the Kodiak Island
Borough, Alaska (the "Borough"), and The Bank of New York Mellon Trust Company,
N.A. (the "Loan Trustee"), to amend and restate the Reserve Depositary Agreement
between the Borough and the Loan Trustee dated as of September 13, 2011. Pursuant
to the 2005 General Obligation Bond Resolution adopted by the Board of Directors of
the Alaska Municipal Bond Bank (the "Bond Bank") on July 13, 2005, as amended on
August 19, 2009, and Series Resolution No. 2021-01 adopted by the Board of Directors
of the Bond Bank on April 15, 2021, the Bond Bank has appointed the Loan Trustee to
serve as Loan Trustee for a loan by the Bond Bank to the Borough. As security for
repayment of such loan, the Bond Bank and the Borough have entered into a
Amendatory Loan Agreement dated as of June 16, 2021, and the Borough has issued
its Solid Waste Disposal Facility Revenue Refunding Bond, 2021 (the "2021 Bond"),
pursuant to Resolution No. FY2020-30 of the Borough. Under such resolution and
Resolution No. FY2012-06, pursuant to which the Borough issued its Solid Waste
Disposal Facility Revenue Bond, 2011 (together with the 2021 Bond, the "Bonds"), the
Loan Trustee is to hold the Reserve Subaccount (the "Reserve Subaccount") created by
the Borough in its Solid Waste Disposal Revenue Bond Account (the "Bond Account") in
trust for the benefit of the Bond Bank, which is the registered owner of the Bonds.
The Borough and the Loan Trustee hereby agree as follows:
1. There is currently on deposit in the Reserve Subaccount held by the Loan
Trustee funds in the amount of $302,500.00.
2. The Loan Trustee will hold and invest funds on deposit in the Reserve
Subaccount until disbursement in accordance with paragraph 3. The Loan Trustee will
invest funds on deposit in the Reserve Subaccount in the Goldman Sachs Financial
Square Government #466 MMF. If such designated fund terminates, closes, or is
otherwise unavailable, the Loan Trustee will notify the Borough of such termination,
closure, or unavailability and will hold such funds uninvested until the Loan Trustee
receives a new written investment directive from the Borough. The Loan Trustee will
hold and invest the funds in the Reserve Subaccount in accordance with the written
instructions of the Borough, and the Loan Trustee will retain any investment earnings in
the Reserve Subaccount until disbursed in accordance with paragraph 3. The Loan
Trustee will not be liable for the selection of investments or for investment losses
FG:54312034.1
incurred thereon. The Loan Trustee may purchase or sell to itself or any affiliate, as
principal or agent, investments authorized by the Borough. The Borough acknowledges
that to the extent regulations of the Comptroller of the Currency or other applicable
regulatory entity grant the Borough the right to receive brokerage confirmation of
security transactions as they occur at no applicable cost, the Borough specifically
waives receipt of such confirmations to the extent permitted by law. The Loan Trustee
shall be entitled to rely conclusively on the written direction of the Borough as to the
suitability and legality of the directed investments. The Borough shall never direct
that the money in the Reserve Subaccount shall be invested at a yield in excess
of 1.29%. The Loan Trustee shall not be responsible for verifying compliance with the
foregoing yield restriction.
3. If the Borough notifies the Loan Trustee that a deficiency has occurred in
the Debt Service Subaccount, the Loan Trustee shall withdraw from the Reserve
Subaccount the amount specified in such notice as being sufficient to make up the
deficiency and transfer such amount to the Borough for deposit in the Debt Service
Subaccount in the Bond Account (the "Debt Service Subaccount"). The Borough shall
make up any deficiency in the Reserve Subaccount resulting from such a withdrawal
within one year. If the Borough notifies the Loan Trustee that the amount in the Reserve
Subaccount is in excess of the Reserve Subaccount Requirement for the Bonds, the
Loan Trustee shall transfer the amount specified in such notice as excess to the
Borough for deposit in the Debt Service Subaccount. If the Borough notifies the Loan
Trustee that the amount in the Bond Account, including the Reserve Subaccount and
the Debt Service Subaccount, is sufficient to pay all outstanding principal of and interest
on the Bonds, the Loan Trustee shall transfer the amount in the Reserve Subaccount to
pay such principal and interest, and the Borough need not make any further deposits
into the Bond Account.
4. On the date all payments on the Bonds have been made to the Bond
Bank, the Loan Trustee will transfer any balances remaining in the Reserve Subaccount
(including any investment earnings) to the Borough or to the order of the Borough.
5. This Agreement will terminate on the date all payments on the Bonds have
been made to the Bond Bank.
6. This Agreement shall be governed under the laws of the State of Alaska.
7. The liability of the Loan Trustee is limited to the duties as specifically set
forth in this Agreement, and no implied covenants or obligations shall be read into this
Agreement against the Loan Trustee. The Loan Trustee will not be liable for any action
taken or omitted to be taken by it under this Agreement or in connection herewith except
to the extent caused by the Loan Trustee’s gross negligence or willful misconduct.
Anything in this Agreement to the contrary notwithstanding, in no event shall the Loan
Trustee be liable for special, indirect, punitive or consequential loss or damage of any
kind whatsoever (including but not limited to lost profits), even if the Loan Trustee has
been advised of the likelihood of such loss or damage and regardless of the form of
action.
2
FG:54312034,1
8. None of the provisions of this Agreement shall require the Loan Trustee to
expend or risk its own funds or otherwise to incur any liability, financial or otherwise, in
the performance of any of its duties hereunder. The Loan Trustee may conclusively rely
and shall be fully protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent, order,
approval, or other paper or document believed by it to be genuine and to have been
signed or presented by the proper party or parties. The Loan Trustee may consult with
counsel and the advice or any opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or omitted by it hereunder in
good faith and in accordance with such advice or opinion of counsel. The Loan Trustee
may execute any of the trusts or powers hereunder or perform any duties hereunder
either directly or by or through agents, attorneys, custodians, or nominees appointed
with due care, and shall not be responsible for any willful misconduct or negligence on
the part of any agent, attorney, custodian, or nominee so appointed.
The Loan Trustee may at any time resign by giving 30 days written notice of
resignation to the Borough. Upon receiving such notice of resignation, the Borough shall
promptly appoint a successor and, upon the acceptance by the successor of such
appointment, release the resigning Loan Trustee from its obligations hereunder by
written instrument, a copy of which instrument shall be delivered to each of the
Borough, the resigning Loan Trustee and the successor. If no successor shall have
been so appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Loan Trustee may petition any court of
competent jurisdiction for the appointment of a successor.
The Borough covenants and represents that (i)neither it nor any of its
subdivisions or officers are the target or subject of any sanctions enforced by the US
Government, (including, the Office of Foreign Assets Control of the US Department of
the Treasury ("OFAC")), the United Nations Security Council, the European Union, HM
Treasury, or other relevant sanctions authority (collectively "Sanctions"); and (ii) neither
it nor any of its subdivisions or officers will use any payments made pursuant to this
Agreement (i) to fund or facilitate any activities of or business with any person who, at
the time of such funding or facilitation, is the subject or target of Sanctions, (ii) to fund or
facilitate any activities of or business with any country or territory that is the target or
subject of Sanctions, or (iii)in any other manner that will result in a violation of
Sanctions by any person.
9. The Loan Trustee shall have the right to accept and act upon instructions,
including funds transfer instructions ("Instructions") given pursuant to this Agreement
and delivered using Electronic Means ("Electronic Means" meaning the following
communications methods: e-mail, facsimile transmission, secure electronic transmission
containing applicable authorization codes, passwords, and/or authentication keys
issued by the Loan Trustee, or another method or system specified by the Loan Trustee
as available for use in connection with its services hereunder); provided, that the
Borough shall provide to the Loan Trustee an incumbency certificate listing officers with
the authority to provide such Instructions (each, an "Authorized Officer") and containing
specimen signatures of such Authorized Officers, which incumbency certificate shall be
3
FG:54312034.1
amended by the Borough whenever a person is to be added or deleted from the listing.
The initial incumbency certificate is attached hereto as Exhibit A. If the Borough elects
to give the Loan Trustee Instructions using Electronic Means and the Loan Trustee in its
discretion elects to act upon such Instructions, the Loan Trustee’s understanding of
such Instructions shall be deemed controlling. The Borough understands and agrees
that the Loan Trustee cannot determine the identity of the actual sender of such
Instructions and that the Loan Trustee shall conclusively presume that directions that
purport to have been sent by an Authorized Officer listed on the incumbency certificate
provided to the Loan Trustee have been sent by such Authorized Officer. The Borough
shall be responsible for ensuring that only Authorized Officers transmit such Instructions
to the Loan Trustee and that the Borough and all Authorized Officers are solely
responsible to safeguard the use and confidentiality of applicable user and authorization
codes, passwords, and/or authentication keys upon receipt by the Borough. The Loan
Trustee shall not be liable for any losses, costs, or expenses arising directly or indirectly
from the Loan Trustee’s reliance upon and compliance with such Instructions
notwithstanding such directions conflict or are inconsistent with a subsequent written
instruction. The Borough agrees: (i)to assume all risks arising out of the use of
Electronic Means to submit Instructions to the Loan Trustee, including without limitation
the risk of the Loan Trustee acting on unauthorized Instructions, and the risk of
interception and misuse by third parties; (ii) that it is fully informed of the protections and
risks associated with the various methods of transmitting Instructions to the Loan
Trustee and that there may be more secure methods of transmitting Instructions than
the method(s) selected by the Borough; (iii) that the security procedures (if any) to be
followed in connection with its transmission of Instructions provide to it a commercially
reasonable degree of protection in light of its particular needs and circumstances; and
(iv) to notify the Loan Trustee immediately upon learning of any compromise or
unauthorized use of the security procedures.
10. To the extent permitted by law, the Borough hereby agrees to indemnify
and hold harmless the Loan Trustee and its officers, directors, agents, and employees
from and against any and all costs, claims, liabilities, losses, or damages whatsoever
(including reasonable costs and fees of counsel, auditors or other experts), asserted or
arising out of or in connection with the acceptance or administration of this Agreement,
except costs, claims, liabilities, losses, or damages resulting from the gross negligence
or willful misconduct of the Loan Trustee, including the reasonable costs and expenses
(including the reasonable fees and expenses of its counsel) of defending itself against
any such claim or liability in connection with its exercise or performance of any of its
duties hereunder and of enforcing this indemnification provision. The indemnifications
set forth herein shall survive the termination of this Agreement and/or the resignation or
removal of the Loan Trustee.
[Signature page follows]
4
FG:54312034.1
11. The Reserve Depositary Agreement between the Borough and the Loan
Trustee dated as of September 13, 2011, as amended by this Agreement, is and
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers thereunto duly
authorized.
KODIAK ISLAND BOROUGH, ALASKA
Dora Cross, Finance Director
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Loan Trustee
By:
5
FG:54312034.1
11. The Reserve Depositary Agreement between the Borough and the Loan
Trustee dated as of September 13, 2011, as amended by this Agreement, is and
remains in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective authorized officers thereunto duly
authorized.
KODIAK ISLAND BOROUGH, ALASKA
By:
Dora Cross, Finance Director
THE BANK OF NEW YORK MELLON TRUST
COMPANY, N.A., as Loan Trustee
By:
5
FG:54312034.1
EXHIBIT A
INCUMBENCY CERTIFICATE
I, ALISE L. RICE, Borough Clerk of the Kodiak Island Borough, Alaska (the
"Borough"), certify that MICHAEL POWERS is the Borough Manager of the Borough
and that DORA CROSS is the Finance Director of the Borough and as such, each is
authorized to provide written directions to The Bank of New York Mellon Trust
Company, N.A., as Loan Trustee (the "Loan Trustee") under the Amended and
Restated Reserve Subaccount Depositary Agreement. dated as of June 16, 2021,
between the Borough and the Loan Trustee, of investments to be made by the Loan
Trustee thereunder. I further certify that the signatures of Michael Powers, as Borough
Manager, and of Dora Cross, as Finance Director, appear below.
Michael Borough Manager
Dora Cross, Finance Director
KODIAK ISLAND BOROUGH, ALASKA
~’~ ~ Al~e L": Ri~e, Borough Clerk
FG:54312034.1
NEW ISSUE MOODY’S RATING: A1
BOOK-ENTRY ONLY S&P GLOBAL RATING: A+
(See “Ratings”)
In the opinion of Orrick, Herrington & Sutcliffe LLP, Bond Counsel, based upon an analysis of existing laws, regulations, rulings and
court decisions, and assuming, among other matters, the accuracy of certain representations and compliance with certain covenants, interest
on the 2021 Series One Bonds and 2021 Series Three Bonds is excluded from gross income for federal income tax purposes under Section 103
of the Internal Revenue Code of 1986 (the “Code”), except that no opinion is expressed as to the status of interest on any 2021 Series Three
Bond for any period that such 2021 Series Three Bond is held by a “substantial user” of the facilities financed or refinanced by the 2021 Series
Three Bonds or by a “related person” within the meaning of Section 147(a) of the Code. In the further opinion of Bond Counsel, interest on
the 2021 Series One Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel observes that
interest on the 2021 Series Three Bonds is a specific preference item for purposes of the federal alternative minimum tax. In the opinion of
Bond Counsel, interest on the 2021 Series Two Bonds is not excluded from gross income for federal income tax purposes under Section 103 of
the Code. Bond Counsel also is of the opinion based upon existing laws of the State of Alaska that interest on all of the 2021 Series One, Two
and Three Bonds is exempt from taxation by the State of Alaska except for transfer, inheritance, and estate taxes. Bond Counsel expresses no
opinion regarding any other tax consequences related to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the
2021 Series One, Two and Three Bonds. See “Tax MaTTers.” Delivery of the 2021 Series Three Bonds, and delivery of Bond Counsel’s opinion
with respect to the 2021 Series Three Bonds, is subject to the satisfaction of certain terms and conditions provided in the Forward Delivery
Bond Purchase Agreement as described under the heading “CERTAIN FORWARD DELIVERY CONSIDERATIONS.”
AlAskA MunicipAl Bond BAnk
$29,775,000 GenerAl oBliGAtion And refundinG
Bonds, 2021 series one (tAx-exeMpt)
$200,975,000 GenerAl oBliGAtion And
refundinG Bonds, 2021 series two (tAxABle)
$5,725,000 GenerAl oBliGAtion refundinG Bonds,
2021 series three (AMt forwArd delivery)
Dated: Date of Delivery, as shown on the inside cover pages Due: December 1, as shown on inside cover pages
The Alaska Municipal Bond Bank (the “Bond Bank”) is issuing $29,775,000 aggregate principal amount of its General Obligation and Refunding Bonds,
2021 Series One (Tax-Exempt) (the “2021 Series One Bonds”), $200,975,000 aggregate principal amount of its General Obligation and Refunding Bonds, 2021
Series Two (Taxable) (the “2021 Series Two Bonds”) and $5,725,000 aggregate principal amount of its General Obligation Refunding Bonds, 2021 Series Three
(AMT Forward Delivery) (the “2021 Series Three Bonds,” and together with the 2021 Series One Bonds and the 2021 Series Two Bonds, the “2021 Series One,
Two and Three Bonds”). The 2021 Series One, Two and Three Bonds initially will be issued as fully registered bonds, in book-entry form only, registered in the
name of Cede & Co., as nominee of The Depository Trust Company (“DTC”), which will serve as depository for the 2021 Series One, Two and Three Bonds.
Individual purchases of the 2021 Series One, Two and Three Bonds will be made in principal amounts of $5,000 or integral multiples thereof within a series
and maturity. Purchasers of the 2021 Series One, Two and Three Bonds will not receive certificates representing their beneficial ownership interests in the
2021 Series One, Two and Three Bonds. Interest on the 2021 Series One Bonds and the 2021 Series Two Bonds will accrue from the date of delivery of the
2021 Series One Bonds and the 2021 Series Two Bonds, or from the most recent interest payment date to which interest has been paid or provided for, and is
payable on each June 1 and December 1, commencing December 1, 2021. Interest on the 2021 Series Three Bonds will accrue from the date of delivery of the
2021 Series Three Bonds, or from the most recent interest payment date to which interest has been paid or provided for, and is payable on each June 1 and
December 1, commencing June 1, 2022.
The Bank of New York Mellon Trust Company, N.A., of San Francisco, California, as the Trustee and Paying Agent for the 2021 Series One, Two and
Three Bonds, will make principal and interest payments to DTC as the registered owner of the 2021 Series One, Two and Three Bonds. Disbursement of such
payments to DTC Participants is the responsibility of DTC. Disbursement of such payments to the Beneficial Owners is the responsibility of DTC Participants.
See “DescRiption of the 2021 seRies one, two anD thRee BonDs” and Appendix H – “Dtc anD its Book-entRy system.”
The 2021 Series One, Two and Three Bonds are subject to redemption prior to their stated maturity dates. See “DescRiption of the 2021 seRies one, two
anD thRee BonDs.”
The 2021 Series Three Bonds are scheduled to be delivered on December 2, 2021. For a discussion regarding the forward delivery of the 2021 Series
Three Bonds, see “ceRtain foRwaRD DeliveRy consiDeRations.”
The 2021 Series One, Two and Three Bonds will be issued under the General Obligation Bond Resolution, adopted by the Board of Directors of the Bond
Bank on July 13, 2005 (as amended on August 19, 2009, the “2005 General Bond Resolution”), as supplemented by Series Resolution No. 2021‑01, adopted on
April 15, 2021 (the “Bond Resolution,” and together with the 2005 General Bond Resolution, the “Resolutions”). The 2021 Series One, Two and Three Bonds
are direct and general obligations of the Bond Bank, and the full faith and credit of the Bond Bank are pledged to the payment of the principal of and interest
on the 2021 Series One, Two and Three Bonds, subject to any agreements made with the holders of any other notes or bonds of the Bond Bank pledging any
particular revenues or assets not pledged under the 2005 General Bond Resolution. The 2021 Series One, Two and Three Bonds are equally and ratably secured
by the pledge and assignment of all Municipal Bonds acquired by the Bond Bank under the 2005 General Bond Resolution on a parity with other Bonds of the
Bond Bank issued under the 2005 General Bond Resolution. The 2021 Series One, Two and Three Bonds are the 47th, 48th and 49th Series, respectively, of
Bonds issued under the 2005 General Bond Resolution.
The 2021 Series One, Two and Three Bonds are payable solely from the sources provided in the 2005 General Bond Resolution and the
Bond Resolution described herein. The 2021 Series One, Two and Three Bonds do not constitute a debt or other liability of the State of Alaska,
and the 2021 Series One, Two and Three Bonds do not directly, indirectly, or contingently obligate the State of Alaska to levy any form of
taxation or make any appropriation for the payment of the 2021 Series One, Two and Three Bonds. Neither the faith and credit nor the taxing
power of the State of Alaska is pledged for the payment of the 2021 Series One, Two and Three Bonds. The Bond Bank has no taxing power.
This cover page contains certain information for quick reference only. It is not a summary of this issue. Investors must read the entire Official Statement
to obtain information essential to the making of an informed investment decision.
The 2021 Series One, Two and Three Bonds are offered when, as, and if issued, subject to the approving legal opinion of Orrick, Herrington &
Sutcliffe LLP, Bond Counsel to the Bond Bank. Certain legal matters will be passed upon for the Governmental Units by their respective bond counsels.
Certain legal matters will be passed upon for the Underwriter(s) by their special counsel, K&L Gates LLP. It is expected that the 2021 Series One, Two
and Three Bonds in definitive form will be issued and available by Fast Automated Securities Transfer for delivery through the facilities of DTC in New
York, New York, on or about June 16, 2021 with respect to the 2021 Series One Bonds and the 2021 Series Two Bonds and December 2, 2021 with respect
to the 2021 Series Three Bonds.
BofA Securities RBC Capital Markets* Jefferies*
May 26, 2021.
* With respect to the 2021 Series One and 2021 Series Two Bonds only.
ALASKA MUNICIPAL BOND BANK
$29,775,000 GENERAL OBLIGATION AND REFUNDING BONDS, 2021 SERIES ONE (TAX-EXEMPT)
Dated: June 16, 2021
MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND PRICES
(Base CUSIP No.† 01179R)
Due (December 1) Principal Amount Interest Rate Yield Price CUSIP No.†
2021 $ 600,000 5.000% 0.150% 102.221 01179RG98
2022 5,190,000 5.000 0.180 107.016 01179RH22
2023 4,495,000 5.000 0.270 111.581 01179RH30
2024 1,315,000 5.000 0.430 115.670 01179RH48
2025 1,385,000 5.000 0.590 119.376 01179RH55
2026 1,460,000 5.000 0.710 122.928 01179RH63
2027 1,240,000 5.000 0.890 125.739 01179RH71
2028 1,310,000 5.000 1.030 128.429 01179RH89
2029 1,380,000 5.000 1.150 130.945 01179RH97
2030 1,450,000 5.000 1.250 133.353 01179RJ20
2031 635,000 5.000 1.340 135.604 01179RJ38
2032 665,000 5.000 1.400 134.909* 01179RJ46
2033 705,000 5.000 1.440 134.448* 01179RJ53
2034 740,000 5.000 1.480 133.988* 01179RJ61
2035 775,000 4.000 1.650 122.487* 01179RJ79
2036 710,000 4.000 1.700 121.951* 01179RJ87
2037 535,000 4.000 1.730 121.630* 01179RJ95
2038 555,000 4.000 1.760 121.311* 01179RK28
2039 575,000 4.000 1.800 120.886* 01179RK36
2040 600,000 4.000 1.840 120.463* 01179RK44
2041 625,000 4.000 1.880 120.042* 01179RK51
$2,830,000 5.000% Term Bonds due December 1, 2045 Yield 1.850% Price 129.827*
CUSIP No.†: 01179RK69
* Priced to the par call date of December 1, 2031.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright 2021, CGS. All rights reserved. The CUSIP numbers herein are not intended to create a database and do not serve in any way as a substitute for the CGS database. The CUSIP numbers herein are provided for the convenience of reference only and are subject to change. Neither the Bond Bank nor the Underwriters takes any responsibility for the accuracy of such CUSIP numbers.
$200,975,000 GENERAL OBLIGATION AND REFUNDING BONDS, 2021 SERIES TWO (TAXABLE)
Dated: June 16, 2021
MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND PRICES
(Base CUSIP No.† 01179R)
Due (December 1) Principal Amount Interest Rate Yield Price CUSIP No.*
2021 $ 3,370,000 0.243% 0.243% 100.000 01179RK77
2022 6,275,000 0.343 0.343 100.000 01179RK85
2023 8,310,000 0.443 0.443 100.000 01179RK93
2024 10,225,000 0.698 0.698 100.000 01179RL27
2025 9,625,000 1.032 1.032 100.000 01179RL35
2026 10,790,000 1.182 1.182 100.000 01179RL43
2027 10,940,000 1.531 1.531 100.000 01179RL50
2028 11,105,000 1.731 1.731 100.000 01179RL68
2029 11,300,000 1.972 1.972 100.000 01179RL76
2030 11,540,000 2.022 2.022 100.000 01179RL84
2031 14,710,000 2.122 2.122 100.000 01179RL92
2032 14,400,000 2.222 2.222 100.000 01179RM26
2033 9,030,000 2.352 2.352 100.000 01179RM34
2034 5,085,000 2.452 2.452 100.000 01179RM42
2035 5,125,000 2.552 2.552 100.000 01179RM59
2036 4,685,000 2.602 2.602 100.000 01179RM67
$24,940,000 3.028% Term Bonds due December 1, 2041 Yield 3.028% Price 100.000 CUSIP No.†: 01179RM75
$29,520,000 3.128% Term Bonds due December 1, 2048 Yield 3.128% Price 100.000 CUSIP No.†: 01179RM83
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright 2021, CGS. All rights reserved. The CUSIP numbers herein are not intended to create a database and do not serve in any way as a substitute for the CGS database. The CUSIP numbers herein are provided for the convenience of reference only and are subject to change. Neither the Bond Bank nor the Underwriters takes any responsibility for the accuracy of such CUSIP numbers.
$5,725,000 GENERAL OBLIGATION REFUNDING BONDS, 2021 SERIES THREE (AMT FORWARD DELIVERY)
Dated: December 2, 2021
MATURITIES, AMOUNTS, INTEREST RATES, YIELDS AND PRICES
(Base CUSIP No.† 01179R)
Due (December 1) Principal Amount Interest Rate Yield Price CUSIP No.*
2030 $ 1,100,000 5.000% 1.750% 126.946 01179RM91
2031 1,155,000 5.000 1.840 128.735 01179RN25
2032 1,205,000 5.000 1.900 128.104* 01179RN33
2033 1,270,000 5.000 1.940 127.686* 01179RN41
2034 995,000 5.000 1.980 127.269* 01179RN58
* Priced to the par call date of December 1, 2031.
† CUSIP® is a registered trademark of the American Bankers Association. CUSIP Global Services (“CGS”) is managed on behalf of the American Bankers Association by S&P Global Market Intelligence. Copyright 2021, CGS. All rights reserved. The CUSIP numbers herein are not intended to create a database and do not serve in any way as a substitute for the CGS database. The CUSIP numbers herein are provided for the convenience of reference only and are subject to change. Neither the Bond Bank nor the Underwriter take any responsibility for the accuracy of such CUSIP numbers.
i
No dealer, broker, salesperson, or other person has been authorized by the Bond Bank or the Underwriters to give any information or to make any representations with respect to the 2021 Series One,
Two and Three Bonds other than those contained in this Official Statement and, if given or made, such information or representations must not be relied upon as having been authorized by the Bond Bank or the Underwriters. This Official Statement does not constitute an offer to sell or a solicitation of an offer to
buy, nor shall there be any sale of, the 2021 Series One, Two and Three Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation, or sale.
The information and expressions of opinion herein are subject to change without notice, and
neither the delivery of this Official Statement nor any sale made by use of this Official Statement shall, under any circumstances, create any implication that there has been no change in the affairs of the Bond Bank since the date hereof.
Information on website addresses set forth in this Official Statement is not incorporated into this Official Statement and cannot be relied upon to be accurate as of the date of this Official Statement, nor should any such information be relied upon in making investment decisions regarding the 2021 Series One, Two and Three Bonds.
The Underwriters have provided the following sentence for inclusion in this Official Statement.
The Underwriters have reviewed the information in this Official Statement in accordance with, and as part of, its responsibilities to investors under the federal securities laws as applied to the facts and circumstances of this transaction, but the Underwriters do not guarantee the accuracy or completeness of
such information.
The 2021 Series One, Two and Three Bonds have not been registered under the Securities Act of 1933, as amended, and the Resolutions have not been qualified under the Trust Indenture Act of 1939, as
amended, in reliance upon exemptions contained in such acts. The 2021 Series One, Two and Three Bonds have not been recommended by any federal or state securities commission or regulatory authority. The foregoing authorities have not confirmed the accuracy or determined the adequacy of this Official
Statement. Any representation to the contrary may be a criminal offense.
Certain statements contained in this Official Statement reflect not historical facts but forecasts and “forward-looking statements.” The words “estimate,” “project,” “anticipate,” “expect,” “intend,”
“believe,” “plan,” “budget,” “forecast,” “assume,” and similar expressions are intended to identify forward-looking statements. The achievement of certain results or other expectations contained in forward-looking statements involves known and unknown risks, uncertainties and other factors that may cause actual results, performance, or achievements described to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based upon underlying assumptions, many of which in turn are based upon further assumptions. No assurance can be given that the future results or plans discussed herein will be achieved, and actual results may differ, perhaps materially, from the plans, budgets, assumptions,
forecasts, and projections described herein. Except for the historical information described in the continuing disclosure undertaking of the Bond Bank, the Bond Bank does not plan to issue any updates or revisions to any forward-looking statements contained herein. See “CONTINUING DISCLOSURE
UNDERTAKINGS.”
For a discussion of certain risks associated with an investment in the 2021 Series One, Two and Three Bonds, see “CERTAIN BONDOWNERS’ RISKS.”
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INFORMATION CONCERNING OFFERING RESTRICTIONS IN CERTAIN JURISDICTIONS OUTSIDE THE UNITED STATES
REFERENCES IN THIS SECTION TO THE “ISSUER” MEAN THE ALASKA MUNICIPAL BOND BANK, AND REFERENCES TO “BONDS” OR “SECURITIES” MEAN THE 2021 SERIES TWO BONDS OFFERED HEREBY. NEITHER THE ISSUER NOR THE UNDERWRITERS ASSUME ANY RESPONSIBILITY FOR THE CONTENTS OF THIS SECTION.
THE 2021 SERIES TWO BONDS WILL TRADE AND SETTLE ON A UNIT BASIS (ONE UNIT EQUALING ONE 2021 SERIES TWO BOND OF $5,000 PRINCIPAL AMOUNT). FOR ANY SALES MADE OUTSIDE THE UNITED STATES, THE MINIMUM PURCHASE AND TRADING AMOUNT IS 30 UNITS (BEING 30 2021 SERIES TWO BONDS IN AN AGGREGATE PRINCIPAL AMOUNT OF $150,000).
NOTICE TO PROSPECTIVE INVESTORS IN THE EUROPEAN ECONOMIC AREA (“EEA”)
THIS OFFICIAL STATEMENT HAS BEEN PREPARED ON THE BASIS THAT ALL OFFERS OF THE SECURITIES TO ANY PERSON THAT IS LOCATED WITHIN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA (“EEA”) WILL BE MADE PURSUANT TO AN EXEMPTION UNDER ARTICLE 1(4) REGULATION (EU) 2017/1129 (THE “PROSPECTUS REGULATION”)
FROM THE REQUIREMENT TO PRODUCE A PROSPECTUS FOR OFFERS OF THE SECURITIES. ACCORDINGLY, ANY PERSON MAKING OR INTENDING TO MAKE ANY OFFER TO ANY PERSON LOCATED WITHIN A MEMBER STATE OF THE EEA OF THE SECURITIES SHOULD
ONLY DO SO IN CIRCUMSTANCES IN WHICH NO OBLIGATION ARISES FOR THE ISSUER OR ANY OF THE INITIAL PURCHASERS TO PRODUCE A PROSPECTUS OR SUPPLEMENT FOR SUCH AN OFFER. NEITHER THE ISSUER NOR THE INITIAL PURCHASERS HAVE
AUTHORIZED, NOR DO THEY AUTHORIZE, THE MAKING OF ANY OFFER OF SECURITIES THROUGH ANY FINANCIAL INTERMEDIARY, OTHER THAN OFFERS MADE BY THE INITIAL PURCHASERS, WHICH CONSTITUTE THE FINAL PLACEMENT OF THE SECURITIES
CONTEMPLATED IN THIS OFFICIAL STATEMENT.
THE OFFER OF ANY SECURITIES WHICH IS THE SUBJECT OF THE OFFERING CONTEMPLATED BY THIS OFFICIAL STATEMENT IS NOT BEING MADE AND WILL NOT BE
MADE TO THE PUBLIC IN ANY MEMBER STATE OF THE EEA, OTHER THAN: (A) TO ANY LEGAL ENTITY WHICH IS A “QUALIFIED INVESTOR” AS SUCH TERM IS DEFINED IN THE PROSPECTUS REGULATION; (B) TO FEWER THAN 150 NATURAL OR LEGAL PERSONS (OTHER THAN “QUALIFIED INVESTORS” AS SUCH TERM IS DEFINED IN THE PROSPECTUS REGULATION)OR (C) IN ANY OTHER CIRCUMSTANCES FALLING WITHIN ARTICLE 1(4) OF THE PROSPECTUS REGULATION, SUBJECT TO OBTAINING THE PRIOR CONSENT OF THE RELEVANT UNDERWRITER OR THE CORPORATION FOR ANY SUCH OFFER; PROVIDED THAT NO SUCH OFFER OF THE SECURITIES SHALL REQUIRE THE ISSUER OR THE INITIAL
PURCHASERS TO PUBLISH A PROSPECTUS PURSUANT TO ARTICLE 3 OF THE PROSPECTUS REGULATION OR A SUPPLEMENT TO A PROSPECTUS PURSUANT TO ARTICLE 23 OF THE PROSPECTUS REGULATION.
FOR THE PURPOSES OF THIS PROVISION, THE EXPRESSION AN “OFFER OF SECURITIES TO THE PUBLIC” IN RELATION TO THE SECURITIES IN ANY MEMBER STATE OF THE EEA MEANS THE COMMUNICATION IN ANY FORM AND BY ANY MEANS OF SUFFICIENT
INFORMATION ON THE TERMS OF THE OFFER AND THE SECURITIES TO BE OFFERED SO AS TO ENABLE AN INVESTOR TO DECIDE TO PURCHASE THE SECURITIES.
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EACH SUBSCRIBER FOR OR PURCHASER OF THE BONDS IN THE OFFERING LOCATED WITHIN A MEMBER STATE WILL BE DEEMED TO HAVE REPRESENTED, ACKNOWLEDGED
AND AGREED THAT IT IS A “QUALIFIED INVESTOR” AS DEFINED IN THE PROSPECTUS REGULATION. THE CORPORATION AND EACH UNDERWRITER AND OTHERS WILL RELY ON THE TRUTH AND ACCURACY OF THE FOREGOING REPRESENTATION,
ACKNOWLEDGEMENT AND AGREEMENT.
PROHIBITION OF SALES TO EEA RETAIL INVESTORS – THE BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO AND SHOULD NOT BE
OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE EEA. FOR THESE PURPOSES, A RETAIL INVESTOR MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT AS DEFINED IN POINT (11) OF ARTICLE 4(1) OF DIRECTIVE 2014/65/EU (AS AMENDED, “MIFID II”); OR (II) A CUSTOMER WITHIN THE MEANING OF DIRECTIVE (EU) 2016/97 (THE “INSURANCE DISTRIBUTION DIRECTIVE”), WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT AS DEFINED IN POINT (10) OF ARTICLE 4(1) OF MIFID II. CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 (THE “PRIIPS REGULATION”) FOR
OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE EEA HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE BONDS OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL
INVESTOR IN THE EEA MAY BE UNLAWFUL UNDER THE PRIIPS REGULATION.
NOTICE TO PROSPECTIVE INVESTORS IN THE UNITED KINGDOM
THIS OFFICIAL STATEMENT HAS NOT BEEN APPROVED FOR THE PURPOSES OF
SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (“FSMA”) AND DOES NOT CONSTITUTE AN OFFER TO THE PUBLIC IN ACCORDANCE WITH THE PROVISIONS OF SECTION 85 OF THE FSMA. THIS OFFICIAL STATEMENT IS FOR DISTRIBUTION ONLY TO,
AND IS DIRECTED SOLELY AT, PERSONS WHO (I) ARE OUTSIDE THE UNITED KINGDOM, (II) ARE INVESTMENT PROFESSIONALS, AS SUCH TERM IS DEFINED IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER
2005, AS AMENDED (THE “FINANCIAL PROMOTION ORDER”), (III) ARE PERSONS FALLING WITHIN ARTICLE 49(2)(A) TO (D) OF THE FINANCIAL PROMOTION ORDER, OR (IV) ARE PERSONS TO WHOM AN INVITATION OR INDUCEMENT TO ENGAGE IN INVESTMENT ACTIVITY (WITHIN THE MEANING OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000) IN CONNECTION WITH THE ISSUE OR SALE OF ANY BONDS MAY OTHERWISE BE LAWFULLY COMMUNICATED OR CAUSED TO BE COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS “RELEVANT PERSONS”). THIS OFFICIAL STATEMENT IS DIRECTED ONLY AT RELEVANT PERSONS AND MUST NOT BE
ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS OFFICIAL STATEMENT RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY
WITH RELEVANT PERSONS. ANY PERSON WHO IS NOT A RELEVANT PERSON SHOULD NOT ACT OR RELY ON THIS OFFICIAL STATEMENT OR ANY OF ITS CONTENTS.
THE 2021 SERIES TWO BONDS ARE NOT INTENDED TO BE OFFERED, SOLD OR OTHERWISE
MADE AVAILABLE TO AND SHOULD NOT BE OFFERED, SOLD OR OTHERWISE MADE AVAILABLE TO ANY RETAIL INVESTOR IN THE UK. FOR THESE PURPOSES, A “RETAIL INVESTOR” MEANS A PERSON WHO IS ONE (OR MORE) OF: (I) A RETAIL CLIENT, AS
DEFINED IN POINT (8) OF ARTICLE 2 OF REGULATION (EU) NO 2017/565 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (THE
iv
“EUWA”); (II) A CUSTOMER WITHIN THE MEANING OF THE PROVISIONS OF THE FSMA AND ANY RULES OR REGULATIONS MADE UNDER THE FSMA TO IMPLEMENT DIRECTIVE
(EU) 2016/97, WHERE THAT CUSTOMER WOULD NOT QUALIFY AS A PROFESSIONAL CLIENT, AS DEFINED IN POINT (8) OF ARTICLE 2(1) OF REGULATION (EU) NO 600/2014 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA; OR (III) NOT A QUALIFIED
INVESTOR AS DEFINED IN ARTICLE 2 OF REGULATION (EU) 2017/1129 AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUWA. CONSEQUENTLY, NO KEY INFORMATION DOCUMENT REQUIRED BY REGULATION (EU) NO 1286/2014 AS IT FORMS PART OF
DOMESTIC LAW BY VIRTUE OF THE EUWA (THE “UK PRIIPS REGULATION”) FOR OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO RETAIL INVESTORS IN THE UK HAS BEEN PREPARED AND THEREFORE OFFERING OR SELLING THE NOTES OR OTHERWISE MAKING THEM AVAILABLE TO ANY RETAIL INVESTOR IN THE UK MAY BE UNLAWFUL UNDER THE UK PRIIPS REGULATION.
NOTICE TO RESIDENTS OF HONG KONG
THE BONDS (EXCEPT FOR BONDS WHICH ARE A “STRUCTURED PRODUCT” AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE (CAP. 571 OF THE LAWS OF HONG KONG)
(“SECURITIES AND FUTURES ORDINANCE”)) MAY NOT BE OFFERED OR SOLD IN HONG KONG BY MEANS OF ANY DOCUMENT OTHER THAN (I) IN CIRCUMSTANCES WHICH DO NOT CONSTITUTE AN OFFER TO THE PUBLIC WITHIN THE MEANING OF THE COMPANIES
(WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE (CAP. 32 OF THE LAWS OF HONG KONG) (“COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS) ORDINANCE”) OR (II) TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SECURITIES
AND FUTURES ORDINANCE AND ANY RULES MADE THEREUNDER, OR (III) IN OTHER CIRCUMSTANCES WHICH DO NOT RESULT IN THE DOCUMENT BEING A “PROSPECTUS” AS DEFINED IN THE COMPANIES (WINDING UP AND MISCELLANEOUS PROVISIONS)
ORDINANCE, AND NO ADVERTISEMENT, INVITATION OR DOCUMENT RELATING TO THE BONDS MAY BE ISSUED OR MAY BE IN THE POSSESSION OF ANY PERSON FOR THE PURPOSE OF ISSUE (IN EACH CASE WHETHER IN HONG KONG OR ELSEWHERE), WHICH IS
DIRECTED AT, OR THE CONTENTS OF WHICH ARE LIKELY TO BE ACCESSED OR READ BY, THE PUBLIC OF HONG KONG (EXCEPT IF PERMITTED TO DO SO UNDER THE SECURITIES LAWS OF HONG KONG) OTHER THAN WITH RESPECT TO BONDS WHICH ARE OR ARE INTENDED TO BE DISPOSED OF ONLY TO PERSONS OUTSIDE HONG KONG OR ONLY TO “PROFESSIONAL INVESTORS” AS DEFINED IN THE SECURITIES AND FUTURES ORDINANCE AND ANY RULES MADE THEREUNDER.
NOTICE TO PROSPECTIVE INVESTORS IN SWITZERLAND
THIS OFFICIAL STATEMENT IS NOT INTENDED TO CONSTITUTE AN OFFER OR
SOLICITATION TO PURCHASE OR INVEST IN THE BONDS. THE BONDS MAY NOT BE PUBLICLY OFFERED, DIRECTLY OR INDIRECTLY, IN SWITZERLAND WITHIN THE MEANING OF THE SWISS FINANCIAL SERVICES ACT (“FINSA”) AND NO APPLICATION HAS
OR WILL BE MADE TO ADMIT THE BONDS TO TRADING ON ANY TRADING VENUE (EXCHANGE OR MULTILATERAL TRADING FACILITY) IN SWITZERLAND. NEITHER THIS OFFICIAL STATEMENT NOR ANY OTHER OFFERING OR MARKETING MATERIAL
RELATING TO THE BONDS CONSTITUTES A PROSPECTUS PURSUANT TO THE FINSA, AND NEITHER THIS OFFICIAL STATEMENT NOR ANY OTHER OFFERING OR MARKETING MATERIAL RELATING TO THE BONDS MAY BE PUBLICLY DISTRIBUTED OR OTHERWISE
MADE PUBLICLY AVAILABLE IN SWITZERLAND.
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NOTICE TO INVESTORS IN SINGAPORE
THIS OFFICIAL STATEMENT HAS NOT BEEN REGISTERED AS A PROSPECTUS WITH THE
MONETARY AUTHORITY OF SINGAPORE. ACCORDINGLY, THIS OFFICIAL STATEMENT AND ANY OTHER DOCUMENT OR MATERIAL IN CONNECTION WITH THE OFFER OR SALE, OR INVITATION FOR SUBSCRIPTION OR PURCHASE, OF THE BONDS MAY NOT BE
CIRCULATED OR DISTRIBUTED, NOR MAY THE BONDS BE OFFERED OR SOLD, OR BE MADE THE SUBJECT OF AN INVITATION FOR SUBSCRIPTION OR PURCHASE, WHETHER DIRECTLY OR INDIRECTLY, TO PERSONS IN SINGAPORE OTHER THAN:
(I) TO AN INSTITUTIONAL INVESTOR (AS DEFINED IN SECTION 4A OF THE SECURITIES AND FUTURES ACT, CHAPTER 289 OF SINGAPORE (THE “SFA”) UNDER SECTION 274, AS THE CASE MAY BE, SECTION 276(2);
(II) TO AN ACCREDITED INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA) IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA OR, AS THE CASE MAY BE, SECTION 276(2);
(III) TO A RELEVANT PERSON (AS DEFINED IN SECTION 275(2) OF THE SFA) PURSUANT TO SECTION 275(1), OR ANY PERSON PURSUANT TO SECTION 275(1A), OR, AS
THE CASE MAY BE, SECTION 276(2) AND IN ACCORDANCE WITH THE CONDITIONS SPECIFIED IN SECTION 275 OF THE SFA WHERE EACH SUCH PERSON IS (1) AN EXPERT INVESTOR (AS DEFINED IN SECTION 4A OF THE SFA) OR (2) NOT AN INDIVIDUAL.
WHERE THE BONDS ARE SUBSCRIBED OR PURCHASED UNDER SECTION 275 OF THE SFA BY A RELEVANT PERSON WHICH IS:
(A) A CORPORATION (WHICH IS NOT AN ACCREDITED INVESTOR) THE SOLE
BUSINESS OF WHICH IS TO HOLD INVESTMENTS AND THE ENTIRE SHARE CAPITAL OF WHICH IS OWNED BY ONE OR MORE INDIVIDUALS, EACH OF WHOM IS AN ACCREDITED INVESTOR; OR
(B) A TRUST (WHERE THE TRUSTEE IS NOT AN ACCREDITED INVESTOR) WHOSE SOLE PURPOSE IS TO HOLD INVESTMENTS AND EACH BENEFICIARY OF THE TRUST IS AN INDIVIDUAL WHO IS AN ACCREDITED
INVESTOR, SECURITIES OR SECURITIES-BASED DERIVATIVES CONTRACTS (EACH TERM AS DEFINED IN SECTION 2(1) OF THE SFA) OF THAT CORPORATION OR THE BENEFICIARIES’ RIGHTS AND INTEREST (HOWSOEVER DESCRIBED) IN THAT TRUST SHALL NOT BE TRANSFERRED WITHIN SIX MONTHS AFTER THAT CORPORATION OR THAT TRUST HAS ACQUIRED THE BONDS PURSUANT TO AN OFFER MADE UNDER SECTION 275 OF THE SFA EXCEPT:
(i) TO AN INSTITUTIONAL INVESTOR OR TO A RELEVANT PERSON, OR
TO ANY PERSON ARISING FROM AN OFFER REFERRED TO IN SECTION 275(1A) OR SECTION 276(4)(I)(B) OF THE SFA;
(ii) WHERE NO CONSIDERATION IS OR WILL BE GIVEN FOR THE
TRANSFER;
(iii) WHERE THE TRANSFER IS BY OPERATION OF LAW;
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(iv) AS SPECIFIED IN SECTION 276(7) OF THE SFA; OR
(v) AS SPECIFIED IN REGULATION 37A OF THE SECURITIES AND
FUTURES (OFFERS OF INVESTMENTS) (SECURITIES AND SECURITIES-BASED DERIVATIVES CONTRACTS) REGULATIONS 2018.
NOTICE TO PROSPECTIVE INVESTORS IN TAIWAN
THE OFFER OF THE BONDS HAS NOT BEEN AND WILL NOT BE REGISTERED OR FILED WITH, OR APPROVED BY, THE FINANCIAL SUPERVISORY COMMISSION OF TAIWAN AND/OR OTHER REGULATORY AUTHORITY OF TAIWAN PURSUANT TO RELEVANT
SECURITIES LAWS AND REGULATIONS, AND THE BONDS MAY NOT BE OFFERED, ISSUED OR SOLD IN TAIWAN THROUGH A PUBLIC OFFERING OR IN CIRCUMSTANCES WHICH CONSTITUTE AN OFFER WITHIN THE MEANING OF THE SECURITIES AND EXCHANGE ACT OF TAIWAN THAT REQUIRES THE REGISTRATION OR FILING WITH OR APPROVAL OF THE FINANCIAL SUPERVISORY COMMISSION OF TAIWAN. THE BONDS MAY BE MADE AVAILABLE OUTSIDE TAIWAN FOR PURCHASE BY INVESTORS RESIDING IN TAIWAN (EITHER DIRECTLY OR THROUGH PROPERLY LICENSED TAIWAN INTERMEDIARIES), BUT MAY NOT BE OFFERED OR SOLD IN TAIWAN EXCEPT TO QUALIFIED INVESTORS VIA A
TAIWAN LICENSED INTERMEDIARY. ANY SUBSCRIPTIONS OF BONDS SHALL ONLY BECOME EFFECTIVE UPON ACCEPTANCE BY THE ISSUER OR THE RELEVANT DEALER OUTSIDE TAIWAN AND SHALL BE DEEMED A CONTRACT ENTERED INTO IN THE
JURISDICTION OF INCORPORATION OF THE ISSUER OR RELEVANT DEALER, AS THE CASE MAY BE, UNLESS OTHERWISE SPECIFIED IN THE SUBSCRIPTION DOCUMENTS RELATING TO THE BONDS SIGNED BY THE INVESTORS.
NOTICE TO INVESTORS IN JAPAN
THE BONDS HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE FINANCIAL INSTRUMENTS AND EXCHANGE ACT OF JAPAN (NO. 25 OF 1948, AS AMENDED, THE
“FIEA”). NEITHER THE BONDS NOR ANY INTEREST THEREIN MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY “RESIDENT” OF JAPAN (AS DEFINED UNDER ITEM 5, PARAGRAPH 1, ARTICLE G OF THE FOREIGN
EXCHANGE AND FOREIGN TRADE ACT (ACT NO. 228 OF 1949, AS AMENDED)), OR TO OTHERS FOR RE-OFFERING OR RESALE, DIRECTLY OR INDIRECTLY, IN JAPAN OR TO, OR FOR THE BENEFIT OF, ANY RESIDENT OF JAPAN, EXCEPT PURSUANT TO AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, AND OTHERWISE IN COMPLIANCE WITH, THE FIEA AND ANY OTHER APPLICABLE LAWS, REGULATIONS AND MINISTERIAL GUIDELINES OF JAPAN.
THE PRIMARY OFFERING OF THE BONDS AND THE SOLICITATION OF AN OFFER FOR ACQUISITION THEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER
PARAGRAPH 1, ARTICLE 4 OF THE FIEA. AS IT IS A PRIMARY OFFERING, IN JAPAN, THE BONDS MAY ONLY BE OFFERED, SOLD, RESOLD OR OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY TO, OR FOR THE BENEFIT OF CERTAIN QUALIFIED
INSTITUTIONAL INVESTORS AS DEFINED IN THE FIEA (“QIIS”). A QII WHO PURCHASED OR OTHERWISE OBTAINED THE BONDS CANNOT RESELL OR OTHERWISE TRANSFER THE BONDS IN JAPAN TO ANY PERSON EXCEPT ANOTHER QII.
vii
ALASKA MUNICIPAL BOND BANK
333 Willoughby Avenue, 11th Floor P.O. Box 110405 Juneau, Alaska 99811-0405 (907) 465-2388
http://treasury.dor.alaska.gov/ambba/*
Board of Directors
Luke Welles Chair
Bruce Tangeman Member
Kendell Koelsch Member
Julie Anderson Member
Lucinda Mahoney Member (Mike Barnhill First Delegate)
Executive Director
Deven J. Mitchell
Finance Director
Ryan S. Williams
Bond Counsel
Orrick, Herrington & Sutcliffe LLP Seattle, Washington
Trustee
The Bank of New York Mellon Trust Company, N.A. San Francisco, California
Municipal Advisor
PFM Financial Advisors LLC Seattle, Washington
* The Bond Bank’s website is not part of this Official Statement, and investors should not rely on information presented in the Bond Bank’s website in determining whether to purchase the 2021 Series One, Two and Three Bonds. This inactive textual reference to the Bond Bank’s website is not a hyperlink and does not incorporate the Bond Bank’s website by reference.
viii
TABLE OF CONTENTS
INTRODUCTION ............................................................................ 1 General ................................................................................... 1 Alaska Municipal Bond Bank ................................................ 3
PURPOSE OF THE 2021 SERIES ONE, TWO AND THREE BONDS ............................................................................... 4 Purpose of the 2021 Series One Bonds .................................. 4 Purpose of the 2021 Series Two Bonds ................................. 4 Purpose of the 2021 Series Three Bonds................................ 5
Refunding Plan ...................................................................... 5 Refunded Bonds ..................................................................... 5
SOURCES AND USES OF FUNDS ...................................................... 8
DESCRIPTION OF THE 2021 SERIES ONE, TWO AND THREE BONDS .................................................................... 8 General Description ............................................................... 8 2021 Series One, Two and Three Bonds ................................ 8 Optional Redemption ............................................................. 9 Mandatory Sinking Fund Redemption ................................. 10 Notice and Effect of Redemption ......................................... 11 Selection of 2021 Series One, Two and Three Bonds for Redemption .................................................... 11
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS .............. 12 General ................................................................................. 12 Pledge Effected by the 2005 General Bond Resolution ....................................................................... 14 Municipal Bonds .................................................................. 14 2005 General Bond Resolution Reserve Fund ..................... 14 State Payments to Governmental Units ................................ 16 Pledge and Agreement of the State ...................................... 17
CERTAIN FORWARD DELIVERY CONSIDERATIONS ...................................................... 18 General ................................................................................. 18 2021 Series Three Bonds Settlement ................................... 18 Agreement of Purchasers ..................................................... 19 Additional Risks Related to the Forward Delivery Period .............................................................................. 21
ALASKA MUNICIPAL BOND BANK .............................................. 22 Organization ........................................................................ 22 Board of Directors................................................................ 22 Management ........................................................................ 23
BONDS OUTSTANDING ............................................................... 24 2005 General Bond Resolution ............................................ 24 2010 Master Bond Resolution .............................................. 24 2016 Master Bond Resolution .............................................. 25 Coastal Energy Impact Program .......................................... 25 Direct Loans ......................................................................... 25 Loans by the State of Alaska ................................................ 26
BONDS ISSUED AND OUTSTANDING AS OF APRIL 1, 2021 ................................................................................ 27
DEBT CAPACITY AS OF APRIL 1, 2021 ......................................... 27
DEBT SERVICE REQUIREMENTS .................................................. 28 Future Financing Plans ........................................................ 29 Debt Payment Record .......................................................... 29
SUMMARY OF THE 2005 GENERAL BOND RESOLUTION ............... 29
2005 General Bond Resolution Constitutes Contract .......................................................................... 29 Obligation of the Bond Bank ............................................... 29 Pledge .................................................................................. 29 Power to Issue Bonds and Make Pledges ............................ 30 General ................................................................................ 30 Waiver of Laws ................................................................... 30 Loan Agreement Provisions ................................................ 30 Modification of Loan Agreement Terms ............................. 31 Enforcement of Municipal Bonds ........................................ 31 Funds and Accounts ............................................................ 32 Security for Deposits and Investment of Funds ................... 33 Payment of Bonds................................................................ 34 Fees and Charges ................................................................. 34 Issuance of Additional Obligations ...................................... 34 Defeasance .......................................................................... 35 Supplements and Amendments ............................................ 35 Events of Default and Remedies .......................................... 36 Excess Earnings ................................................................... 38 Modifications to the 2005 General Bond Resolution ........... 38
CERTAIN BONDOWNERS’ RISKS ................................................. 38 General ................................................................................ 39 State and Governmental Unit Revenues .............................. 39 Adequacy of Revenues ........................................................ 40 Infectious Disease Outbreak – COVID-19 .......................... 42 Other Factors Affecting the State and Governmental Units ........................................................ 44 Ratings ................................................................................. 45 Limitations on Enforceability of Obligations and Remedies ........................................................................ 45 Early Redemption ................................................................ 45 Secondary Market and Prices .............................................. 45
LITIGATION ............................................................................... 46
TAX MATTERS ........................................................................... 46 2021 Series One Bonds and 2021 Series Three Bonds (Tax-Exempt/AMT) ............................................. 46 2021 Series Two Bonds (Taxable) ....................................... 48
CERTAIN LEGAL MATTERS ........................................................ 51
UNDERWRITING ......................................................................... 52
MUNICIPAL ADVISOR................................................................. 53
FINANCIAL STATEMENTS ........................................................... 53
RATINGS.................................................................................... 53
CONTINUING DISCLOSURE UNDERTAKINGS ................................ 53 Bond Bank Continuing Disclosure Undertaking ................. 53 Governmental Unit Continuing Disclosure Undertakings ................................................................... 54 Compliance with Prior Continuing Disclosure Undertakings ................................................................... 54
DEFINITIONS .............................................................................. 54
MISCELLANEOUS ....................................................................... 56
OFFICIAL STATEMENT ............................................................... 57
Appendix A-1: PROPOSED FORM OF OPINION OF BOND COUNSEL – SERIES 2021 ONE AND SERIES 2021 TWO Appendix A-2: PROPOSED FORM OF OPINION OF BOND COUNSEL – SERIES 2021 THREE Appendix B: STATE PAYMENTS TO GOVERNMENTAL UNITS Appendix C: GOVERNMENTAL UNIT STATISTICS REGARDING PARTICIPATION IN THE BOND BANK Appendix D: FINANCIAL STATEMENTS OF THE ALASKA MUNICIPAL BOND BANK FOR THE YEAR ENDED JUNE 30, 2020 Appendix E: 2005 GENERAL BOND RESOLUTION AND 2013 FIRST SUPPLEMENTAL RESOLUTION Appendix F: INFORMATION CONCERNING THE STATE OF ALASKA Appendix G: PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE Appendix H: DTC AND ITS BOOK-ENTRY SYSTEM Appendix I: GLOBAL CLEARANCE PROCEDURES
OFFICIAL STATEMENT
Relating to
ALASKA MUNICIPAL BOND BANK $29,775,000 GENERAL OBLIGATION AND REFUNDING BONDS, 2021 SERIES ONE (TAX-EXEMPT)
$200,975,000 GENERAL OBLIGATION AND REFUNDING BONDS, 2021 SERIES TWO (TAXABLE) $5,725,000 GENERAL OBLIGATION REFUNDING BONDS,
2021 SERIES THREE (AMT FORWARD DELIVERY)
INTRODUCTION
General
This Official Statement is furnished by the Alaska Municipal Bond Bank (the “Bond Bank”) in connection with the sale of $29,775,000 aggregate principal amount of its General Obligation and
Refunding Bonds, 2021 Series One (Tax-Exempt) (the “2021 Series One Bonds”), $200,975,000 aggregate principal amount of its General Obligation and Refunding Bonds, 2021 Series Two (Taxable) (the “2021 Series Two Bonds”) and $5,725,000 aggregate principal amount of its General Obligation
Refunding Bonds, 2021 Series Three (AMT Forward Delivery) (the “2021 Series Three Bonds,” and together with the 2021 Series One Bonds and the 2021 Series Two Bonds, the “2021 Series One, Two and Three Bonds”). See “PURPOSE OF THE 2021 SERIES ONE, TWO AND THREE BONDS.”
The 2021 Series One Bonds and the 2021 Series Two Bonds are expected to be delivered on June 16, 2021.
The 2021 Series Three Bonds will not be delivered until on or about December 2, 2021. The delay in the issuance and delivery of the 2021 Series Three Bonds may have significant consequences to the purchasers of beneficial ownership interests therein. The market value of the 2021 Series Three Bonds
on the date of issuance and delivery thereof is unlikely to be the same as, and likely will be greater or less than, the respective initial offering prices thereof, and any such difference may be substantial. Several factors may adversely affect the market prices of the 2021 Series Three Bonds, including, but not limited
to, a general increase in interest rates for all obligations and other indebtedness, changes to the economic environment due to the pandemic or other factors, any proposed or adopted change in federal tax laws affecting the relative benefits of owning tax-exempt securities instead of other types of investments, such
as fully taxable obligations, or any adverse development with respect to the Bond Bank. See “CERTAIN FORWARD DELIVERY CONSIDERATIONS” herein.
BY PLACING AN ORDER WITH THE UNDERWRITER FOR THE PURCHASE OF THE
2021 SERIES THREE BONDS, EACH INVESTOR ACKNOWLEDGES AND AGREES THAT THE 2021 SERIES THREE BONDS ARE BEING SOLD ON A “DELAYED DELIVERY” BASIS AND THAT THE INVESTOR IS OBLIGATED TO ACCEPT DELIVERY AND PAY FOR THE 2021 SERIES THREE BONDS ON THE DELAYED DELIVERY DATE SUBJECT ONLY TO THE CONDITIONS IN THE FORWARD DELIVERY BOND PURCHASE AGREEMENT. See “CERTAIN FORWARD DELIVERY CONSIDERATIONS.”
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The 2021 Series One, Two and Three Bonds will be issued under the General Obligation Bond Resolution, adopted by the Board of Directors of the Bond Bank (the “Board”) on July 13, 2005 (as
amended on August 19, 2009, the “2005 General Bond Resolution”), and as supplemented by Series Resolution No. 2021-01, adopted by the Board on April 15, 2021 (the “Bond Resolution,” and together with the 2005 General Bond Resolution, the “Resolutions”). On February 19, 2013, the Board adopted a
First Supplemental Resolution (the “2013 First Supplemental Resolution”) that amends certain provisions of the 2005 General Bond Resolution, effective as of the first date on which all Bonds issued prior to February 19, 2013, are no longer Outstanding. Holders and Beneficial Owners of the 2021 Series One,
Two and Three Bonds are deemed to have consented to all of the amendments authorized in the 2013 First Supplemental Resolution. Copies of the 2005 General Bond Resolution and the 2013 First Supplemental Resolution are included as Appendix E. See “SUMMARY OF THE 2005 GENERAL BOND RESOLUTION – Modifications to the 2005 General Bond Resolution” and Appendix E – “2005 GENERAL BOND RESOLUTION AND 2013 FIRST SUPPLEMENTAL RESOLUTION.”
The Bond Bank was created pursuant to Alaska Statutes 44.85.005 – 44.85.420, as amended (the “Act”), for the primary purpose of lending money to eligible borrowers in the State of Alaska (the “State”), including the purchase of bonds and promissory notes issued by such borrowers. Certain
capitalized terms used in this Official Statement, and not otherwise defined herein, are defined in the 2005 General Bond Resolution.
The Bank of New York Mellon Trust Company, N.A., of San Francisco, California, as Trustee
under the 2005 General Bond Resolution (the “Trustee”), serves as the Trustee and Paying Agent for the 2021 Series One, Two and Three Bonds.
The 2021 Series One, Two and Three Bonds are direct and general obligations of the Bond Bank,
and the full faith and credit of the Bond Bank are pledged to the payment of the principal of and interest on the 2021 Series One, Two and Three Bonds, subject to any agreements made with the holders of any other notes or bonds of the Bond Bank pledging any particular revenues or assets not pledged under the
2005 General Bond Resolution. The 2021 Series One, Two and Three Bonds are equally and ratably secured by the pledge and assignment of all Municipal Bonds acquired by the Bond Bank under the 2005 General Bond Resolution on a parity with other Bonds of the Bond Bank heretofore or hereafter issued
under the 2005 General Bond Resolution. The 2021 Series One, Two and Three Bonds are the 47th, 48th and 49th Series of Bonds, respectively, issued under the 2005 General Bond Resolution. See “SECURITY
AND SOURCES OF PAYMENT FOR THE BONDS” and “BONDS OUTSTANDING.”
The 2021 Series One, Two and Three Bonds are payable solely from the sources provided in the 2005 General Bond Resolution and the Bond Resolution. The 2021 Series One, Two and Three Bonds do not constitute a debt or other liability of the State of Alaska, and the 2021 Series One, Two and Three Bonds do not directly, indirectly, or contingently obligate the State of Alaska to levy any form of taxation or make any appropriation for the payment of the 2021 Series One, Two and
Three Bonds. Neither the faith and credit nor the taxing power of the State of Alaska is pledged for the payment of the 2021 Series One, Two and Three Bonds. The Bond Bank has no taxing power. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS.”
All references herein to agreements and documents are qualified in their entirety by reference to the definitive forms thereof, and all references to the 2021 Series One, Two and Three Bonds are further qualified by reference to the provisions with respect thereto contained in the Bond Resolution. All bonds
issued under and pursuant to the terms of the 2005 General Bond Resolution are referred to as the “Bonds.”
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The outbreak of the 2019 novel coronavirus (“COVID-19”) is a significant event that has had and will continue to have ongoing, material effects on the State and the Governmental Units. Although the
effects of COVID-19 cannot be predicted with certainty, COVID-19 and related social distancing measures implemented in response to COVID-19 have had and are expected to continue to have a material adverse effect on the global economy and financial markets; economic activity within the State,
including the oil and gas, tourism, and healthcare industries, among others; revenues collected by the State and Governmental Units; and the value of the Alaska Permanent Fund and Earnings Reserve. The availability of the COVID-19 vaccine is expected to have a positive impact on state, local, and
international re-opening plans, however, the rate and extent of the impact is unknown. Historic information in this Official Statement about the finances and operations of the State, the Bond Bank, and the Governmental Units that predates the outbreak of COVID-19 should be considered in light of the possible or probable negative effects the COVID-19 outbreak may have on the current and future finances and operations thereof. Any budgets or projections that have been updated since the outbreak of COVID-19 should be considered in light of the possible or probable further negative impact from the COVID-19 outbreak. On March 15, 2021 the Department of Revenue’s Tax Division issued its Revenue Sources Book Spring 2021 Revenue Forecast (the “Spring 2021 Revenue Forecast”), which provides
updated projections that reflect certain impacts from the COVID-19 outbreak. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA.” The Spring 2021 Revenue Forecast and any other budget and projection information and all other forward-looking statements in this Official Statement are
based on current expectations and are not intended as representations of fact or guarantees of results. Any such forward-looking statements are inherently subject to a variety of risks and uncertainties that could cause actual results or performance to differ materially from those that have been forecast, estimated, or
projected.
For a discussion of COVID-19 and certain other risks associated with an investment in the 2021 Series One, Two and Three Bonds, see “CERTAIN BONDOWNERS’ RISKS.”
Alaska Municipal Bond Bank
The Bond Bank is a public corporation of the State and an instrumentality of the State established and organized by the Act in 1975 within the State of Alaska Department of Revenue (the “DOR”), initially to assist municipalities in the State in accessing the financial markets by lending money through the purchase of municipal general obligation bonds. The Bond Bank is currently administered by staff that is shared with the DOR. A board of five directors authorizes the Bond Bank’s actions including issuing bonds and approving loans. See “ALASKA MUNICIPAL BOND BANK.”
The Act has been modified from time to time, including changes to allow the Bond Bank to finance loans to port authorities, joint action agencies, the Alaska Municipal League Joint Insurance Association, the University of Alaska, and regional health organizations and for purposes including revenue bond issues, other debt obligations, and electrical generation projects including hydroelectric
projects. The bonds issued by the Bond Bank for the purpose of making loans to governmental borrowers are issued primarily pursuant to the 2005 General Bond Resolution, and in one instance pursuant to the 2010 General Bond Resolution adopted by the Board on October 19, 2010 (the “2010 Master Bond
Resolution”). The bonds issued by the Bond Bank for the purpose of making loans to regional health organizations are issued pursuant to the 2016 Master Resolution, adopted by the Board on May 5, 2016 (the “2016 Master Bond Resolution”).
On March 5, 2021, House Bill 127 (“HB 127”) was introduced in the Legislature. As drafted, and if passed, the bill would amend the Act to grant broader authority to the Bond Bank to issue bonds on behalf of the University of Alaska (the “University”) and regional health organizations. HB 127 would
permit the Bond Bank to issue bonds on behalf of the University for any University purpose, and the
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maximum authorized amount would increase from $87.5 million to $500 million. HB 127 would also increase the maximum amount that a regional health organization is permitted to borrow for a given
project from 49% of the project costs to 100% of the project costs, and from a maximum authorized amount of $102.5 million to $205 million of the cost of a project, and the total lending authority of the Bond Bank for regional health organization bond issuances would increase from $205 million to $500
million.
The Bond Bank provides capital funds for the majority of eligible borrowers through loans to such entities funded by issuing its bonds and notes in the national market to finance such loans under
conditions set forth in the Act and the administrative regulations thereunder (Chapter 144 of the Alaska Administrative Code). Loan payments by Governmental Units to the Bond Bank provide the primary source of funds for payment of principal of and interest on the Bonds, including the 2021 Series One, Two and Three Bonds.
Although payments made by the Governmental Units on their Municipal Bonds are the primary security for the payment of principal of and interest on the Bonds, including the 2021 Series One, Two and Three Bonds, the Bond Bank also maintains a reserve account within the reserve fund created under the Act as additional security for the payment of the Bonds and separate reserve accounts as security for
bonds issued under the 2010 Master Bond Resolution and the 2016 Master Bond Resolution. The Bond Bank is required under the Act to report the sufficiency of the reserve fund and to seek appropriations from the Legislature to replenish the reserve fund if needed. See “SECURITY AND SOURCES OF PAYMENT
FOR THE BONDS – 2005 General Bond Resolution Reserve Fund.” For information regarding the State of Alaska and its appropriation process, see Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA.”
PURPOSE OF THE 2021 SERIES ONE, TWO AND THREE BONDS
Purpose of the 2021 Series One Bonds
The 2021 Series One Bond proceeds are to be used: (i) to provide a loan to the City of Sand
Point, Alaska, to finance costs of certain capital improvements related to the City of Sand Point’s replacement harbor boat lift and to make a deposit to the City of Sand Point’s borrower reserve account related to such loan; (ii) to provide a loan to the Southeast Alaska Power Agency (“SEAPA”) to finance costs of certain renewal and replacement capital projects related to SEAPA’s electric utility assets and to make a deposit to SEAPA’s borrower reserve account related to such loan; (iii) to refund certain outstanding bonds previously issued by the Bond Bank, the proceeds of which were used to make loans to the Kenai Peninsula Borough, Kodiak Island Borough, City of Seward, and City and Borough of Sitka; (iv) to make a deposit to the Reserve Fund; and (v) to pay a portion of the costs of issuing the 2021 Series One Bonds.
Purpose of the 2021 Series Two Bonds
The 2021 Series Two Bond proceeds are to be used: (i) to provide a loan to the City and Borough
of Sitka, Alaska to refinance a loan made by the Alaska Energy Authority; (ii) to refund certain outstanding bonds previously issued by the Bond Bank, the proceeds of which were used to make loans to the Aleutians East Borough, City of Homer, City and Borough of Juneau, Kenai Peninsula Borough, City
of Ketchikan, Kodiak Island Borough, Lake and Peninsula Borough, City of Sand Point, and City and Borough of Sitka; and (iii) to pay a portion of the costs of issuing the 2021 Series Two Bonds.
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Purpose of the 2021 Series Three Bonds
The 2021 Series Three Bond proceeds are to be used: (i) to refund certain outstanding bonds
previously issued by the Bond Bank, the proceeds of which were used to make loans to the City and Borough of Juneau; and (ii) to pay a portion of the costs of issuing the 2021 Series Three Bonds.
Refunding Plan
A portion of the proceeds of the 2021 Series One, Two and Three Bonds are to be used to refund certain outstanding Bonds of the Bond Bank described below (the “Refunded Bonds”). The refunding of the Refunded Bonds is being undertaken to achieve net present value debt service savings for the Bond Bank and the Governmental Units.
Refunded Bonds
The outstanding bonds of the Bond Bank to be refunded with a portion of the proceeds of the 2021 Series One Bonds are set forth below.
Series Maturity Date Principal Amount Interest Rate Redemption Date Redemption Price
2011 One 03/01/2026 $ 2,125,000(1) 4.750% 07/01/2021 100% 2011 One 03/01/2031 2,690,000(1) 5.125 07/01/2021 100 2011 Two 04/01/2022 280,000 3.250 07/01/2021 100 2011 Two 04/01/2023 285,000 3.375 07/01/2021 100 2011 Two 04/01/2024 295,000 4.000 07/01/2021 100 2011 Two 04/01/2025 310,000 4.000 07/01/2021 100 2011 Two 04/01/2027 655,000(1) 4.000 07/01/2021 100 2011 Two 04/01/2028 345,000 4.100 07/01/2021 100 2011 Two 04/01/2029 360,000 4.200 07/01/2021 100 2011 Two 04/01/2030 375,000 4.300 07/01/2021 100 2011 Two 04/01/2031 395,000 4.375 07/01/2021 100 2011 Three 09/01/2022 4,580,000(2) 5.000 09/01/2021 100 2011 Three 09/01/2023 3,830,000(2) 5.000 09/01/2021 100 2011 Three 09/01/2024 410,000(2) 4.000 09/01/2021 100 2011 Three 09/01/2025 430,000(2) 4.000 09/01/2021 100 2011 Three 09/01/2026 445,000(2) 4.000 09/01/2021 100 2011 Three 09/01/2031 865,000(1) (2) 5.000 09/01/2021 100 2011 Three 09/01/2036 1,100,000(1) 4.250 09/01/2021 100 (1) Term Bonds.
(2) Partial maturity.
The outstanding bonds of the Bond Bank to be refunded with a portion of the proceeds of the 2021 Series Two Bonds are set forth below.
Series Maturity Date Principal Amount Interest Rate Redemption Date Redemption Price 2010B Three 10/01/2025 $ 1,320,000(1) (2) 4.925% 07/01/2021 100% 2010B Three 10/01/2030 1,510,000(1) (2) 5.432 07/01/2021 100 2012 Two 09/01/2022 2,835,000(2) 5.000 03/01/2022 100 2012 Two 09/01/2023 2,975,000(2) 5.000 03/01/2022 100 2012 Two 09/01/2024 2,290,000(2) 5.000 03/01/2022 100 2012 Two 09/01/2025 290,000(2) 2.750 03/01/2022 100 2012 Two 09/01/2026 295,000 3.000 03/01/2022 100
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2012 Two 09/01/2027 305,000 3.125 03/01/2022 100 2012 Two 09/01/2028 315,000 3.250 03/01/2022 100 2012 Two 09/01/2029 330,000 3.250 03/01/2022 100 2012 Two 09/01/2031 685,000(1) 3.500 03/01/2022 100 2013 One 02/01/2024 1,520,000(2) 5.000 02/01/2023 100 2013 One 02/01/2025 1,585,000(2) 5.000 02/01/2023 100 2013 One 02/01/2026 2,745,000 5.000 02/01/2023 100 2013 One 02/01/2027 695,000 3.000 02/01/2023 100 2013 One 02/01/2027 2,195,000 5.000 02/01/2023 100 2013 One 02/01/2028 350,000 3.125 02/01/2023 100 2013 One 02/01/2028 2,670,000 5.000 02/01/2023 100 2013 One 02/01/2029 3,165,000 5.000 02/01/2023 100 2013 One 02/01/2030 3,325,000 5.000 02/01/2023 100 2013 One 02/01/2031 3,490,000 5.000 02/01/2023 100 2013 One 02/01/2032 4,890,000 5.000 02/01/2023 100 2013 One 02/01/2033 3,945,000(2) 3.800 02/01/2023 100 2013 One 02/01/2035 5,030,000(1) 5.000 02/01/2023 100 2013 One 02/01/2038 6,245,000(1) 5.000 02/01/2023 100 2013 One 02/01/2043 11,660,000(1) 5.000 02/01/2023 100 2013 One 02/01/2047 11,615,000(1) 5.000 02/01/2023 100 2013A Two 06/01/2024 660,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2025 865,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2026 930,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2027 975,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2028 1,025,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2029 1,075,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2030 1,130,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2031 1,190,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2032 1,250,000(2) 5.000 06/01/2023 100 2013A Two 06/01/2033 1,315,000(2) 5.000 06/01/2023 100 2013B Two 06/01/2024 615,000(2) 5.000 06/01/2023 100 2013B Two 06/01/2030 4,410,000(1) (2) 5.000 07/01/2021 100 2013B Two 06/01/2031 870,000(2) 5.000 06/01/2023 100 2013B Two 06/01/2032 910,000(2) 3.625 06/01/2023 100 2013B Two 06/01/2033 945,000(2) 3.750 06/01/2023 100 2013 Three 08/01/2024 1,920,000 5.000 08/01/2023 100 2013 Three 08/01/2025 2,015,000 5.000 08/01/2023 100 2013 Three 08/01/2026 2,115,000 5.000 08/01/2023 100 2013 Three 08/01/2027 2,230,000 5.000 08/01/2023 100 2013 Three 08/01/2028 2,340,000 5.000 08/01/2023 100 2013 Three 08/01/2029 2,460,000 5.000 08/01/2023 100 2013 Three 08/01/2030 2,570,000 4.000 08/01/2023 100 2013 Three 08/01/2031 3,595,000 5.000 08/01/2023 100 2013 Three 08/01/2032 3,780,000 5.000 08/01/2023 100 2013 Three 08/01/2033 3,975,000 5.000 08/01/2023 100 2013 Three 08/01/2035 2,155,000(1) 5.000 08/01/2023 100 2013 Three 08/01/2036 1,155,000 4.500 08/01/2023 100 2013 Three 08/01/2042 8,280,000(1) 5.000 08/01/2023 100 2013 Three 08/01/2048 11,170,000(1) 5.000 08/01/2023 100 2014A One 03/01/2026 1,150,000(2) 5.000 03/01/2024 100 2014A One 03/01/2027 1,205,000(2) 5.000 03/01/2024 100 2014A One 03/01/2028 1,265,000(2) 5.000 03/01/2024 100 2014A One 03/01/2029 1,330,000(2) 5.000 03/01/2024 100 2014A One 03/01/2030 1,395,000(2) 5.000 03/01/2024 100 2014A One 03/01/2031 1,465,000(2) 4.500 03/01/2024 100 2014A One 03/01/2033 3,145,000(1) (2) 5.000 03/01/2024 100
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2014A One 03/01/2034 1,690,000(2) 5.000 03/01/2024 100 2014 Three 10/01/2031 825,000(2) 5.000 10/01/2024 100 2014 Three 10/01/2032 870,000(2) 5.000 10/01/2024 100 2014 Three 10/01/2033 915,000(2) 5.000 10/01/2024 100 2014 Three 10/01/2034 960,000(2) 5.000 10/01/2024 100 2014 Three 10/01/2039 5,585,000(1) 5.000 10/01/2024 100 2014 Three 10/01/2044 7,170,000(1) 5.000 10/01/2024 100 (1) Term Bonds.
(2) Partial maturity.
The outstanding bonds of the Bond Bank to be refunded with a portion of the proceeds of the 2021 Series Three Bonds are set forth below.
Series Maturity Date Principal Amount Interest Rate Redemption Date Redemption Price 2015B Two 03/01/2034 $ 7,045,000(1) 5.000% 03/01/2022 100% (1) Term Bonds.
Certain proceeds of the 2021 Series One, Two and Three Bonds, together with other legally available funds, are to be deposited in one or more redemption accounts (the “Redemption Account”) to
be held by The Bank of New York Mellon Trust Company, N.A., San Francisco, California, as escrow agent, pursuant to one or more escrow deposit agreements. Certain proceeds deposited in the Redemption Account are to be invested in noncallable direct obligations of, or obligations the principal of and interest
on which are unconditionally guaranteed by, the United States of America (the “Escrow Obligations”). The maturing principal of and interest on the Escrow Obligations and the other money in the Redemption Account are to be used to pay interest on the Refunded Bonds when due and, on each maturity or
redemption date, the principal of the Refunded Bonds when due.
The mathematical accuracy of the computations of the adequacy of the maturing principal amounts of and interest on the Escrow Obligations and the other money in the Redemption Account to pay principal of and interest on the Refunded Bonds as described above are to be verified by Causey Demgen & Moore P.C., independent certified public accountants.
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SOURCES AND USES OF FUNDS
The table below sets forth the sources and uses of funds related to the 2021 Series One, Two and
Three Bonds, rounded to the nearest dollar.
2021 Series One (5) 2021 Series Two (5) 2021 Series Three (5)
Sources:
Principal Amount $ 29,775,000 $200,975,000 $ 5,725,000
Original Issue Premium 6,038,394 - 1,589,887
Other Sources (1) 27,250 - -
Total Sources $ 35,840,644 $200,975,000 $ 7,314,887
Uses:
Deposit to Redemption Account (2) $ 20,168,504 $193,691,367 $ 7,221,126
Deposit to Reserve Fund (3) 875,700 - -
Loan to City and Borough of Sitka - 5,923,440 -
Loan to the City of Sand Point 1,100,000 - -
Loan to SEAPA 13,370,000 - -
Costs of Issuance and Rounding (4) 326,440 1,360,193 93,761
Total Uses $ 35,840,644 $200,975,000 $ 7,314,887
(1) Represents Bond Bank contribution to payment of costs of issuance.
(2) See “PURPOSE OF THE 2021 SERIES ONE, TWO AND THREE BONDS--Refunding Plan.”
(3) Represents amount to be transferred to the Reserve Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS--2005 General Bond Resolution Reserve Fund.”
(4) Includes Bond Bank and Governmental Unit costs of issuance such as Underwriters’ discount, legal fees,
municipal advisor fees, rating agency fees, Trustee Fees, verification agent, accounting, printing and other costs of issuance of the 2021 Series One, Two and Three Bonds.
(5) Total may not foot due to rounding.
DESCRIPTION OF THE 2021 SERIES ONE, TWO AND THREE BONDS
General Description
The 2021 Series One, Two and Three Bonds are issuable only as fully registered bonds, registered in the name of Cede & Co., as nominee for The Depository Trust Company, New York, New
York (“DTC”), as securities depository for the 2021 Series One, Two and Three Bonds. Principal of and interest on the 2021 Series One, Two and Three Bonds are payable by the Trustee to DTC which, in turn, is obligated to disburse such principal and interest payments to its participants (the “DTC Participants”) in
accordance with DTC procedures. See Appendix H – “DTC AND ITS BOOK-ENTRY SYSTEM.”
2021 Series One, Two and Three Bonds
The 2021 Series One, Two and Three Bonds mature, subject to prior redemption, on the dates and bear interest at the rates set forth on the inside cover pages of this Official Statement. The 2021 Series One, Two and Three Bonds are issuable in denominations of $5,000 or any integral multiple thereof within a maturity. Interest on the 2021 Series One Bonds and 2021 Series Two Bonds will accrue from the date of delivery of the 2021 Series One Bonds and 2021 Series Two Bonds, or from the most recent interest payment date to which interest has been paid or provided for, and is payable on each June 1 and
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December 1, commencing December 1, 2021. Interest on the 2021 Series Three Bonds will accrue from the date of delivery of the 2021 Series Three Bonds, or from the most recent interest payment date to
which interest has been paid or provided for, and is payable on each June 1 and December 1, commencing June 1, 2022.
Optional Redemption
2021 Series One Bonds. The 2021 Series One Bonds maturing on or after December 1, 2032, are subject to redemption in whole or in part at the option of the Bond Bank on any date on or after December 1, 2031, at a price of 100 percent of the principal amount thereof to be redeemed plus accrued
interest to the date fixed for redemption. The Loans to the Governmental Units have corresponding optional prepayment provisions.
2021 Series Two Bonds. The 2021 Series Two Bonds maturing on or after December 1, 2032, are subject to redemption in whole or in part at the option of the Bond Bank on any date on or after December 1, 2031, at a price of 100 percent of the principal amount thereof to be redeemed plus accrued interest to the date fixed for redemption. The Loans to the Governmental Units have corresponding optional prepayment provisions.
Make-Whole Optional Redemption. The 2021 Series Two Bonds are subject to optional
redemption by the Bond Bank prior to their stated maturity dates on any date prior to December 1, 2031, as a whole or in part (and within a maturity in accordance with the operational procedures of DTC then in effect), on any business day, at the “Make-Whole Redemption Price,” plus accrued and unpaid interest on
the 2021 Series Two Bonds to be redeemed on the date fixed for redemption.
The “Make-Whole Redemption Price” is the greater of (i) 100 percent of the principal amount of the 2021 Series Two Bonds to be redeemed or (ii) the sum of the present value of the remaining
scheduled payments of principal and interest on the 2021 Series Two Bonds to be redeemed, not including any portion of those payments of interest accrued and unpaid as of the date on which such 2021 Series Two Bonds are to be redeemed, discounted to the date on which the 2021 Series Two Bonds are to
be redeemed on a semi-annual basis, assuming a 360-day year consisting of twelve 30-day months, at the “Treasury Rate” defined below, plus 20 basis points.
“Treasury Rate” means, with respect to any redemption date for a particular 2021 Series Two Bonds, the yield to maturity as of such redemption date of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) that has become publicly available at least two business days prior to the redemption date, but not more than 45 calendar days (excluding inflation indexed securities), or, if such Statistical Release is no longer published, any publicly available source of similar market data) most nearly equal to the period from the redemption date to the maturity date of the 2021 Series Two Bonds to be redeemed; provided, however, that if the period from the redemption date to such maturity date is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity
of one year will be used.
2021 Series Three Bonds. The 2021 Series Three Bonds maturing on or after December 1, 2032, are subject to redemption in whole or in part at the option of the Bond Bank on any date on or after
December 1, 2031, at a price of 100 percent of the principal amount thereof to be redeemed plus accrued interest to the date fixed for redemption. The Loans to the Governmental Units have corresponding optional prepayment provisions.
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Mandatory Sinking Fund Redemption
The 2021 Series One Bonds maturing on December 1, 2045, are subject to mandatory sinking
fund redemption on December 1 of the years and in the principal amounts set forth in the following table. Any such redemption will be at a price of 100 percent of the principal amount to be redeemed plus accrued and unpaid interest thereon to the date fixed for redemption, but without premium.
2021 Series One Term Bonds Due December 1, 2045
Year Principal Amount 2042 $ 655,000 2043 690,000
2044 725,000 2045* 760,000
* Maturity.
The Bond Resolution provides that if the Bond Bank redeems a portion of the 2021 Series One Term Bonds pursuant to the optional redemption provisions described above or purchases for cancellation or defeases 2021 Series One Term Bonds, the 2021 Series One Term Bonds so redeemed, purchased or
defeased may be credited against one or more of the scheduled mandatory sinking fund redemption amounts of the same maturity in the order directed by the Bond Bank (or if no direction is given, then in a random manner as determined by the Trustee).
The 2021 Series Two Bonds maturing on December 1, 2041, are subject to mandatory sinking fund redemption on December 1 of the years and in the principal amounts set forth in the following table. Any such redemption will be at a price of 100 percent of the principal amount to be redeemed plus accrued and unpaid interest thereon to the date fixed for redemption, but without premium.
2021 Series Two Term Bonds Due December 1, 2041
Year Principal Amount
2037 $ 4,825,000
2038 4,800,000 2039 4,950,000 2040 5,105,000 2041* 5,260,000
* Maturity.
The 2021 Series Two Bonds maturing on December 1, 2048, are subject to mandatory sinking fund redemption on December 1 of the years and in the principal amounts set forth in the following table. Any such redemption will be at a price of 100 percent of the principal amount to be redeemed plus
accrued and unpaid interest thereon to the date fixed for redemption, but without premium.
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2021 Series Two Term Bonds Due December 1, 2048
Year Principal Amount
2042 $ 5,430,000 2043 5,600,000 2044 5,775,000 2045 4,440,000
2046 4,580,000 2047 1,820,000 2048* 1,875,000
* Maturity.
The Bond Resolution provides that if the Bond Bank redeems a portion of the 2021 Series Two Term Bonds pursuant to the optional redemption provisions described above or purchases for cancellation
or defeases 2021 Series Two Term Bonds, the 2021 Series Two Term Bonds so redeemed, purchased or defeased may be credited against one or more of the scheduled mandatory sinking fund redemption amounts of the same maturity in the order directed by the Bond Bank (or if no direction is given, then in a
random manner as determined by the Trustee).
Notice and Effect of Redemption
The Bond Resolution provides that at least 20 days, but not more than 60 days, prior to the date
upon which any 2021 Series One, Two and Three Bonds are to be redeemed, the Trustee will mail a notice of redemption to the registered owner (DTC so long as all of the 2021 Series One, Two and Three Bonds are held under the DTC book-entry system) of any 2021 Series One and Two Bond all or a portion of which is to be redeemed, at the owner’s last address appearing on the registration books of the Bond Bank kept by the Trustee. So long as all of the 2021 Series One, Two and Three Bonds are held under the DTC book-entry system, such notice will be sent only to DTC, and any notice to the Beneficial Owners of the 2021 Series One, Two and Three Bonds will be the responsibility of DTC Participants. Neither the Bond Bank nor the Trustee will provide redemption notices to the Beneficial Owners.
The Bond Resolution provides that a notice of redemption is required to state that on the date fixed for redemption the redemption price will become due and payable on each 2021 Series One, Two and Three Bond called for redemption, unless, in the case of optional redemption, money sufficient to
redeem the 2021 Series One, Two and Three Bonds is not on deposit with the Trustee, and that if sufficient money is on deposit with the Trustee interest thereon will cease to accrue from and after such date. In the case of optional redemptions, the Bond Resolution requires that the notice state that it is a
conditional notice and that on the date fixed for redemption, provided that money sufficient to redeem the 2021 Series One, Two and Three Bonds specified in the notice is on deposit with the Trustee, the redemption price will become due and payable and interest thereon will cease to accrue.
The 2005 General Bond Resolution provides that if at the time of mailing any notice of optional redemption, money sufficient to redeem the 2021 Series One, Two and Three Bonds to be redeemed is not on deposit with the Trustee, the notice is required to state that the redemption is subject to the deposit of the redemption money with the Trustee and that the notice will be of no effect unless such money is so deposited.
Selection of 2021 Series One, Two and Three Bonds for Redemption
If fewer than all of the 2021 Series One Bonds are to be redeemed prior to maturity at the option of the Bond Bank, the Bond Bank may select the maturity or maturities to be redeemed. If, at the time
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notice of redemption is given the 2021 Series One Bonds to be redeemed are in book-entry only form, then DTC will select the 2021 Series One Bonds for redemption within a maturity in accordance with
operational procedures of DTC referred to in the Letter of Representations. The 2005 General Bond Resolution provides that if less than all of the Bonds of any maturity are called for redemption and the Bonds are not in book-entry form, the Bonds to be redeemed are to be selected by lot or in any manner as
the Trustee, in its sole discretion, may deem appropriate and fair. See Appendix H – “DTC AND ITS BOOK-ENTRY SYSTEM.”
If fewer than all of the 2021 Series Two Bonds are to be redeemed prior to maturity at the option
of the Bond Bank, the Bond Bank may select the maturity or maturities to be redeemed at the option of the Bond Bank. If, at the time notice of redemption is given the 2021 Series Two Bonds are in book-entry form, then DTC will select the 2021 Series Two Bonds for redemption within a maturity in accordance with operational procedures of DTC referred to in the Letter of Representations. The 2005 General Bond Resolution provides that if less than all of the Bonds of any maturity are called for redemption and the Bonds are not in book-entry form, the Bonds to be redeemed are to be selected on a pro rata pass-through distribution of principal basis by the Trustee or in any manner as the Trustee, in its sole discretion, may deem appropriate and fair. See Appendix H – “DTC AND ITS BOOK-ENTRY SYSTEM.”
If fewer than all of the 2021 Series Three Bonds are to be redeemed prior to maturity at the option of the Bond Bank, the Bond Bank may select the maturity or maturities to be redeemed. If, at the time notice of redemption is given the 2021 Series Three Bonds to be redeemed are in book-entry only form,
then DTC will select the 2021 Series Three Bonds for redemption within a maturity in accordance with operational procedures of DTC referred to in the Letter of Representations. The 2005 General Bond Resolution provides that if less than all of the Bonds of any maturity are called for redemption and the
Bonds are not in book-entry form, the Bonds to be redeemed are to be selected by lot or in any manner as the Trustee, in its sole discretion, may deem appropriate and fair. See Appendix H – “DTC AND ITS BOOK-ENTRY SYSTEM.”
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds, including the 2021 Series One, Two and Three Bonds, are direct and general obligations of the Bond Bank, and the full faith and credit of the Bond Bank are pledged to the payment of the principal of and interest on the Bonds, subject to any agreements made with the holders of any other notes or bonds of the Bond Bank pledging any particular revenues or assets not pledged under the 2005 General Bond Resolution. In addition to Bonds outstanding under the 2005 General Bond Resolution, the Bond Bank has issued and currently has bonds outstanding under the 2016 Master Bond
Resolution, and the revenues and assets pledged under those resolutions are not pledged to or available for payment of Bonds issued under the 2005 General Bond Resolution, including the 2021 Series One, Two and Three Bonds. See “BONDS OUTSTANDING.”
The 2021 Series One, Two and Three Bonds are equally and ratably secured by the pledge and assignment of all Municipal Bonds acquired by the Bond Bank under the 2005 General Bond Resolution on a parity with other Bonds of the Bond Bank issued under the 2005 General Bond Resolution. The 2021
Series One, Two and Three Bonds are the 47th, 48th and 49th Series of Bonds, respectively, issued under the 2005 General Bond Resolution.
The 2021 Series One, Two and Three Bonds are payable solely from the sources provided in the 2005 General Bond Resolution and the Bond Resolution. The 2021 Series One, Two and Three Bonds do not constitute an indebtedness or other liability of the State of Alaska, and the 2021 Series
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One, Two and Three Bonds do not directly, indirectly, or contingently obligate the State of Alaska to levy any form of taxation or make any appropriation for the payment of the 2021 Series One, Two and Three Bonds. As provided in the Act, the Bond Bank is obligated to pay the principal of and interest on the Bonds only from revenues or funds of the Bond Bank, and the State of Alaska is not obligated to pay the principal of or the interest on the Bonds, including the 2021 Series One, Two and
Three Bonds. Neither the faith and credit nor the taxing power of the State of Alaska is pledged for the payment of the 2021 Series One, Two and Three Bonds. The Bond Bank has no taxing power.
As additional security for payment of principal of and interest on the 2021 Series One, Two and
Three Bonds and the other Bonds issued under the 2005 General Bond Resolution, the Bond Bank has established a common Reserve Fund. See “2005 General Bond Resolution Reserve Fund.” The Reserve Fund is a separate reserve account within the reserve fund created by the Act and does not secure the payment of bonds issued under the 2010 Master Bond Resolution, the 2016 Master Bond Resolution, or any other resolution. The Reserve Fund is separate from, and the Bonds are not secured by, the reserve accounts established pursuant to the 2010 Master Bond Resolution and the 2016 Master Bond Resolution.
The Act provides that to assure the maintenance of the Reserve Fund Requirement, the Legislature may appropriate annually to the Bond Bank for deposit in the Reserve Fund the amount, if
any, necessary to restore the Reserve Fund to an amount equal to the Reserve Fund Requirement. The Chair of the Board is required annually (before each January 30) to make and deliver to the Governor and to the Legislature a certificate stating the amount, if any, required to restore the Reserve Fund to the
amount of the Reserve Fund Requirement. Money received by the Bond Bank from the State pursuant to such certification is required, to the extent such certification was occasioned by the fact that the amount in the Reserve Fund was less than the Reserve Fund Requirement, to be deposited in the Reserve Fund. The
Legislature is legally authorized, but not legally obligated, to appropriate such sums during the then-current State fiscal year. The State’s fiscal year begins July 1 and ends June 30. This provision of the Act does not create a debt obligation on behalf of the State or a legally enforceable obligation of the State.
Beginning in 2009, the Bond Bank has been obligated by the 2005 General Bond Resolution to seek annually an appropriation within the State’s annual operating budget to replenish the Reserve Fund, if necessary. The 2010 Master Bond Resolution and the 2016 Master Bond Resolution also require the
Bond Bank to seek an annual appropriation to satisfy any unanticipated deficiency in the Bond Bank’s reserve accounts established under those resolutions. An appropriation for replenishment of the Bond Bank’s reserve accounts, including the Reserve Fund, has been included in each State operating budget since the fiscal year 2010 budget, including for the current fiscal year 2021, and was included in the Governor’s proposed fiscal year 2022 budget currently being considered by the Legislature. No such replenishment from State appropriation has been necessary.
If the Bond Bank is required to draw on the Reserve Fund because of a default by a Governmental Unit, the appropriation provides that an amount equal to the amount drawn from the
Reserve Fund is appropriated from the State’s General Fund to the Reserve Fund. The State is not obligated to make such appropriation. There is no guarantee that the Bond Bank will be able to secure future appropriations within the State’s operating budget for replenishment of the Bond Bank’s reserve
accounts, including the Reserve Fund. See “2005 General Bond Resolution Reserve Fund” and Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – Government Budgets and Appropriations.”
Starting in fiscal year 2010, and continuing through fiscal year 2021, the Bond Bank also has obtained annual appropriations of earnings on accounts held by the Bond Bank in excess of the Bond Bank’s operating expenses for the fiscal year; the Act otherwise would require such earnings to be
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appropriated to the General Fund. See “2005 General Bond Resolution Reserve Fund – Custodian Account.”
Pledge Effected by the 2005 General Bond Resolution
Pursuant to the 2005 General Bond Resolution, all Municipal Bonds, all Municipal Bonds Payments, the investments thereof, and the proceeds of such investments, if any, and all funds and
accounts established by the 2005 General Bond Resolution to be held by the Trustee are pledged and assigned to secure the payment of the principal of, redemption premium, if any, and interest on all Bonds, subject only to the provisions of the 2005 General Bond Resolution permitting the application thereof for the purposes and on the terms and conditions specified in the 2005 General Bond Resolution.
The Act and the 2005 General Bond Resolution provide among other things that (i) any pledge made in respect of the Bonds will be valid and binding from the time the pledge is made, (ii) the Municipal Bonds, the Municipal Bonds Payments, and all other money and securities so pledged and thereafter received by the Bond Bank immediately will be subject to the lien of such pledge without any further act, and (iii) the lien of any such pledge will be valid and binding against all parties having any claims of any kind in tort, contract, or otherwise against the Bond Bank irrespective of whether the parties have notice.
Municipal Bonds
Under the provisions of the Act and the 2005 General Bond Resolution, the Bond Bank is authorized to purchase Municipal Bonds from any Governmental Unit. The 2005 General Bond
Resolution defines Municipal Bonds as “general obligation bonds, revenue bonds, notes, or other evidences of debt issued by any Governmental Unit as now or hereafter defined in the Act which have heretofore been or will hereafter be acquired by the Bond Bank as evidence of a Loan to the
Governmental Unit pursuant to the Act.”
For each issue of Municipal Bonds that the Bond Bank purchases, the 2005 General Bond Resolution requires the Bond Bank to obtain from bond counsel to the Governmental Unit an opinion
stating that (i) such Municipal Bonds are valid obligations of the Governmental Unit as required by the Act and (ii) a Loan Agreement has been duly authorized and executed between the Bond Bank and the Governmental Unit that constitutes a valid and binding obligation of the Governmental Unit.
Each Loan Agreement obligates a Governmental Unit to (i) make interest payments on its Municipal Bond sufficient in amount and at such times to provide the Bond Bank funds to meet interest payments on its Loan Obligations as they become due; and (ii) make principal payments on its Municipal Bond sufficient in amount and at such times to provide the Bond Bank funds to meet principal payments on its Loan Obligations as they become due. Pursuant to the Loan Agreement, the Governmental Unit may be required to pay fees and charges to the Bond Bank to meet the Governmental Unit’s allocable portion of certain expenses. Pursuant to each Loan Agreement relating to a revenue bond issued by a Governmental Unit, the Governmental Unit may be required to maintain with the Trustee a separate debt
service reserve account to secure payment by the Governmental Unit of its Loan Obligations. Each Loan Agreement also contains restrictions on the sale or redemption of the Governmental Unit’s Municipal Bonds.
2005 General Bond Resolution Reserve Fund
To secure the payment of all Bonds issued under the 2005 General Bond Resolution, the 2005 General Bond Resolution established the Reserve Fund to be held by the Trustee and maintained at an
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amount at least equal to the Reserve Fund Requirement, equal to approximately $56,991,877 following the issuance of the 2021 Series One, Two and Three Bonds. The Reserve Fund Requirement is equal to
the least of the following: (i) 10 percent of the initial principal amount of each Series of Bonds then Outstanding; (ii) Maximum Annual Debt Service with respect to all Bonds Outstanding; (iii) 125 percent of Average Annual Debt Service on all Bonds Outstanding; or (iv) such lower amount as may be required
by law. See “DEFINITIONS – Required Debt Service Reserve.” The Reserve Fund Requirement may be satisfied entirely, or in part, by a letter of credit, line of credit, credit facility, surety bond, bond insurance, or any other instrument or arrangement obtained in connection with the issuance of a Series of Bonds. See
“Debt Service Reserve Fund Surety Bond.”
As of December 31, 2020, the valuation of assets in the Reserve Fund was approximately $62.3 million, an amount sufficient to satisfy the Reserve Fund Requirement. As of that date, approximately $44.3 million, representing 71 percent of the assets in the Reserve Fund, was funded from cash deposits by the Bond Bank, of which approximately $1.4 million was funded from Bonds issued by the Bond Bank to make deposits in the Reserve Fund (“Reserve Fund Obligations”); and approximately $18.0 million, representing 29 percent, was funded with a surety policy (the “Debt Service Reserve Fund Surety Bond”) from National Public Finance Guarantee Corporation (“National”). The Reserve Fund
currently is funded at a level sufficient to meet the Reserve Fund Requirement with the issuance of the 2021 Series One, Two and Three Bonds. See “—Debt Service Reserve Fund Surety Bond.”
The 2005 General Bond Resolution requires the Bond Bank to submit annually to the State a
budget request for an appropriation to replenish the Reserve Fund to the Reserve Fund Requirement in the event that there is a deficiency as a result of a default by a Governmental Unit. Since fiscal year 2010 continuing through fiscal year 2021 and including the Governor’s proposed fiscal year 2022 budget, the
State has included in its operating budget an appropriation to replenish the Reserve Fund, if necessary. Although the Bond Bank is obligated under the 2005 General Bond Resolution to seek an appropriation within the State’s annual operating budget, and has obtained such appropriation, in every year since fiscal
year 2010, the State is not obligated, legally or otherwise, to include the appropriation in its annual operating budget. The Bond Bank’s annual obligation to submit to the State a budget request for an appropriation is in addition to the Bond Bank’s obligation to seek an appropriation to restore the Reserve
Fund to the amount of the Required Debt Service Reserve as described below. See “Administration of Reserve Fund.”
The 2005 General Bond Resolution provides that on or before December 31 of each year, and subject to the requirements of the 2005 General Bond Resolution, the Trustee will transfer from the Reserve Fund any amounts remaining in the Reserve Fund derived from income or interest earned and profits realized by the Reserve Fund due to investments thereof to the Operating Fund, but only to the extent that there remains after such transfer an amount in the Reserve Fund equal to the Required Debt Service Reserve. See “SUMMARY OF THE 2005 GENERAL BOND RESOLUTION – Funds and Accounts –
Reserve Fund” and Section 911 of the 2005 General Bond Resolution in Appendix E.
Debt Service Reserve Fund Surety Bond. The amount credited to the Reserve Fund includes the Debt Service Reserve Fund Surety Bond, in the face amount of approximately $18.0 million. The Debt
Service Reserve Fund Surety Bond provides that upon notice from the Trustee to National to the effect that insufficient amounts are on deposit in the Debt Service Fund to pay the principal of (at maturity or pursuant to mandatory redemption requirements) and interest on the Bonds, National will be required to
deposit with the Trustee an amount sufficient to pay the principal of and interest on the Bonds or the available amount of the Debt Service Reserve Fund Surety Bond, whichever is less. Upon the later of: (i) three days after receipt by National of a demand for payment, duly executed by the Paying Agent; or
(ii) the payment date of the Bonds as specified in the demand for payment presented by the Trustee to National, National will be required to make a deposit of funds in an account with U.S. Bank Trust
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National Association, in New York, New York, or its successor, sufficient for the payment to the Trustee of amounts then due to the Trustee (as specified in the demand for payment), subject to the coverage
limits of the Debt Service Reserve Fund Surety Bond.
The available amount of the Debt Service Reserve Fund Surety Bond is the face amount of the Debt Service Reserve Fund Surety Bond then in effect less the amount of any previous deposits by
National with the Trustee that have not been reimbursed by the Bond Bank. The Bond Bank and National have entered into a Financial Guaranty Agreement in connection with the Debt Service Reserve Fund Surety Bond. Pursuant to the Financial Guaranty Agreement, the Bond Bank is required to reimburse National, with interest, within one year after any deposit, the amount of such deposit made by National with the Trustee under the Debt Service Reserve Fund Surety Bond. The Bond Bank is also required to obtain National’s consent to any amendment or modification of the 2005 General Bond Resolution that would also require consent of holders of the Bonds. The Financial Guaranty Agreement also provides that no optional redemption of Bonds may be made until the Debt Service Reserve Fund Surety Bond is reinstated.
Administration of Reserve Fund. The Bond Bank is required by the Act to deliver a statement to the Governor and the Legislature annually, before January 30, stating the amount, if any, necessary to
restore the Reserve Fund to the Required Debt Service Reserve resulting from a draw on the Reserve Fund at any time during the prior year. The Legislature may, but is under no legal obligation to, appropriate money sufficient to restore the Reserve Fund to the Required Debt Service Reserve. Since its
creation, the Bond Bank has annually reported a reserve sufficiency in all of the reserve accounts held by the Bond Bank.
Custodian Account. Money not held in the Reserve Fund, loaned to authorized borrowers, or
held in reserve accounts for bonds issued under other bond resolutions is maintained by the Bond Bank in an account within the Operating Fund referred to as the Custodian Account (the “Custodian Account”). The Custodian Account contains direct and indirect State appropriations, prior year retained earnings, and
current year investment earnings and as with the Operating Fund is not held by the Trustee or pledged to the payment of the Bonds. As of March 31, 2021, the unaudited asset value of the Custodian Account was $10.2 million.
The Act requires that earnings on funds directly appropriated by the State to the Bond Bank, net of the Bond Bank’s operating expenses, be transferred to the State in the following fiscal year. Starting in fiscal year 2009, however, and continuing through fiscal year 2021, all such fiscal year earnings due to the General Fund by statute have been appropriated to the Bond Bank for deposit in the Custodian Account. The Legislature may, but is under no legal obligation to, appropriate statutory earnings back to the Bond Bank. The entire Custodian Account balance is available for appropriation by the Legislature, with a majority vote and the Governor’s concurrence or with a three-quarter majority vote to overcome a Governor’s veto of the appropriation, during any legislative session. The Legislature has not appropriated
funds out of the Custodian Account for non-Bond Bank related purposes in the current, or any prior, fiscal year.
The Bond Bank uses the Custodian Account to pay operating expenses, to make direct loans to
eligible borrowers, and to make deposits to the Reserve Fund.
State Payments to Governmental Units
The Act provides that, to the extent that any department or agency of the State is the custodian of
money payable to a Governmental Unit, at any time after notice from the Bond Bank that the Governmental Unit is in default on the payment of the principal of or interest on its Municipal Bonds then
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held or owned by the Bond Bank, the department or agency is required to withhold the payment of such money held by it and pay over such money to the Bond Bank for the purpose of paying principal of and
interest on the bonds of the Bond Bank. State payments to Governmental Units include, but are not limited to, payments through the School Debt Reimbursement Program (the “SDRP”) and Education Support Funding through the Department of Education and Early Development; and community jail
funding through the Department of Corrections. A table in Appendix B sets forth the amount of State payments to Governmental Units that have borrowed from the Bond Bank as well as the fiscal year 2021 Loan Obligations and estimated coverage provided by those State payments. Capital expenditures by the
State that are the source of matching grant funding to municipalities have been reduced significantly since fiscal year 2015. Payments through the SDRP were reduced by 25 percent in fiscal year 2017 and were reduced by 50 percent in fiscal year 2020, and by 100 percent in fiscal year 2021. The SDRP programs’ funding level in the fiscal year 2022 operating budget is uncertain as the budget is currently being crafted by the Legislature. The Governor indicated that funding from the federal Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) would be made available to municipalities to pay for COVID-19 impacts and mute the impact of this reduction. The Governor proposed distribution of, and the Legislature approved, $569 million of CARES Act funding to municipalities in the State.
The State’s enacted budget for fiscal year 2021 diminished spending from fiscal year 2020 from $10.623 billion to $10.027 billion, a reduction of approximately $596 million, of which approximately $389 million is reduced State fund spending. The enacted budget reduced State payments to
Governmental Units subject to the Bond Bank’s intercept authority under the Act by reducing payments for the SDRP and for the State’s Transportation and Infrastructure Debt Service Reimbursement Program (the “TIDSRP”) by 100 percent from authorized amounts, among other reductions. See Appendix F –
“INFORMATION CONCERNING THE STATE OF ALASKA.” Diminished State funding may continue to result in a diminishment of the balances in the matching grant column of the table in Appendix B. There is no guarantee that State payments to Governmental Units will continue, and all of the payments could be
reduced from current levels.
The payment and amount of such State payments is uncertain, and legislative authorization for such payments is subject to appropriation and to amendment or repeal. Other State agencies may have
similar rights to intercept State payments to local governments or to limit the amount intercepted, and no assurance can be given that the Bond Bank’s claim would have priority or that the amount of available State payments would be sufficient. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – Government Budgets and Appropriations” and “– Government Funds” and Appendix B – “STATE PAYMENTS TO GOVERNMENTAL UNITS.” The Bond Bank has never implemented the State payment intercept remedy.
Pledge and Agreement of the State
In the Act, the State has pledged and agreed with the holders of the Bonds that it will not limit or
restrict the rights vested in the Bond Bank by the Act to, among other things, purchase, hold, and dispose of Municipal Bonds and fulfill the terms of an agreement (including the 2005 General Bond Resolution) made by the Bond Bank with such holders, or in any way impair the rights or remedies of such holders
until the Bonds, including interest on the Bonds and interest on unpaid installments of interest and all costs and expenses in connection with an action or proceeding by or on behalf of such holders, are fully met, paid and discharged.
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CERTAIN FORWARD DELIVERY CONSIDERATIONS
General
The Bond Bank expects to enter into a forward delivery bond purchase agreement (the “Forward Delivery Bond Purchase Agreement”) for the 2021 Series Three Bonds with BofA Securities, Inc. (the “Underwriter of the 2021 Series Three Bonds”), as the Underwriter of the 2021 Series Three Bonds.
Subject to the terms of the Forward Delivery Bond Purchase Agreement, the Bond Bank expects to issue and deliver the 2021 Series Three Bonds on December 2, 2021 or on such later date as is mutually agreed upon by the Bond Bank and the Underwriter of the 2021 Series Three Bonds (the “Settlement Date”).
Pursuant to the Forward Delivery Bond Purchase Agreement, the Underwriter of the 2021 Series Three Bonds will agree to purchase the 2021 Series Three Bonds on the Settlement Date. An initial closing (the “Initial Closing”) will be held with respect to the Bonds on or about June 16, 2021. At such time, the conditions for issuance and delayed delivery of the 2021 Series Three Bonds and payment therefor by the Underwriter of the 2021 Series Three Bonds are expected to be met, except for the confirmation of certain facts, and the documents, certificates and opinions specified in the Forward Delivery Bond Purchase Agreement the receipt of which is a condition to the delivery of the 2021 Series Three Bonds will be delivered to be held in escrow (to the extent possible), including the opinion of Bond
Counsel with respect to the 2021 Series Three Bonds substantially in the form and to the effect as set forth in Appendix A-2 hereto.
Upon satisfaction of the conditions of the Initial Closing, and subject to compliance with the
conditions described below and in the Forward Delivery Bond Purchase Agreement, the Underwriter of the 2021 Series Three Bonds will be obligated to take delivery of and pay for the 2021 Series Three Bonds on the Settlement Date. There will be no delivery of the 2021 Series Three Bonds or any payment
therefor on the date of the Initial Closing.
2021 Series Three Bonds Settlement
The issuance of the 2021 Series Three Bonds and the obligation of the Underwriter of the 2021
Series Three Bonds under the Forward Delivery Bond Purchase Agreement to purchase, accept delivery of and pay for the 2021 Series Three Bonds on the Settlement Date are conditioned upon the performance by the Bond Bank of their respective obligations thereunder, including, without limitation, the delivery of an opinion, dated the Settlement Date, of Bond Counsel, substantially in the form set forth in Appendix A-2. The purchase and delivery of the 2021 Series Three Bonds is further contingent upon (i) the delivery and/or release from escrow of certain certificates and legal opinions, (ii) the 2021 Series Three Bonds being rated at least investment grade by S&P Global Ratings or Moody’s Investors Service, Inc. (each a “Rating Agency”), and (iii) the satisfaction of other conditions set forth in the Forward Delivery Bond
Purchase Agreement as of the Settlement Date. Changes or proposed changes in federal or state laws, court decisions, regulations or proposed regulations or rulings of administrative agencies occurring or in effect prior to the Settlement Date or the failure by the Bond Bank to provide closing documents of the
type customarily required in connection with the issuance of state and local government tax-exempt bonds could prevent those conditions from being satisfied. None of the 2021 Series Three Bonds will be issued unless all of the 2021 Series Three Bonds are issued and delivered on the Settlement Date.
The Underwriter of the 2021 Series Three Bonds has the right to terminate its obligations under the Forward Delivery Bond Purchase Agreement to purchase, to accept delivery of and to pay for the 2021 Series Three Bonds by notifying the Bond Bank of its election to do so under the circumstances set
forth herein and in the Forward Delivery Bond Purchase Agreement.
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The Bond Bank has agreed to supplement this Official Statement during the forward period, if and when necessary, in order to provide any material updates to the disclosure in this Official Statement.
The Underwriter of the 2021 Series Three Bonds shall file such supplements, if any, with the Municipal Securities Rulemaking Board through its Electronic Municipal Market Access (“EMMA”) system currently accessible at www.emma.msrb.org and such supplements are hereby incorporated by reference
and are made a part of this Official Statement.
During the period of time between the date of this Official Statement and the Settlement Date (the “Forward Delivery Period”), certain information contained in this Official Statement could change in a
material respect. Except as described above, the Underwriter of the 2021 Series Three Bonds may not refuse to purchase the 2021 Series Three Bonds by reason of “general market or credit changes,” including, but not limited to, (a) changes in the ratings assigned to the 2021 Series Three Bonds, so long as the 2021 Series Three Bonds are rated investment grade by at least one of the Rating Agencies as of the Settlement Date, or (b) changes in the financial condition, operations, performance, properties or prospects of the Bond Bank prior to the Settlement Date.
Agreement of Purchasers
By submitting an order for the 2021 Series Three Bonds, every Purchaser shall be deemed
to have committed to purchase its allotted share of the 2021 Series Three Bonds (the “Purchased Bonds”).
By submission of its order, the Purchaser confirms that it has reviewed this Official Statement,
has considered the risks associated with purchasing the Purchased Bonds and is duly authorized to purchase the Purchased Bonds. The Purchaser understands that the Purchased Bonds are being sold on a “forward” basis, and the Purchaser will purchase and agree to accept delivery of such Purchased Bonds
from the Underwriter of the 2021 Series Three Bonds on or about the Settlement Date, pursuant to the Forward Delivery Bond Purchase Agreement.
Upon issuance by the Bond Bank of the 2021 Series Three Bonds and purchase thereof by the
Underwriter of the 2021 Series Three Bonds, the obligation of the Purchaser to take delivery of the Purchased Bonds shall be unconditional unless the Underwriter of the 2021 Series Three Bonds terminates the Forward Delivery Bond Purchase Agreement prior to the Settlement Date. The obligations of the Underwriter of the 2021 Series Three Bonds to accept delivery of and pay for the 2021 Series Three Bonds on the Settlement Date shall be subject to the accuracy in all material respects of the representations and warranties on the part of the Bond Bank contained in the Forward Delivery Bond Purchase Agreement as of its date and as of the Settlement Date, to the accuracy in all material respects of the statements of the officers and other officials of the Bond Bank, as well as of the other individuals referred to therein, made in any certificates or other documents furnished pursuant to the provisions thereof, to the performance by the Bond Bank of its obligations to be performed thereunder at or prior to the Settlement Date and to the following additional conditions:
(A) On the Settlement Date, the 2021 Series Three Bonds and the Forward Delivery Bond Purchase Agreement, the Resolutions and the Continuing Disclosure Certificate for the 2021 Series Three Bonds in the form attached as Appendix G to the Official Statement (collectively, the “Financing
Documents”) shall be in full force and effect, and shall not have been amended, modified or supplemented, except as may have been agreed to in writing by the Underwriter of the 2021 Series Three Bonds, and there shall have been taken in connection with the issuance of the 2021 Series Three Bonds
and with the transactions contemplated by the 2021 Series Three Bonds and the Financing Documents, all such actions as, in the opinion of Bond Counsel, shall be necessary and appropriate; and
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(B) At any time subsequent to the Initial Closing and at or prior to the Settlement Date, the following events shall not have occurred:
(a) any Change in Law shall have occurred. For purposes of the preceding sentence, “Change in Law” means (i) any change in or addition to applicable federal or state law, whether statutory or as interpreted by the courts, including any changes in or new rules, regulations or
other pronouncements or interpretations by federal or state agencies, (ii) any legislation enacted by the Congress of the United States or introduced therein or recommended for passage by the President of the United States (if such enacted, introduced or recommended legislation has a proposed effective date that is on or before the Settlement Date), (iii) any law, rule or regulation proposed or enacted by any governmental body, department or agency (if such proposed or enacted law, rule or regulation has a proposed effective date that is on or before the Settlement Date) or (iv) any judgment, ruling or order issued by any court or administrative body, which in the case of any of (i), (ii), (iii) or (iv) would, as to the Underwriter of the 2021 Series Three Bonds, prohibit (or have the retroactive effect of prohibiting, if enacted, adopted, passed or finalized) the Underwriter of the 2021 Series Three Bonds from purchasing the 2021 Series Three Bonds as provided in the Forward Delivery Bond Purchase Agreement or selling the 2021 Series
Three Bonds or beneficial ownership interests therein to the public, or as to the Bond Bank, make the issuance, sale or delivery of the 2021 Series Three Bonds illegal (or have the retroactive effect of making such issuance, sale or delivery illegal, if enacted, adopted, passed or finalized), or
prevent the issuance of any of the opinions referenced in Section 9(d) of the Forward Delivery Bond Purchase Agreement at Settlement; provided, however, that such change in or addition to law, legislation, law, rule or regulation or judgment, ruling or order shall have become effective,
been enacted, introduced or recommended, been proposed or enacted or been issued, as the case may be, after the date of the Forward Delivery Bond Purchase Agreement. If the Change in Law involves the enactment of legislation that only diminishes the value of, as opposed to eliminating
the exclusion from gross income for federal income tax purposes of interest payable on “state or local bonds,” the Bond Bank may, nonetheless, be able to satisfy the requirements for the delivery of the 2021 Series Three Bonds, and in such case, the Underwriter of the 2021 Series Three
Bonds would be obligated to purchase the 2021 Series Three Bonds from the Bond Bank.
(b) the Official Statement, as the same may be amended or supplemented in accordance with the Forward Delivery Bond Purchase Agreement prior to the time of Settlement, contains an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading;
(c) Bond Counsel does not deliver an opinion on the Settlement Date substantially in the form and to the effect set forth in Appendix A-2 to this Official Statement;;
(d) an event of default (howsoever defined) has occurred and is continuing, technical or otherwise, on the Settlement Date under any documents described herein; or;
(e) a reduction or withdrawal of the assigned ratings to below the following ratings,
or, as of the Settlement Date, the failure by any of the following rating agencies to assign investment grade ratings, to the 2021 Series Three Bonds; e.g., “Baa3” by Moody’s Investors Service, Inc, and “BBB-” by S&P Global Ratings.
Except as otherwise described above or in the Forward Delivery Bond Purchase Agreement, by submission of its order, the Purchaser shall be deemed to acknowledge and agree that it will not be able to withdraw its order and will not otherwise be excused from performance of its obligations to take up and
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pay for the Purchased Bonds on the Settlement Date because of market or credit changes. The Purchaser shall be deemed to acknowledge and agree that it will remain obligated to purchase the Purchased Bonds
in accordance with the terms hereof even if the Purchaser decides to sell such Purchased Bonds after the date of this Official Statement.
Additional Risks Related to the Forward Delivery Period
During the Forward Delivery Period, certain information contained in this Official Statement could change in a material respect. Any changes in such information will not permit the Underwriter of the 2021 Series Three Bonds to terminate the Forward Delivery Bond Purchase Agreement or release the
purchasers from their obligation to purchase the 2021 Series Three Bonds. Purchasers of the 2021 Series Three Bonds will be subject to the risks (including changes in the financial condition and business operations of the Bond Bank prior to the Settlement Date), some of which are described below, and none of which will constitute grounds for purchasers to refuse to accept delivery of and pay for the 2021 Series Three Bonds unless the Underwriter of the 2021 Series Three Bonds determines that such material changes give rise to its right to termination under the Forward Delivery Bond Purchase Agreement.
In addition to the risks set forth above, purchasers of the 2021 Series Three Bonds are subject to certain additional risks, some of which are described below:
Ratings Risk. No assurances can be given that the ratings assigned to the 2021 Series Three Bonds on the Settlement Date will not be different from those currently assigned to the 2021 Series Three Bonds. Issuance of the 2021 Series Three Bonds and the obligations of the Underwriter of the 2021 Series
Three Bonds under the Forward Delivery Bond Purchase Agreement are not conditioned upon the assignment of any particular ratings to the 2021 Series Three Bonds or the maintenance of the initial ratings assigned to the 2021 Series Three Bonds. So long as the 2021 Series Three Bonds are rated at least
investment grade by at least one of the Rating Agencies as of the Settlement Date, the condition precedent concerning the rating of the 2021 Series Three Bonds under the Forward Delivery Bond Purchase Agreement will have been satisfied.
Secondary Market Risk. The Underwriter of the 2021 Series Three Bonds is not obligated to make a secondary market in the 2021 Series Three Bonds, and no assurances can be given that a secondary market will exist for the 2021 Series Three Bonds during the Forward Delivery Period. Purchasers of the 2021 Series Three Bonds should assume that the 2021 Series Three Bonds will be illiquid throughout the Forward Delivery Period. Should events occur before the 2021 Series Three Bonds are issued and delivered by the Bond Bank on the Settlement Date that affect the market value of the 2021 Series Three Bonds and if a secondary market in the 2021 Series Three Bonds does not exist, a beneficial owner of 2021 Series Three Bonds may be unable to re-sell all or a portion of the 2021 Series Three Bonds held by or on behalf of that beneficial owner.
Market Value Risk. The market value of the 2021 Series Three Bonds as of the Settlement Date may be affected by a variety of factors, including, without limitation, general market conditions, the
ratings then assigned to the 2021 Series Three Bonds, the financial condition of the Bond Bank and federal income tax and other laws. The market value of the 2021 Series Three Bonds as of the Settlement Date could therefore be higher or lower than the price to be paid by the initial purchasers of the 2021
Series Three Bonds and that difference could be substantial. Neither the Bond Bank nor the Underwriter of the 2021 Series Three Bonds makes any representation as to the expected market prices of the 2021 Series Three Bonds as of the Settlement Date, and the Bond Bank and the Underwriter of the 2021 Series
Three Bonds may not refuse to deliver and purchase, respectively, the 2021 Series Three Bonds by reason of general market or credit changes, except as set forth in the Forward Delivery Bond Purchase Agreement. Further, no assurance can be given that the introduction or enactment of any future legislation
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will not affect the market prices for the 2021 Series Three Bonds as of the Settlement Date or thereafter or not have a materially adverse effect on any secondary market for the 2021 Series Three Bonds.
Tax Treatment Risk. Subject to the additional conditions of settlement described under “CERTAIN FORWARD DELIVERY CONSIDERATIONS–2021 Series Three Bonds Settlement” above, a condition to the Underwriter of the 2021 Series Three Bonds’ obligation to purchase the 2021 Series
Three Bonds under the Forward Delivery Bond Purchase Agreement is the delivery of an opinion of Bond Counsel with respect to the 2021 Series Three Bonds substantially in the form set forth as Appendix A-2 to this Official Statement. During the Forward Delivery Period, new legislation, new court decisions, new
regulations, or new rulings may be enacted, delivered or promulgated, or existing law, including regulations adopted pursuant thereto, may be interpreted in a manner that might prevent Bond Counsel from rendering its opinion in the form set forth as Appendix A-2 to this Official Statement, in which case the Underwriter of the 2021 Series Three Bonds would not be obligated to pay for and take delivery of the 2021 Series Three Bonds. Notwithstanding that the enactment of new legislation, new court decisions, the promulgation of new regulations or rulings or reinterpretations or existing law might diminish the value of, or otherwise affect, the exclusion of interest on the 2021 Series Three Bonds for purposes of federal income taxation, Bond Counsel may still be able to satisfy the opinion requirements for the delivery of
the 2021 Series Three Bonds. In such event, the purchasers would be required to accept delivery of the 2021 Series Three Bonds. Prospective purchasers are encouraged to consult their tax advisors regarding the likelihood of any changes in tax law and the consequences of such changes to such purchasers.
ALASKA MUNICIPAL BOND BANK
Organization
The powers of the Bond Bank are vested in the Board. The membership of the Board consists of
five Directors: the Commissioners of the DOR and the Department of Commerce, Community and Economic Development (“DCCED”) of the State and three Directors appointed by the Governor. The three appointees serve four-year staggered terms and must be qualified voting residents of the State. The
Commissioners of the DOR and the DCCED may appoint delegates to serve in their absence.
The Act requires the Board in the first meeting of each fiscal year to elect one of the Directors as chair and one of the Directors as vice chair and also to elect a secretary and a treasurer, who need not be Directors. Action may be taken and motions and resolutions adopted by the Board at any meeting by the affirmative vote of at least three Directors. The Directors appoint an Executive Director and a Finance Director to manage the business of the Bond Bank.
Board of Directors
The members of the Board are listed below.
Luke Welles – Chair. Term expires July 15, 2023. Mr. Welles was originally appointed to the Board on May 21, 2008. Mr. Welles became Vice President of Finance of the Arctic Slope Native Association, Ltd. in 2011. Prior to his current job, he served as Chief Financial Officer of LifeMed
Alaska, LLC, which provides medivac services in Alaska. Previously, Mr. Welles was the Chief Financial Officer for Yukon-Kuskokwim Health Corporation. He has management experience in healthcare, civil construction, and commercial real estate. Over the past 15 years he has served on several economic
development commissions in the State, as a city council member in Homer, Alaska, and on multiple boards. Mr. Welles received a Bachelor of Arts Degree in Foreign Service and International Business from Baylor University.
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Bruce Tangeman – Member. Term expires July 15, 2022. Mr. Tangeman was appointed to the Board on May 28, 2020. Mr. Tangeman most recently served as the Commissioner of the Department of
Revenue under Governor Michael Dunleavy. Prior to that, he served as Policy Director for the Senate Majority during the 2017/2018 sessions. Mr. Tangeman also served as Vice President and Chief Financial Officer for the Alaska Gasline Development Corporation, as Deputy Commissioner for the Department of
Revenue, as Chief Financial Officer for Doyon Utilities, and as Corporate Budget Officer for the Alaska Railroad. He has served on many boards and commissions throughout his career, including the Alaska Permanent Fund Board, the Alaska Housing Finance Corporation Board, and the Alaska Retirement
Management Board. Mr. Tangeman received a Bachelor of Science Degree in Public Finance and Double Minors in Economics and Management from Indiana University.
Kendell Koelsch – Member. Term expires July 15, 2021. Mr. Koelsch was appointed to the Board on May 28, 2020. He is currently a member of Juneau’s Economic Stabilization Task Force. He served as Mayor of the City and Borough of Juneau from 2016 to 2018. Prior to that, he was Deputy Mayor from 2001 to 2003 and a Borough Assembly member from 1997 to 2001. His work experience also includes United States Customs Inspector and Port Director from 1980 to 2003 and Port Director and founding member of Customs and Border Protection, United States Department of Homeland Security
from 2003 to 2014. Mr. Koelsch also taught English, history, and government at Juneau-Douglas high school from 1968 to 1996. He has a Bachelor of Arts Degree from Michigan State University, a Master of Arts in Teaching from the University of Alaska Fairbanks, and a Masters in Administration from the
University of Alaska Southeast Juneau.
Julie Anderson – Member. Ms. Anderson is Commissioner of the DCCED. Commissioner Anderson has experience in both private and public sectors with a diverse background in most of the core
sectors of the Alaska economy. Increasing the strength of the economy and putting Alaskans to work is a high priority. Commissioner Anderson holds a Bachelor’s degree in Business with an emphasis in International Management from the University of Alaska, Fairbanks, and an MBA from the Thunderbird
School of Global Management.
Mike Barnhill – Member. Mr. Barnhill is the first delegate for the Commissioner of the DOR. Mr. Barnhill was named Acting Commissioner of the DOR in December 2019 and was named the Deputy
Commissioner of the DOR in February 2020. He most recently served as the Director of Policy in the Office of Management and Budget. He previously served in the DOR as an Investment Officer and Deputy Commissioner, in the Department of Administration as Deputy Commissioner, and in the Department of Law as an Assistant Attorney General. Mr. Barnhill is a graduate of Cornell Law School, where he was editor of the Cornell International Law Journal, and he earned his undergraduate degree in religious studies from the College of Wooster.
Management
The Bond Bank is a public corporation of the State of Alaska established and organized within
the DOR in 1975. Following creation, the Bond Bank was independently staffed by a full time Executive Director, full-time Secretary, and additional short-term staff and maintained separate offices in Anchorage, Alaska. The Legislature determined in 1997 that the operation and management responsibility
for the Bond Bank would be incorporated into the duties of existing DOR – Treasury Division staff. This resulted in the partial delegation of the State’s Debt Manager to the Bond Bank. Staffing was augmented in 2013 when the DOR – Treasury Division Operations Research Analyst position was partially delegated
to the Bond Bank.
Deven J. Mitchell, who also serves as State Debt Manager and Investment Officer in the DOR – Treasury Division, with responsibility for the management of all debt of the State, was appointed
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Executive Director of the Bond Bank in 1999. Mr. Mitchell has worked for the DOR since 1992. He previously held several positions in Alaska financial institutions. Mr. Mitchell holds a Bachelor of
Science Degree in Business Administration from Northern Arizona University. He has served as board member and chairman of the Wildflower Court Nursing Home and as board member and president of the Alaska Government Finance Officers Association, and as a board member of the Alaska Municipal
League and the Alaska Municipal League Joint Insurance Association.
Ryan S. Williams, who also serves as Operations Research Analyst in the DOR – Treasury Division, was appointed Finance Director of the Bond Bank in 2014. Mr. Williams has worked for the
DOR since 2009. Mr. Williams holds a Bachelor of Science Degree in Business Administration from the University of Southern California, with a concentration in International Business. He has served as a board member and president of the Alaska Government Finance Officers Association.
The Bond Bank contracts in the private sector for a wide range of professional services. The Executive Director and Finance Director coordinate the activities of these professionals, which include bond counsel, municipal advisor, accountants, auditors, fund trustees, bond trustees, arbitrage rebate consultants, and investment managers.
BONDS OUTSTANDING
Under the provisions of the Act, within the limitations described below, the Bond Bank may issue additional Series of Bonds under the 2005 General Bond Resolution and, subject to certain additional limitations, may issue bonds under other resolutions. The total amount of Bond Bank bonds and notes
outstanding at any one time may not exceed $1,792.5 million without additional statutory authorization. The current $1,792.5 million authorization consists of statutory authorizations of: $87.5 million for the University of Alaska, $205 million for regional health organizations, and $1,500 million for
municipalities and all other authorized purposes. As of April 1, 2021, the total principal amount of Bond Bank bonds and notes outstanding, not including the 2021 Series One, Two and Three Bonds, was $1,004,943,571. The Bond Bank currently has bonds outstanding under the following resolutions.
2005 General Bond Resolution
The 2021 Series One, Two and Three Bonds are the 47th, 48th and 49th Series of Bonds, respectively, issued under the 2005 General Bond Resolution. As of April 1, 2021, the Bond Bank has issued $1,683,180,000 of general obligation bonds under the 2005 General Bond Resolution (not including the 2021 Series One, Two and Three Bonds), $897,310,000 of which remains outstanding. After the issuance of the 2021 Series One, Two and Three Bonds, the Bond Bank will have issued $1,919,655,000 of general obligation bonds under the 2005 General Bond Resolution, $931,795,000 of which will remain outstanding. Bonds may be issued by the Bond Bank pursuant to the 2005 General Bond Resolution only to finance loans to Governmental Units. The Bond Bank expects to issue additional bonds under the 2005 General Bond Resolution within the next year and to continue to use the 2005 General Bond Resolution as the primary means of financing loans to Governmental Units.
2010 Master Bond Resolution
Bonds issued under the 2010 Master Bond Resolution are general obligations of the Bond Bank, equally and ratably secured by a pledge and assignment of all obligations acquired by the Bond Bank
under the 2010 Master Bond Resolution. As of April 1, 2021, the Bond Bank has issued $4,765,000 of bonds under the 2010 Master Bond Resolution, none of which remain outstanding. The Bond Bank has no plans at this time to issue additional bonds under the 2010 Master Bond Resolution.
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2016 Master Bond Resolution
Bonds issued under the 2016 Master Bond Resolution are general obligations of the Bond Bank,
payable solely from the sources provided in and pledged pursuant to the 2016 Master Bond Resolution and the related series resolutions. As of April 1, 2021, the Bond Bank has issued $144,850,000 of bonds under the 2016 Master Bond Resolution, $100,715,000 of which remain outstanding. The Bond Bank
expects to continue to use the 2016 Master Bond Resolution as the primary means of financing loans to regional health organizations.
Coastal Energy Impact Program
In the 1980s, the Bond Bank privately placed conduit bonds with the United States Department of Commerce National Oceanic and Atmospheric Administration (“NOAA”) to provide loans to local governments that qualified for aid under the Coastal Energy Impact Program (“CEIP”). CEIP is a federal program designed to provide financial assistance to coastal states and municipalities facing impacts from offshore oil development. NOAA and the Bond Bank entered into an agreement whereby the Bond Bank
was the direct lending agency for the CEIP in the State, with $50 million available to make loans to local governments or to establish reserves for loans to local governments.
The CEIP bonds that remain outstanding were issued for the City of Nome and the City of
St. Paul. The total amount of CEIP bonds outstanding as of June 30, 2020, was $9,748,571.
The CEIP loans are administered directly by NOAA without involvement of the Bond Bank. Bonds issued for the CEIP are not liabilities of the Bond Bank and are not secured by a pledge of any
amounts held by or payable to the Bond Bank under the 2005 General Bond Resolution, including the Reserve Fund, nor are they secured directly or indirectly by any reserve account created under the Act. The CEIP loans are included, however, when calculating the amount of bonds the Bond Bank may issue
under the Act. See Note 8 in Appendix D. The Bond Bank has no plans at this time to issue additional CEIP bonds.
The City of St. Paul’s counsel has reported to the Bond Bank that in April 2020, NOAA agreed to
recommend to Congress that the CEIP loan be forgiven. A letter dated April 16, 2020, from the Chief of the Business Operations Division of NOAA’s Office for Coastal Management requests the City of St. Paul to remit a $150,000 reserve fund to NOAA. Once these funds are received, NOAA is to move forward with a recommendation to Congress that the CEIP loan be forgiven.
Direct Loans
With money from the Custodian Account, the Bond Bank has periodically acquired certain Municipal Bonds and has defeased certain bonds while retaining the underlying Municipal Bonds. Additionally, on two occasions the State has appropriated funds to the Bond Bank for acquisition of two
Municipal Bonds.
In the State’s fiscal year 2011 capital budget, $2,450,000 was appropriated to the Bond Bank for the specific purpose of making loans to the City of Galena for electric utility and general fund needs at an
interest rate of 1 percent. As of April 1, 2021, the Bond Bank held $662,456 of City of Galena utility revenue bonds and $72,670 of City of Galena appropriation obligations.
As of April 1, 2021, the Bond Bank held $1,779,000 of Kenai Peninsula Borough taxable revenue
bonds. The related loans were funded with money from the Custodian Account, bear interest at market
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rates, and are secured by a pledge of gross revenues of the Central Peninsula Hospital and a debt service reserve fund, all on a parity with other loans made for the Central Peninsula Hospital.
As of April 1, 2021, the Bond Bank held $450,000 of Kodiak Island Borough taxable general obligation bonds. The loan was funded with money from the Custodian Account, bears interest at market rates, and is a general obligation, secured by the full faith and credit of the Kodiak Island Borough.
Loans by the State of Alaska
The Bond Bank has statutory authority to borrow funds from the General Fund at the discretion of the Commissioner of the DOR. In 2010 and 2011 the Bond Bank borrowed money from the State for authorized uses of the Bond Bank. The State’s fiscal year 2013 capital budget converted the 2010 and 2011 loans to grants through an appropriation to the Bond Bank. The Bond Bank does not currently have any outstanding loans from the State.
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BONDS ISSUED AND OUTSTANDING AS OF APRIL 1, 2021
Principal Amount
Issued
Principal Amount
Outstanding
2005 General Bond Resolution Bonds (1) $1,919,655,000 $931,795,000
2016 Master Resolution Bonds 144,850,000 100,715,000
1976 Master Bond Resolution Bonds (2) 721,985,000 –
2010 Master Bond Resolution Bonds (3) 4,765,000 –
Coastal Energy Impact Program Loans (4) 35,456,046 9,748,571
(1) Includes the 2021 Series One, Two and Three Bonds, and the Principal Amount Outstanding excludes the Refunded Bonds.
(2) As of February 1, 2016, no bonds remain outstanding under the 1976 Master Bond Resolution, and no bonds have been issued after that date.
(3) As of July 7, 2020, no bonds remain outstanding under the 2010 Master Bond Resolution, and no bonds have been issued after that date.
(4) The CEIP loans are not liabilities of the Bond Bank but are included when calculating the amount of bonds outstanding under the Act. CEIP bonds outstanding as of June 30, 2020.
DEBT CAPACITY AS OF APRIL 1, 2021
Debt Limit (1) University of Alaska $ 87,500,000
Regional Health Organizations 205,000,000 All Other Authorized Purposes 1,500,000,000 $1,792,500,000
Less Outstanding Debt (2) General Obligation Bonds 2005 General Bond Resolution (3) 931,795,000
2016 Master Resolution (4) 100,715,000 $1,032,510,000 Coastal Energy Impact Program Loans (5) 9,748,571 Total Outstanding Debt $1,042,258,571
Remaining Debt Capacity University of Alaska 6,325,000 Regional Health Organizations 104,285,000
All Other Authorized Purposes 639,631,429 $ 750,241,429 (1) Excludes the authority of the Bond Bank (or a subsidiary corporation of the Bond Bank) to issue bonds to finance loans to governmental employers to prepay all or a portion of their shares of the unfunded accrued actuarial liabilities of retirement systems. The Bond Bank has never used this authority and has no current plans to do so. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – Public Debt and Other Obligations of the State – Potential State-Supported Pension Obligation Bonds.”
(2) Includes the 2021 Series One, Two and Three Bonds and excludes the Refunded Bonds.
(3) Of this amount, $81,175,000 is attributable to the University of Alaska.
(4) All of this amount was issued to make loans to regional health organizations.
(5) The CEIP loans are not liabilities of the Bond Bank but are included when calculating the amount of bonds outstanding under the Act. CEIP bonds outstanding as of June 30, 2020.
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DEBT SERVICE REQUIREMENTS
BONDS ISSUED AND OUTSTANDING UNDER THE 2005 GENERAL BOND RESOLUTION AND THE 2021 SERIES ONE, TWO AND THREE BONDS
(Fiscal Years Ending June 30)
Outstanding
2021 Series One, Two and Three
Bonds
Fiscal Year Bonds(1) Principal Interest Total (2)
2021 $ 111,314,135 $ – $ -- $ 111,314,135
2022 97,936,097 3,970,000 5,419,085 107,325,183 2023 87,105,892 11,465,000 5,633,654 104,204,545 2024 78,463,892 12,805,000 5,362,360 96,631,252 2025 70,620,666 11,540,000 5,163,018 87,323,685 2026 66,032,694 11,010,000 5,010,168 82,052,862
2027 60,439,393 12,250,000 4,825,609 77,515,002 2028 56,449,693 12,180,000 4,610,595 73,240,288 2029 51,625,159 12,415,000 4,366,985 68,407,144
2030 43,764,475 12,680,000 4,092,203 60,536,678 2031 41,985,670 14,090,000 3,765,866 59,841,536 2032 36,618,634 16,500,000 3,384,623 56,503,258
2033 36,576,948 16,270,000 2,977,066 55,824,014 2034 34,895,389 11,005,000 2,614,765 48,515,154 2035 30,160,105 6,820,000 2,353,480 39,333,585
2036 27,804,971 5,900,000 2,166,868 35,871,839 2037 20,389,762 5,395,000 2,010,821 27,795,583 2038 19,991,150 5,360,000 1,851,918 27,203,068
2039 15,778,416 5,355,000 1,684,396 22,817,811 2040 11,736,563 5,525,000 1,514,181 18,775,743 2041 11,006,525 5,705,000 1,338,448 18,049,973 2042 10,861,200 5,885,000 1,157,022 17,903,222 2043 10,858,500 6,085,000 963,585 17,907,085 2044 8,850,100 6,290,000 757,451 15,897,551 2045 6,270,800 6,500,000 544,171 13,314,971 2046 - 5,200,000 347,284 5,547,284 2047 - 4,580,000 187,211 4,767,211 2048 - 1,820,000 87,115 1,907,115
2049 - 1,875,000 29,325 1,904,325
Total (2) $ 1,047,536,830 $ 236,475,000 $ 74,219,273 $1,358,231,103 (1) Excludes the Refunded Bonds. (2) Totals may not foot due to rounding.
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Future Financing Plans
The Bond Bank anticipates issuing additional bonds pursuant to the 2005 General Bond
Resolution within the next year and making related loans to eligible borrowers. The principal amount of such additional bonds depends on the number and size of the applications from eligible borrowers.
Debt Payment Record
The Bond Bank has always made principal and interest payments on its general obligation and revenue bonds when due. No deficiencies have arisen in any Bond Bank debt service fund or reserve fund, nor has there been a need to exercise the provision requiring that State payments to Governmental Units be paid to the Bond Bank.
SUMMARY OF THE 2005 GENERAL BOND RESOLUTION
The following is a summary of certain provisions of the 2005 General Bond Resolution. A copy of the 2005 General Bond Resolution, together with the First Supplemental Resolution adopted in February 2013, is included as Appendix E. The 2013 First Supplemental Resolution includes amendments
to the 2005 General Bond Resolution that take effect after all Bonds outstanding as of February 19, 2013 are no longer outstanding. See “Modifications to the 2005 General Bond Resolution.” Capitalized terms used in this summary are defined in Section 103 of the 2005 General Bond Resolution.
2005 General Bond Resolution Constitutes Contract
The 2005 General Bond Resolution provides that the 2005 General Bond Resolution constitutes a contract between the Bond Bank, the Trustee, and the owners from time to time of the Bonds, that the
pledges made in the 2005 General Bond Resolution and the covenants and agreements therein set forth to be performed by the Bond Bank will be for the benefit, protection, and security of the holders of any and all of the Bonds, and that each Bond, Credit Enhancement facility, and Interest Rate Exchange Agreement
will be of equal rank without preference, priority or distinction.
Obligation of the Bond Bank
The Bonds are general obligations of the Bond Bank, and the full faith and credit of the Bond Bank are pledged for the payment of the principal and redemption premium, if any, of, and interest on the Bonds solely from the sources provided in the 2005 General Bond Resolution and any Series Resolution. The Act and the 2005 General Bond Resolution each provides that the State is not obligated to pay the principal, premium, if any, or interest on the Bonds, and that the Bonds, are not a debt or liability of the State and neither the faith and credit of the State nor the taxing power of the State is pledged to the payment of the principal of, premium, if any, or interest on the Bonds.
Pledge
The Municipal Bonds and the Municipal Bonds Payments, the investments thereof, and the
proceeds of such investments, if any, and all funds and accounts established by the 2005 General Bond Resolution to be held by the Trustee are pledged and assigned for the payment of the principal of, redemption price of, interest on, and sinking fund installments for, the Bonds in accordance with the
terms and provisions of the 2005 General Bond Resolution, subject only to the provisions of the 2005 General Bond Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the 2005 General Bond Resolution. See Section 601 of the 2005 General Bond
Resolution in Appendix E. The 2005 General Bond Resolution provides that Municipal Bonds and the
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Municipal Bonds Payments and all other money and securities pledged pursuant to the 2005 General Bond Resolution immediately will be subject to the lien of such pledge without any further act, and such
lien will be valid and binding as against all parties having claims of any kind in tort, contract, or otherwise against the Bond Bank, regardless of whether such parties have notice thereof.
Power to Issue Bonds and Make Pledges
The Bond Bank represents in the 2005 General Bond Resolution that it is duly authorized by law to authorize and issue the Bonds and to pledge the Municipal Bonds Payments, the Municipal Bonds, and other money, securities, funds, and property purported to be pledged by the 2005 General Bond
Resolution, free and clear of any pledge, lien, charge, or encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge created by the 2005 General Bond Resolution, except for the liens in favor of the Trustee and Paying Agent as provided in the 2005 General Bond Resolution. The Bond Bank covenants in the 2005 General Bond Resolution that it will at all times, to the extent permitted by law, defend, preserve, and protect the pledge of the Municipal Bonds Payments, the Municipal Bonds, and other money, securities, funds, and property pledged under the 2005 General Bond Resolution and all the rights of the Bondholders under the 2005 General Bond Resolution against all claims and demands of all persons whomsoever.
General
The Bond Bank covenants in the 2005 General Bond Resolution that it will do and perform or cause to be done and performed all acts and things required to be done or performed by or on behalf of
the Bond Bank under law and the 2005 General Bond Resolution in accordance with the terms thereof.
The Act provides that the State will not limit or restrict, and the Bond Bank pledges and agrees in the 2005 General Bond Resolution with the Holders of the Bonds that it will not cause the State to limit or
alter, the rights vested by the Act in the Bond Bank to fulfill the terms of any agreements made with Bondholders, or in any way impair the rights and remedies of such Bondholders, until the Bonds, together with the interest thereon, with interest on any unpaid installments of interest, and all costs and expenses in
connection with any action or proceeding by or on behalf of such Holders, are fully met and discharged.
Waiver of Laws
The Bond Bank covenants in the 2005 General Bond Resolution in addition that it will not at any time insist upon or plead in any manner whatsoever, or claim or take the benefit or advantage of any stay or extension of law now or at any time hereafter in force which may affect the covenants and agreements contained in the 2005 General Bond Resolution or in any Series Resolution or in the Bonds, and all benefit or advantage of any such law or laws is expressly waived by the Bond Bank.
Loan Agreement Provisions
The 2005 General Bond Resolution provides that no loan will be made by the Bond Bank from proceeds of the sale of Bonds and no Bonds will be issued for the purpose of providing funds with which to make a loan, unless the Loan Agreement under which such loan is to be made will comply with, among
other requirements in the 2005 General Bond Resolution, the following:
(a) The Governmental Unit which is a party to such Loan Agreement must be a Governmental Unit as defined by the 2005 General Bond Resolution, and the Loan Agreement
must be executed in accordance with existing laws.
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(b) The Governmental Unit, prior to or simultaneously with the issuance of Bonds issued to make a Loan to the Governmental Unit, will issue Municipal Bonds which are valid
debt obligations of the Governmental Unit as required by the Act.
(c) The Municipal Bonds Payment to be made by the Governmental Unit under such Loan Agreement will be not less than the interest and principal payments the Bond Bank is
required to make on the Loan Obligations and will be scheduled by the Bond Bank in such manner and at such times as to provide funds sufficient to pay principal and interest on the Loan Obligations as the same become due.
(d) The Governmental Unit will be obligated to pay Fees and Charges to the Bond Bank at the times and in the amounts which will enable the Bond Bank to comply with the provisions of the 2005 General Bond Resolution to pay Administrative Expenses and fees and expenses of the Trustee and Paying Agent.
(e) The Governmental Unit will agree that in the event the Municipal Bonds Payment is not paid by it to the Bond Bank on or before the times specified in the Loan Agreement, any money payable to the Governmental Unit by any department or agency of the State will be withheld from such Governmental Unit and paid over directly to the Trustee acting
under the 2005 General Bond Resolution.
(f) The Bond Bank will not sell, and the Governmental Unit will not redeem prior to maturity, any of the Municipal Bonds with respect to which the Loan is made in an amount
greater than the Outstanding Bonds issued with respect to such Loan which are then redeemable, and any such sale or redemption of such Municipal Bond will be in an amount not less than the aggregate of (i) the principal amount of the Loan Obligation so to be redeemed (or the amount of
Refunding Bonds if the Loan is being refunded), (ii) the interest to accrue on the Loan Obligation so to be redeemed to the next redemption date, (iii) the applicable premium, if any, payable on the Loan Obligation so to be redeemed, and (iv) the costs and expenses of the Bond Bank in effecting
the redemption of the Loan Obligation so to be redeemed.
(g) The Governmental Unit must give the Bond Bank at least fifty (50) days’ notice of its intent to redeem its Municipal Bonds.
Modification of Loan Agreement Terms
The Bond Bank covenants in the 2005 General Bond Resolution that it will not consent to the modification of, or modify, the rates of interest of, or the amount or time of payment of any installment of principal of or interest on, any Municipal Bonds evidencing a Loan, or the amount or time of payment of any Fees and Charges payable with respect to such Loan, or the security for or any terms or provisions of such Loan or the Municipal Bonds evidencing the same, in a manner which adversely affects or diminishes the rights of the Bondholders.
Enforcement of Municipal Bonds
The 2005 General Bond Resolution provides that the Bond Bank will diligently enforce, and take all reasonable steps, actions, and proceedings necessary for the enforcement of, all terms, covenants, and conditions of all Loan Agreements and the Municipal Bonds, including the prompt collection, and the
giving of notice to the Commissioner of Revenue, Commissioner of Commerce, Community and Economic Development, and Commissioner of Administration and any other department or agency of the State which is custodian of any money payable to the Governmental Unit of any failure or default of the
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Governmental Unit in the payment of its Municipal Bonds Payments and will promptly transfer any such money, upon receipt thereof, to the Trustee and that in such event, or if such money is paid directly to the
Trustee, the Trustee will deposit any such money in the Principal Account and Interest Account in place of said unpaid Municipal Bonds Payment or in the event deficiencies in said Accounts created by such default has been made up by the Reserve Fund, into the Reserve Fund to the extent of such deficiencies.
Funds and Accounts
The 2005 General Bond Resolution established a Debt Service Fund, consisting of an Interest Account, a Principal Account, and a Redemption Account; a Reserve Fund; a Rebate Fund, which
consists of a separate sub-account for each Series of Bonds; and an Operating Fund. The Debt Service Fund, the Rebate Fund, and the Reserve Fund are held by the Trustee. The Operating Fund is held by the Bond Bank and is not pledged to the payment of the Bonds.
Debt Service Fund. The Trustee is required to deposit Municipal Bonds Interest Payments and any other money available for the payment of interest in the Interest Account upon receipt thereof and on or before each interest payment date, to pay out of the Interest Account the amounts required for the payment of the interest becoming due on each Series of Bonds on such interest payment date.
The Trustee is required to deposit Municipal Bonds Principal Payments and any other money
available for the payment of principal in the Principal Account upon receipt thereof. The Trustee is required, on or before each principal payment date or Sinking Fund Installment date, to pay out of the Principal Account the amounts required for the payment of the principal or Sinking Fund Installment due
on each Series of Bonds on such date.
The Trustee establishes in the Redemption Account a separate sub-account for each Series of Bonds. Any money deposited in the Redemption Account from any source other than excess money
transferred from the Reserve Fund or certain proceeds received from sales or redemptions of Municipal Bonds pursuant to Section 607 or Section 916 of the 2005 General Bond Resolution will be applied to the purchase or redemption of Bonds. Any money deposited in the Redemption Account from the Reserve
Fund because of a reduction in the Required Debt Service Reserve is to be applied to the purchase or redemption of Reserve Fund Obligations.
Reserve Fund. The 2005 General Bond Resolution established the Reserve Fund as a 2005 General Obligation Bond Resolution Reserve Account within the Alaska Municipal Bond Bank Reserve Fund created by the Act and provides that monthly, the Trustee will set aside from amounts in the Reserve Fund derived from investment earnings and profits realized by the Reserve Fund due to investments thereof, an amount which, when added to the amounts theretofore set aside for such purpose and not paid into the Interest Account, will on such date be equal to the unpaid interest on the Reserve Fund Obligations accrued and to accrue to the last day of such month.
On or before each principal payment date and Sinking Fund Installment payment date of Reserve Fund Obligations, the Trustee is to withdraw from amounts in the Reserve Fund and deposit in the
Principal Account an amount which, when added to the amount then on deposit in the Principal Account and derived from sources other than Municipal Bonds Payments, will be equal to the Principal Installment of the Reserve Fund Obligations falling due on such date.
On or before December 31 of each year, after satisfying the deposit requirements described above, the Trustee is to withdraw from the Reserve Fund any amount remaining therein derived from investment earnings or profits due to investments thereof, and pay over said amount to the Bond Bank for
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deposit in the Custodian Account within the Operating Fund, but only to the extent that there remains after such withdrawal an amount in the Reserve Fund at least equal to the Reserve Fund Requirement.
The 2005 General Bond Resolution provides that the Reserve Fund Requirement may be satisfied with (i) money made available by the State and paid to the Bond Bank for the purpose of the Alaska Municipal Bond Bank Reserve Fund created by the Act in the amount provided by a Series Resolution;
(ii) all money paid to the Bond Bank pursuant to the Act for the purpose of restoring the Reserve Fund to the amount of the Reserve Fund Requirement; (iii) such portion of the proceeds of sale of Bonds, if any, as provided by any Series Resolution; (iv) Credit Enhancement; (v) any other money which may be made available to the Bond Bank for the purposes of the Reserve Fund from any other source or sources; or (vi) any combination of the foregoing. The Reserve Fund Requirement may be satisfied entirely, or in part, by a letter of credit, a line of credit, a credit facility, a surety bond, bond insurance, or any other instrument or arrangement obtained in connection with the issuance of a Series of Bonds; provided, however, any credit enhancement satisfying all or any part of the Reserve Fund Requirement after the initial issuance of Bonds or issued in substitution for any prior credit enhancement previously issued will not, by itself, cause a withdrawal or downward revision of the ratings maintained by any Rating Agency with respect to the Bonds.
In the event there is a deficiency in the Interest Account on any interest payment date or in the Principal Account on any principal payment date or Sinking Fund Installment payment date, the Trustee is to make up such deficiencies from the Reserve Fund.
Administration of Reserve Fund. The 2005 General Bond Resolution provides that money and securities held in the Reserve Fund will not be withdrawn therefrom at any time in such amount as would reduce the amount in such Fund to an amount less than the Reserve Fund Requirement except for the
payment when due of debt service on Reserve Fund Obligations and to cure a deficiency in the Principal Account or the Interest Account.
Rebate Fund. There is to be deposited in the Rebate Fund the amount of the Rebate Requirement
for each Series of Bonds, and the Trustee is to pay over to the United States Government such amounts as determined by the Bond Bank and as set forth in the 2005 General Bond Resolution. All amounts held in the Rebate Fund, including income earned from investment of the Rebate Fund, shall be held by the
Trustee free and clear of the lien of the 2005 General Bond Resolution.
Operating Fund. The 2005 General Bond Resolution requires the deposit in the Operating Fund of all Fees and Charges, to the extent not otherwise encumbered or pledged, and any other money which may be made available to the Bond Bank for purposes of the Operating Fund from any other source or sources. Money at any time held for the credit of the Operating Fund is to be used for and applied solely to the following purposes: (i) to pay the Administrative Expenses of the Bond Bank; (ii) to pay the fees and expenses of the Trustee and any Paying Agent; (iii) to pay financing costs incurred with respect to a Series of Bonds; and (iv) to pay any expenses in carrying out any other purpose then authorized by the
Act.
The Operating Fund is held by the Bond Bank, not by the Trustee, and the 2005 General Bond Resolution provides that all amounts in the Operating Fund will be free and clear of any lien or pledge
created by the 2005 General Bond Resolution.
Security for Deposits and Investment of Funds
The 2005 General Bond Resolution provides that all money held by the Trustee under the 2005
General Bond Resolution will be continuously and fully secured, for the benefit of the Bond Bank and the
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Bondholders in such manner as may then be required or permitted by applicable State or federal laws and regulations regarding the security for, or granting a preference in the case of, the deposit of trust funds but
does not require the Trustee or any Paying Agent to give security for the deposit of any money with them held in trust for the payment of the principal or Redemption Price of or interest on any Bonds, or for the Trustee to give security for any money which is represented by obligations purchased under the
provisions of the 2005 General Bond Resolution as an investment of such money. The 2005 General Bond Resolution also provides for the investment of funds held by the Trustee. See the definition of “Investment Securities” and Sections 702 and 703 of the 2005 General Bond Resolution in Appendix E.
Payment of Bonds
The Bond Bank covenants in the 2005 General Bond Resolution that it will duly and punctually pay or cause to be paid the principal or Redemption Price, if any, of every Bond and the interest thereon, at the dates and places and in the manner stated in the Bonds according to the true intent and meaning thereof, and will duly and punctually pay, or caused to be paid, all Sinking Fund Installments, if any, becoming payable with respect to any Series of Bonds.
Fees and Charges
The Bond Bank may charge such Fees and Charges to each Governmental Unit to which a Loan
is made, and will from time to time revise such Fees and Charges whenever necessary, so that such Fees and Charges actually collected from each such Governmental Unit will at all times produce money which, together with such Governmental Unit’s Allocable Proportion of other money available under the
provisions of the 2005 General Bond Resolution, and other money available therefor, will be at least sufficient to pay, as the same become due, the Governmental Unit’s Allocable Proportion of (i) the Administrative Expenses of the Bond Bank and (ii) the fees and expenses of the Trustee and any Paying
Agent.
Issuance of Additional Obligations
The Bond Bank may issue additional Bonds and refunding Bonds pursuant to the terms of the
2005 General Bond Resolution; however, no additional Series of Bonds are to be issued unless:
(a) the aggregate principal amount of Bonds and Notes Outstanding at the time of issuance and delivery of such additional Bonds, including the principal amount of such additional Bonds, will not exceed any limit thereon imposed by law;
(b) there is at the time of the issuance of such additional Bonds no deficiency in the amounts required by the 2005 General Bond Resolution or any Series Resolution to be paid into the Debt Service Fund and into the Reserve Fund;
(c) the amount of the Reserve Fund, upon the issuance and delivery of such
additional Bonds, and the deposit in the Reserve Fund of any amount provided therefor in the Series Resolution authorizing the issuance of such additional Bonds, will not be less than the Required Debt Service Reserve; and
(d) the maturities of, or Sinking Fund Installments for, the additional Bonds representing Loan Obligations, unless such additional Bonds are being issued to refund Outstanding Bonds, will be equal to the scheduled Municipal Bonds Principal Payments to be
made in respect of the Loans with respect to which such additional Bonds are to be issued.
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The Bond Bank expressly reserves the right to adopt other general bond resolutions and reserves the right to issue Notes and any other obligations so long as the same are not a charge or lien on the
Municipal Bonds, the Municipal Bonds Payments, and the Fees and Charges or payable from the Debt Service Fund or the Reserve Fund.
Defeasance
If the Bond Bank pays or causes to be paid to the holders of all Bonds then Outstanding the principal and interest and/or Redemption Price, if any, to become due thereon, at the times and in the manner stipulated therein and in the 2005 General Bond Resolution and also pays or causes to be paid all
other sums payable under the 2005 General Bond Resolution by the Bond Bank, including any amounts payable to the United States, then, at the option of the Bond Bank, as expressed in an instrument in writing signed by an Authorized Officer and delivered to the Trustee, the covenants, agreements, and other obligations of the Bond Bank to the Bondholders will be discharged and satisfied.
The 2005 General Bond Resolution provides that Bonds may, prior to the maturity or redemption date thereof, be deemed to have been paid if (i) in case any of said Bonds are to be redeemed on any date prior to their maturity, the Bond Bank has given to the Trustee in form satisfactory to it irrevocable instructions to publish notice of redemption on said date of such Bonds, and (ii) there has been deposited
with the Trustee either monies in an amount which will be sufficient or Investment Securities which are not subject to redemption prior to the dates on which amounts will be needed to make payments on the Bonds and described in clause (1) of the definition of Investment Securities in the 2005 General Bond
Resolution, the principal of and the interest on which when due will provide money which, together with the money, if any, deposited with the Trustee or Paying Agent at the same time, is sufficient, to pay, when due, the principal or Redemption Price, if applicable, and interest due and to become due on said Bonds
on and prior to the redemption date or maturity date thereof, as may be the case. See the definition of “Outstanding,” the definition of “Investment Securities,” and Article XIII of the 2005 General Bond Resolution in Appendix E.
Supplements and Amendments
The Bond Bank may adopt a Series Resolution or Supplemental Resolution without the consent of the Bondholders or the Trustee for various purposes not inconsistent with the 2005 General Bond Resolution, to provide for the issuance of additional Series of Bonds, to impose additional limitations or restrictions on the issuance of Bonds, to impose other restrictions on the Bond Bank, to surrender any right, power, or privilege, or to confirm any pledge of or lien upon the Municipal Bonds or the Municipal Bonds Payments or any other funds. The Bond Bank may also supplement the 2005 General Bond Resolution to cure any ambiguity or defect in the 2005 General Bond Resolution, provided such modifications are not contrary to or inconsistent with the 2005 General Bond Resolution as theretofore in effect.
Any other modification or amendment of the 2005 General Bond Resolution and of the rights and
obligations of the Bond Bank and of the Bondholders may be made with the written consent (i) of the holders of at least two-thirds in principal amount of the Bonds Outstanding at the time such consent is given, or (ii) in case less than all of the several Series of Bonds then Outstanding are affected by the
modification or amendment, of the holders of at least two-thirds in principal amount of the Bonds of each Series so affected and Outstanding at the time such consent is given; provided, however, that such modification or amendment will not permit (i) a change in the terms of redemption or maturity of the
principal of any outstanding Bond or of any installment of interest thereon or Sinking Fund Installment therefor, (ii) a reduction in the principal amount or the Redemption Price thereof or in the rate of interest thereon, (iii) a reduction of the percentage of the Holders of which is required to effect any such
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modification or amendment, or (iv) the creation of any lien prior to or on a parity with the lien created by the 2005 General Bond Resolution (except in the manner provided by the 2005 General Bond Resolution)
or deprive the Bondholders of the lien created by the 2005 General Bond Resolution, without the consent of the holders of all the Bonds Outstanding or of the Series of Bonds affected by such modification or amendment. To the extent that the full payment of the interest and principal of Bonds of a Series is
secured by Credit Enhancement, the Credit Enhancement Agency will be considered to be the Bondholder of all the Bonds of the Series for purposes of exercising any rights with respect to supplements and amendments to the 2005 General Bond Resolution if the Credit Enhancement so provides. See Articles X
and XI and the definition of “Bondholder” in the 2005 General Bond Resolution and Section 202 of the 2013 First Supplemental Resolution in Appendix E.
Events of Default and Remedies
Each of the following events is an Event of Default under the 2005 General Bond Resolution:
(a) the Bond Bank defaults in the payment of the principal or Redemption Price of, Sinking Fund Installment for, or interest on, any Bond when and as the same becomes due whether at maturity or upon call for redemption, or otherwise;
(b) the Bond Bank fails or refuses to comply with the provisions of the Act regarding
the certification of deficiencies in the 2005 General Bond Resolution Reserve Fund, or such amounts as are certified by the Chair of the Bank to the Governor and to the Legislature pursuant to the Act are not appropriated and paid to the Bond Bank prior to the termination of the then-
current State fiscal year; or
(c) the Bond Bank fails or refuses to comply with the provisions of the Act, other than as described in clause (b) above, or defaults in the performance or observance of any other of
the covenants, agreements, or conditions on its part in the 2005 General Bond Resolution, any Series Resolution, any Supplemental Resolution, or in the Bonds contained, and such failure, refusal, or default continues for a period of 45 days after written notice thereof by the Trustee or
the Holders of not less than 25 percent in principal amount of the Outstanding Bonds;
provided, however, that an event of default will not be deemed to exist under the provisions described in clause (c) above upon the failure of the Bond Bank to make and collect Fees and Charges required to be made and collected by the 2005 General Bond Resolution or upon the failure of the Bond Bank to enforce any obligation undertaken by a Governmental Unit pursuant to a Loan Agreement including the making of the stipulated Municipal Bonds Payments so long as the Bond Bank may be otherwise directed by law and so long as the Bond Bank is provided with money from the State or otherwise, other than withdrawals from or reimbursements of the Reserve Fund, sufficient in amount to pay the principal of and interest on all Bonds as the same becomes due during the period for which the Bond Bank is directed by law to abstain from making and collecting such Fees and Charges and from enforcing the obligations of a Governmental Unit under the applicable Loan Agreement.
The 2005 General Bond Resolution provides that upon the happening and continuance of any Event of Default described in clause (a) above, the Trustee will proceed, or upon the happening and continuance of any Event of Default described in clauses (b) and (c) above, the Trustee may proceed, and
upon the written request of the holders of not less than 25 percent in principal amount of the Outstanding Bonds will proceed, in its own name, to protect and enforce its rights and the rights of the Bondholders by such of the following remedies as the Trustee, being advised by counsel, deems most effectual to protect
and enforce such rights:
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(a) by mandamus or other suit, action, or proceeding at law or in equity, enforce all rights of the Bondholders, including the right to require the Bond Bank to make and collect Fees
and Charges and Municipal Bonds Payments adequate to carry out the covenants and agreements as to, and pledge of, such Fees and Charges and Municipal Bonds Payments and other properties and to require the Bond Bank to carry out any other covenant or agreement with Bondholders and
to perform its duties under the Act;
(b) by bringing suit upon the Bonds;
(c) by action or suit in equity, require the Bond Bank to account as if it were the
trustee of an express trust for the holders of the Bonds; and
(d) by action or suit in equity, enjoin any acts or things which may be unlawful or in violation of the rights of the holders of the Bonds.
Acceleration. The 2005 General Bond Resolution provides that upon the occurrence of an event of default in the payment of principal or Redemption Price of, Sinking Fund Installment for, or interest on Bonds then Outstanding, unless the principal of all Bonds has already become due and payable, the Trustee, by notice in writing to the Bond Bank, may, and upon the written request of the holders of not less than a majority in aggregate principal amount of the Bonds at the time Outstanding will, declare the
principal of all the Bonds then Outstanding, and the interest accrued thereon, to be due and payable immediately, and upon any such declaration the same will be immediately due and payable. This provision, however, is subject to the condition that if, at any time after the principal of the Bonds has been
so declared due and payable, and before any judgment or decree for the payment of the money due has been obtained or entered, the Bond Bank deposits with the Trustee a sum sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments of interest upon all the Bonds,
with interest on such overdue installments of principal at the rate borne by the respective Bonds, and the reasonable expenses of the Trustee, and any and all other defaults known to the Trustee (other than in the payment of principal of and interest on the Bonds due and payable solely by reason of such declaration)
have been made good or cured to the satisfaction of the Trustee or provision deemed by the Trustee to be adequate have been made therefor, then the holders of at least a majority in aggregate principal amount of the Bonds then outstanding, by written notice to the Bank and to the Trustee, may, on behalf of the
holders of all of the Bonds, rescind and annul such declaration and its consequences and waive such default. See Sections 1203 and 1204 in Appendix E.
Bondholders’ Direction of Proceedings. The holders of a majority in principal amount of the Bonds then Outstanding will have the right to direct the method of conducting all remedial proceedings to be taken by the Trustee, provided that such direction is not otherwise than in accordance with law or the 2005 General Bond Resolution, and that the Trustee has the right to decline to follow any such direction which in the opinion of the Trustee would be unjustly prejudicial to Bondholders not parties to such direction.
Limitation on Rights of Bondholders. No holder of any Bond will have any right to institute any suit, action, mandamus, or other proceeding in equity or at law under the 2005 General Bond Resolution, or for the protection or enforcement of any right under the 2005 General Bond Resolution or any right
under law, unless such holder has given to the Trustee written notice of the event of default or breach of duty on account of which such suit, action, or proceeding is to be taken, and unless the holders of not less than 25 percent in principal amount of the Bonds then Outstanding have made written request of the
Trustee and has afforded the Trustee a reasonable opportunity either to proceed to exercise the powers granted under law or to institute such action, suit, or proceeding in its name and unless, also, there has been offered to the Trustee reasonable security and indemnity against the costs, expenses, and liabilities
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to be incurred thereby, and the Trustee has refused or neglected to comply with such request within a reasonable time. No holder of the Bonds will have any right to affect, disturb, or prejudice the security of
the 2005 General Bond Resolution, or to enforce any right with respect to the Bonds or the 2005 General Bond Resolution, except in the manner provided in the 2005 General Bond Resolution, and all proceedings at law or in equity will be instituted, held, and maintained in the manner provided in the 2005
General Bond Resolution and for the benefit of all Bondholders.
Excess Earnings
The Bond Bank covenants and agrees in the 2005 General Bond Resolution to calculate Rebatable Arbitrage and to pay Rebatable Arbitrage to the United States of America in the manner necessary to comply with the then applicable federal tax law. Within 30 days after the end of every fifth Bond Year, and within 60 days of the date when all of each Series of Bonds have been retired (or at such other time or times as may then be required by the Code and the applicable Income Tax Regulations), the Bond Bank will determine the Rebatable Arbitrage with respect to each Series of Bonds, and pay rebate amounts due the United States of America with respect thereto, as provided in Section 148(f) of the Code.
Modifications to the 2005 General Bond Resolution
In addition to modifications with and without consent of Bondholders, the 2005 General Bond
Resolution authorizes modifications of any provision set forth in the 2005 General Bond Resolution by the terms of a Supplemental Resolution, with such modifications becoming effective after all Bonds of each Series Outstanding as of the date of such Supplemental Resolution authorizing such modification
cease to be Outstanding. The 2013 First Supplemental Resolution was adopted by the Board on February 19, 2013.
The 2013 First Supplemental Resolution authorizes the following modifications to the 2005
General Bond Resolution: (i) to authorize the Trustee to release to the Bond Bank amounts held in the Reserve Fund which exceed the Required Debt Service Reserve whenever there is a reduction in the Required Debt Service Reserve, (ii) to authorize the Trustee to release to the Bond Bank earnings and
profits realized from investments in the Reserve Fund on or before June 30 of each year so long as the balance therein equals the Required Debt Service Reserve, (iii) to allow for certain amendments and modifications to the 2005 General Bond Resolution to be effective upon securing the consent of Holders of at least two-thirds in principal amount of Bonds then Outstanding, and (iv) to establish that consent of Holders of Bonds, when required under the terms of the 2005 General Bond Resolution, specifically includes the consent of an underwriter or purchaser of a Series of Bonds at the time such Bonds are issued.
The modifications to the 2005 General Bond Resolution set forth in the 2013 First Supplemental Resolution shall become effective after all Bonds issued prior to the 2013 Series Three Bonds cease to be Outstanding and compliance by the Bank with certain requirements set forth in the 2005 General Bond Resolution, at which time these modifications will apply to the 2021 Series One, Two and Three Bonds
and govern the rights and obligations of the Holders thereof.
CERTAIN BONDOWNERS’ RISKS
The following is a discussion of certain risks that could affect payments to be made with respect
to the 2021 Series One, Two and Three Bonds. This discussion is not, and is not intended to be, exhaustive, should be read in conjunction with all other parts of this Official Statement, and should not be considered to be a complete description of all risks that could affect such payments. Prospective
purchasers of the 2021 Series One, Two and Three Bonds should analyze carefully the information
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contained in this Official Statement, including the appendices, and additional information in the form of the complete documents summarized herein, copies of which are available as described in this Official
Statement.
General
An investment in the 2021 Series One, Two and Three Bonds involves certain risks, including the
risk of nonpayment of interest or principal due to owners of the 2021 Series One, Two and Three Bonds and the risk that the 2021 Series One, Two and Three Bonds will be redeemed prior to maturity. The enforceability of the Bond Bank’s obligations pursuant to the 2005 General Bond Resolution may be limited by the laws of the State and the United States with respect to bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies.
The 2021 Series One, Two and Three Bonds are general obligations of the Bond Bank, and the full faith and credit of the Bond Bank are pledged for the payment of the principal and redemption premium, if any, of, and interest on the 2021 Series One, Two and Three Bonds solely from the sources provided in the 2005 General Bond Resolution and any Series Resolution. The Act and the 2005 General Bond Resolution each provides that the State is not obligated to pay the principal, premium, if any, or
interest on the 2021 Series One, Two and Three Bonds, that the 2021 Series One, Two and Three Bonds are not a debt or liability of the State, and that neither the faith and credit of the State nor the taxing power of the State is pledged to the payment of the principal of, premium, if any, or interest on the 2021 Series
One, Two and Three Bonds.
In addition to the 2021 Series One, Two and Three Bonds, the Bond Bank may issue additional series of Bonds secured on a parity under the 2005 General Bond Resolution. See “SECURITY AND
SOURCES OF PAYMENT FOR THE BONDS.”
State and Governmental Unit Revenues
Payments made by the Governmental Units on their Municipal Bonds are the primary security for
the payment of principal of and interest on the Bonds, including the 2021 Series One, Two and Three Bonds. The Bond Bank also maintains a reserve account within the reserve fund created under the Act as additional security for the payment of the Bonds. The Bond Bank is required under the Act to report the sufficiency of the reserve fund and to seek appropriations from the Legislature to replenish the reserve fund if needed. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – 2005 General Bond Resolution Reserve Fund.”
State Payments to Governmental Units. State payments to Governmental Units include payments through the SDRP and Education Support Funding through the Department of Education and Early Development and community jail funding through the Department of Corrections. A table in Appendix B sets forth the amount of State payments to Governmental Units that have borrowed from the Bond Bank as well as the fiscal year 2021 Loan Obligations and estimated coverage provided by those State
payments. The payment and amount of such State payments is uncertain, and legislative authorization for such payments is subject to appropriation and to amendment or repeal. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – Government Budgets and Appropriations” and “– Government
Funds” and Appendix B – “STATE PAYMENTS TO GOVERNMENTAL UNITS.”
Capital expenditures by the State that are the source of matching grant funding to municipalities have been reduced significantly since fiscal year 2015. Payments through the SDRP were reduced by
25 percent in fiscal year 2017 and were reduced by 50 percent in fiscal year 2020. See “SECURITY AND
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SOURCES OF PAYMENT FOR THE BONDS – State Payments to Governmental Units.” The State’s enacted budget for fiscal year 2021 reduced State payments to Governmental Units by reducing payments for the
SDRP and the TIDSRP by 100 percent from authorized amounts, among other reductions. These programs’ funding level in the fiscal year 2022 operating budget is uncertain as the budget is currently being crafted by the Legislature. See Appendix F – “INFORMATION CONCERNING THE STATE OF
ALASKA.”
Effect on State Intercept. The Act provides that, to the extent that any department or agency of the State is the custodian of money payable to a Governmental Unit, at any time after notice from the
Bond Bank that the Governmental Unit is in default on the payment of the principal of or interest on its Municipal Bonds then held or owned by the Bond Bank, the department or agency is required to withhold the payment of such money held by it and pay over such money to the Bond Bank for the purpose of paying principal of and interest on the bonds of the Bond Bank. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – State Payments to Governmental Units.” Other State agencies may have similar rights to intercept State payments to local governments or to limit the amount intercepted, and no assurance can be given that the Bond Bank’s claim would have priority or that the amount of available State payments would be sufficient. State payments to Governmental Units have been reduced in recent
years, and there can be no assurance that additional reductions will not be made, reducing the amount available to the Bond Bank under the intercept remedy.
Effect on Reserve Fund. If the Bond Bank is required to draw on the Reserve Fund because of a
default by a Governmental Unit, the appropriation provides that an amount equal to the amount drawn from the Reserve Fund is appropriated from the State’s General Fund to the Reserve Fund. The State is not obligated to make such an appropriation. There is no guarantee that the Bond Bank will be able to
secure future appropriations within the State’s operating budget for replenishment of the Bond Bank’s reserve accounts, including the Reserve Fund. See “SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – 2005 General Bond Resolution Reserve Fund” and Appendix F – “INFORMATION CONCERNING
THE STATE OF ALASKA – Government Budgets and Appropriations.”
Adequacy of Revenues
No representation or assurance can be given that the Bond Bank will realize revenues in amounts sufficient to make payments when due under the 2005 General Bond Resolution. The realization of future revenues is dependent upon, among other things, payments to be made by Governmental Units, which are subject to future changes in economic, legal, legislative, regulatory, and other conditions that are unpredictable and cannot be determined at this time. The risk of nonpayment or that the 2021 Series One, Two and Three Bonds will be redeemed prior to maturity is affected by the following factors, among others, which should be considered by prospective investors, along with other information set forth in this Official Statement, in judging the suitability of an investment in the 2021 Series One, Two and Three Bonds. The 2021 Series One, Two and Three Bonds may not be a suitable investment for all prospective
purchasers. Prospective purchasers should consult their investment advisors before making any decisions as to the purchase of the 2021 Series One, Two and Three Bonds.
The future financial condition of the State and of the Governmental Units could be adversely
affected by, among other things: detrimental State or federal legislation; detrimental State or federal regulatory actions; lower investment returns; decreased demand and lower prices for petroleum products; decreased tourism and other retail activity; demographic changes; the occurrence of natural, national, or
international calamities, including a national or localized outbreak of a highly contagious or epidemic disease; security breaches in information technology systems; and tax law changes. There can be no assurance that revenues available to the Bond Bank and the Governmental Units to make payment on the
2021 Series One, Two and Three Bonds will not decrease.
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Investment Earnings. Investment earnings are a principal source of unrestricted General Fund revenue for the State. In 2018, the Legislature enacted Senate Bill 26, which directs the State to
appropriate amounts from the Earnings Reserve of the Alaska Permanent Fund to the General Fund as unrestricted General Fund revenue. The State has forecasted for fiscal year 2021 that of the $4,663.5 million of projected unrestricted General Fund revenue, $3,091.5 million, or 66.3 percent, is
estimated to be transferred from the Permanent Fund Earnings Reserve. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – State Revenues” and “– Government Funds – The Alaska Permanent Fund.” The past performance of such investments cannot be used as a basis to predict
future results. The results in subsequent fiscal years will depend upon the state of general economic conditions and market results of investments that may be held by the State from time to time for its investment purposes. The COVID-19 outbreak may have a material adverse effect on investment returns for the Alaska Permanent Fund.
Oil and Gas Revenues. The State’s unrestricted General Fund revenue has historically been generated primarily from petroleum production activities. Approximately 80 percent of fiscal year 2018 unrestricted General Fund revenue was generated from petroleum. The State has forecasted for fiscal year 2021 that of $4,663.5 million of unrestricted General Fund revenue, $1,160.8 million, or 24.9 percent,
will be derived from oil and gas revenue.
Many factors affect the ability of the petroleum industry to sustain production in the State, including: future economic conditions; energy prices; technological changes; transportation costs;
availability and cost of materials used in processing; availability and affordability of insurance; availability and capability of qualified management and personnel; technical difficulties or supplier interruptions; and seasonality. Energy prices are affected by, among other factors outside the control of
the State: the supply and demand for oil and gas and expectations regarding supply and demand; the development of energy production technology, such as hydraulic fracturing; political conditions in other oil-producing countries, including the possibility of insurgency or war in such areas; economic conditions
in the United States and worldwide; governmental regulations and taxation, including regulations on carbon emissions and other greenhouse gases; the impact of energy conservation efforts; the price and availability of alternative fuel sources; weather conditions; the availability of transportation systems and
storage; and market uncertainty.
The spread of COVID-19 has had a material adverse effect on the demand for and price of petroleum products. As a result of the global decrease in demand for petroleum products, in April 2020 the operator of the Trans-Alaska Pipeline System temporarily reduced the amount of oil flowing through the pipeline by up to 75 thousand barrels per day to address storage capacity at the pipeline terminal in Valdez, Alaska. On May 21, 2020, the operator of the Trans-Alaska Pipeline System announced that it would restore the operations of the pipeline to full capacity. It is anticipated the reduction in demand for and the price of petroleum products will have a negative effect on revenues of the State, and there can be
no assurance that oil and gas revenue of the State will not decrease further. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – State Revenues – Oil and Gas Revenues.”
Federal Revenues. The State receives federal revenues for specific purposes that are generally
subject to review or audit by grantor agencies. Entitlement to federal revenues is generally conditioned upon compliance with the terms of grant agreements and applicable federal regulations, including the expenditure of assistance for allowable purposes. Any disallowance resulting from a review or audit may
become a liability of the State. In addition, pending legal challenges to the Affordable Care Act pose risks to federal revenues received by the State through the Medicare and Medicaid programs. Reductions in federal funding (including the COVID-19 stimulus funds discussed below) could result in reduced
economic activity and increased State costs. There can be no assurance that federal revenues available to
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the State will not decrease. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – State Revenues – Federal Revenue;” “Infectious Disease Outbreak – COVID-19.”
Infectious Disease Outbreak – COVID-19
COVID-19. The outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus, which was first detected in China and has since spread to other countries, including the
United States (and the State of Alaska), has been declared a pandemic by the World Health Organization. The outbreak of the disease has affected travel, commerce, and financial markets globally.
On March 11, 2020, Governor Dunleavy declared a public health disaster emergency under State
law as a result of COVID-19. On March 13, 2020, President Trump declared a national emergency due to the COVID-19 outbreak, and on April 9, 2020, President Trump declared that a major disaster exists in the State of Alaska and ordered federal assistance to supplement State, tribal, and local recovery efforts in the areas affected by COVID-19.
The Governor issued a series of health mandates, including: (1) suspending and limiting visitation
to various State facilities; (2) closing State libraries and museums; (3) sending students home from residential school programs; (4) postponing or canceling elective procedures at surgical centers and hospitals and by oral health care providers; (5) closing all public and private schools through the end of
the school year, subject to each school district’s individual plan to provide distance-delivered educational services to students; (6) requiring all people arriving in the State (residents, workers, and visitors) to self-quarantine for 14 days; (7) effective March 28, 2020, mandating all persons in Alaska except for those
engaged in essential health services, public government services, and essential business activities, to remain at their place of residence and to practice social distancing, and closing all non-essential businesses; and (8) prohibiting in-State travel between communities except to support critical
infrastructure or for critical personal needs.
The Legislature extended all tax returns and payments (other than for oil and gas taxes) that would otherwise be due March 31, 2020, until July 15, 2020. The State did not assess penalties or interest
if taxpayers complied with filing and payment requirements by July 15, 2020.
On February 14, 2021 the State of Alaska’s declaration of public health disaster emergency, which was in place due to COVID-19, expired. With this expiration the prior State-level health orders, health alerts, and health mandates expired. Four State-level health advisories remain in place to provide guidance to individuals on keeping safe in their community, while travelling to/from the State and within the State, and for critical infrastructure. Certain individual boroughs, cities and villages continue to maintain locally imposed restrictions on travel, businesses and other activities. As of April 6, 2021, anyone living or working in Alaska age 16 or older is eligible to be vaccinated at no cost, and 244,968 people had received at least one vaccination shot and 193,577 had completed their vaccination series.
In addition to actions taken by State, local and federal governments, governments throughout the world have taken action to limit, and in some cases prohibit, non-essential travel to or from their
territories in response to COVID-19, which may have an adverse effect on tourism activity in the State. For example, some countries have closed their borders to travelers from certain other counties and others have imposed entry and re-entry requirements such as mandatory quarantine periods and/or proof of a
negative COVID-19 test, and the Canadian government banned large cruise ships from calling on Canadian ports until 2022. As a result of the Canadian government’s ban on cruise ships, without Congressional action, no large cruise ships are permitted to sail from U.S. ports directly to the Alaska
market (pursuant to the Passenger Vessel Services Act of 1886), effectively cancelling all large cruises in the Alaska market for 2021. The scope and severity of COVID-19 travel restrictions and “stay at home”
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orders vary throughout the United States and the world, and governmental authorities continue to adjust and revise these restrictions from time to time.
The COVID-19 outbreak and the associated responses by governments, businesses, and individuals are rapidly evolving. The Bond Bank cannot predict if any of the health mandates will be further modified or extended, or if the Governor will issue additional proclamations that may adversely
impact the finances or operations of the State or of Governmental Units.
The United States government and the Federal Reserve Board are taking legislative and regulatory actions and implementing measures to mitigate the broad disruptive effects of the COVID-19 outbreak. As described below, the State has received and expects to receive additional funds through federal legislation, which among other things, provides relief for a portion of the costs incurred by the State in response to COVID-19.
The CARES Act, passed by the 116th U.S. Congress in March 2020, established a $150 billion Coronavirus Relief Fund to, among other things, provide financial assistance to states. The State has received its approximately $1.25 billion allocation from the Coronavirus Relief Fund, which can be used to cover COVID-19 related medical expenses, public health expenses, including among other things public safety measures taken in response to COVID-19, payroll expenses for public safety, public health,
healthcare, human services, and similar employees dedicated to the COVID-19 public health emergency, economic support, and other emergency response costs. The CARES Act limits the State’s use of funds from the Coronavirus Relief Fund to COVID-19 expense reimbursement rather than to offset anticipated
state tax revenue losses.
The State, governmental agencies, and local governments within the State have received additional grants from the federal government including approximately $87 million in pass-through
funding to school districts, $50 million in pass-through funding for fisheries relief, $49 million for rural airports, and $29 million related to Federal Transit Administration pass-through funding, among other grants.
In addition, the State is eligible to receive a 6.2 percent increase to its federal medical assistance percentage related to Medicaid, applied retroactively to January 1, 2020, through the end of the calendar quarter in which the COVID-19 pandemic is determined to be over. The State anticipates that it will
receive an additional $40 million to $60 million in federal funding as a result of the percentage increase.
On March 11, 2021 President Biden signed the $1.9 trillion stimulus package. Alaska is expected to receive funding through a number of channels from the package. Income eligible Alaskans will receive a direct payment of $1,400, and the potential of an expanded child tax credit. The State of Alaska is expected to receive $1.17 billion and local governments approximately $230 million. Guidance on the use of these funds is expected in early May and funds will be allocated thereafter. Tribes in Alaska are expected to receive approximately $1 billion, the allocation and expenditure of which to take place over the next three years.
The impact that the COVID-19 pandemic is having and will have on commerce, financial markets, the State and the local governments is significant, and the nature of the impact is likely to evolve over the next several years. The Bond Bank has provided the information contained in this Official
Statement to describe current impacts that the COVID-19 pandemic and related emergency orders have had on the finances and operations of the Bond Bank, the State and local governments generally, and to describe some of the actions that the State and other entities have taken in response. Other public health
emergencies, including other global pandemics, may occur. The Bond Bank cannot predict the duration and extent of the COVID-19 public health emergency, the occurrence of future public health emergencies
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or quantify the magnitude of the impact on the State and local economies or on the other revenues of the Bond Bank from borrowers participating in Bond Bank programs.
The COVID-19 outbreak is ongoing, and its dynamic nature leads to uncertainties, including (i) the geographic spread of the virus and its variants and the emergence of new variants; (ii) the severity of the disease; (iii) the duration of the outbreak; (iv) actions that governmental authorities may take in the
future to contain or mitigate the outbreak; (v) the development, efficacy, distribution and acceptance of medical therapeutics and vaccinations and the efficacy of therapeutics and vaccines to emerging and new variants; (vi) additional or changed travel restrictions; (vii) the impact of the outbreak on the State, local or global economy; (viii) whether and to what extent the Governor or local executives may order additional public health measures; (ix) restoration of public perception of the safety and necessity of travel for personal and business needs; and (x) the impact of the outbreak and actions taken in response to the outbreak on the Bond Bank. Prospective investors should assume that the restrictions and limitations instituted related to COVID-19 may be reimposed or continue, that the current upheaval to the national and global economies and financial markets may continue and/or be exacerbated, at least over the near term, and that the recovery may be prolonged. Additional pandemics, and other public health emergencies, may occur and may occur with greater frequency and intensity due to trends in
globalization.
Other Factors Affecting the State and Governmental Units
Future Economic Conditions. Increased unemployment, adverse economic conditions, including
the health of the oil and gas industry, volatility in the tourism industry including the summer cruise ship season, changes in demographics, the cost and availability of energy, the inability to control expenses in periods of inflation, and difficulty in increasing revenues while maintaining a competitive economic
environment could all affect the finances and operations of the State and Governmental Units.
Cybersecurity Risks. The State and Governmental Units rely on electronic systems and technologies to conduct their operations. In the past several years, a number of entities have sought to
gain unauthorized access to electronic systems of various organizations for the purpose of misappropriating assets or personal, operational, financial, or other sensitive information that can cause operational disruption. These attempts, which are increasing, include highly sophisticated efforts to electronically circumvent security measures as well as more traditional intelligence gathering aimed at obtaining information necessary to gain such access. No assurance can be given that security measures implemented by the State and Governmental Units will be able to prevent cyber-attacks on their electronic systems, and no assurances can be given that any cyber-attacks, if successful, will not have a material adverse effect on their finances or operations.
Earthquakes. The State contains many regions of seismic activity, with frequent small earthquakes and occasionally moderate and larger earthquakes. A 1964 earthquake with its epicenter in southcentral Alaska measuring 9.2 on the Richter scale was the most powerful earthquake recorded in
North American history, and the second most powerful in world history, causing over 130 deaths. Certain soil types and property located in certain areas of the State could become subject to liquefaction and could result in landslides following a major earthquake and any aftershocks. Areas of the State also could
experience the effects of a tsunami following a major earthquake. A significant earthquake may disrupt transportation, communication, water and sewer systems, power and fuel delivery for weeks to months throughout certain regions of the State, and could result in significant permanent loss of population and
business.
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Volcanic Eruptions. The State contains many active volcanoes. A volcanic eruption could result in landslides and releases of gas and ash that can interfere with air travel, a principal mode of
transportation in the State.
Wildfires. Areas of the State have experienced drought conditions and increased wildfire activity. Warmer and drier summer conditions increase the risk of wildfires that may threaten the health, economy,
and environment of the State and Governmental Units by creating unhealthy air quality levels, threatening infrastructure, businesses, and residences, destroying natural resources, and damaging wildlife habitat.
Climate Change. Climate change poses potential risks to the State and Governmental Units and their finances and operations. Extreme weather events can result in droughts, wildfires, floods, and other natural disasters. Climate change may also affect population migration and shifts in economic activities such as agriculture, fishing, and construction of facilities and roads on permafrost and ice. No assurance can be given that climate change will not have a material adverse effect on the finances and operations of the State and Governmental Units.
Ratings
The lowering, suspension, or withdrawal of either or both of the ratings initially assigned to the 2021 Series One, Two and Three Bonds could adversely affect the market price and the market for the
2021 Series One, Two and Three Bonds. See “RATINGS.”
Limitations on Enforceability of Obligations and Remedies
The enforceability of the Bond Bank’s obligations under the 2005 General Bond Resolution may
be limited by the laws of the State and the United States with respect to bankruptcy, insolvency, reorganization, moratorium, or other similar laws affecting creditors’ rights generally and by the availability of equitable remedies. The opinions of Bond Counsel will so state. The practical realization of
any rights upon any default will depend upon the exercise of various remedies specified in the 2005 General Bond Resolution. These remedies, in certain respects, may require judicial action, which is often subject to discretion and delay. Under existing law, certain of the remedies specified in the 2005 General
Bond Resolution may not be readily available or may be limited. A court may decide not to order the specific performance of these covenants.
Early Redemption
Purchasers of 2021 Series One, Two and Three Bonds, including those who purchase 2021 Series One, Two and Three Bonds at a price in excess of their principal amount or who hold such a 2021 Series One, Two and Three Bond trading at a price in excess of par, should consider the fact that the 2021 Series One, Two and Three Bonds are subject to redemption prior to maturity. See “DESCRIPTION OF THE 2021 SERIES ONE, TWO AND THREE BONDS – Optional Redemption” and “– Mandatory Redemption.”
Secondary Market and Prices
It has been the practice of the Underwriters to maintain a secondary market in municipal securities they sell, and the Underwriters currently intend to engage in secondary market trading of the
2021 Series One, Two and Three Bonds, subject to applicable securities laws. The Underwriters, however, are not obligated to engage in secondary trading or to repurchase any of the 2021 Series One, Two and Three Bonds at the request of the owners thereof. No assurance can be given that a market will
exist for the resale of the 2021 Series One, Two and Three Bonds. Because of general market conditions or because of adverse history or economic prospects connected with a particular issue or issuer, secondary
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marketing activity in connection with a particular issue may be suspended or terminated. Additionally, prices of issues for which a market is being made will depend upon then-prevailing circumstances. Such
prices could be substantially different from the original purchase price. There can be no guarantee that there will be a secondary market for the 2021 Series One, Two and Three Bonds, or if a secondary market exists, that the 2021 Series One, Two and Three Bonds can be sold for any particular price.
LITIGATION
As a condition to the delivery of the 2021 Series One, Two and Three Bonds, the Alaska Department of Law, as counsel to the Bond Bank, is required to furnish a certificate to the effect that as of
the date of delivery, there is no litigation pending against the Bond Bank in any State court to restrain or enjoin the issuance or delivery by the Bond Bank of the 2021 Series One, Two and Three Bonds or contesting the validity or enforceability of the 2021 Series One, Two and Three Bonds, the 2005 General Bond Resolution, or the pledge made under the Bond Resolution.
TAX MATTERS
2021 Series One Bonds and 2021 Series Three Bonds (Tax-Exempt/AMT)
In the opinion of Orrick, Herrington & Sutcliffe LLP (“Bond Counsel”), based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, the
accuracy of certain representations and compliance with certain covenants, interest on the 2021 Series One Bonds and the 2021 Series Three Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Internal Revenue Code”), except
that no opinion is expressed as to the status of interest on any 2021 Series Three Bond for any period that such 2021 Series Three Bond is held by a “substantial user” of the facilities financed or refinanced by the 2021 Series Three Bonds or by a “related person” within the meaning of Section 147(a) of the Code. In
the opinion of Bond Counsel, interest on the 2021 Series One Bonds is not a specific preference item for purposes of the federal alternative minimum tax. Bond Counsel observes, however, that interest on the 2021 Series Three Bonds is a specific preference item for purposes of the federal alternative minimum
tax. Bond Counsel is also of the opinion, based on existing laws of the State, that interest on the 2021 Series One Bonds and the 2021 Series Three Bonds is exempt from taxation by the State except for transfer, estate and inheritance taxes. A complete copy of the proposed form of opinion of Bond Counsel related to the 2021 Series One Bonds is set forth in Appendix A-1 and a complete copy of the proposed form of opinion of Bond Counsel related to the 2021 Series Three Bonds is set forth in Appendix A-2. Delivery of the 2021 Series Three Bonds, and delivery of Bond Counsel’s opinion with respect to the 2021 Series Three Bonds, is subject to the satisfaction of certain additional terms and conditions provided in the Forward Delivery Purchase Agreement as described under the heading “CERTAIN FORWARD
DELIVERY CONSIDERATIONS.”
To the extent the issue price of any maturity of the 2021 Series One Bonds or 2021 Series Three Bonds is less than the amount to be paid at maturity of such 2021 Series One Bonds or 2021 Series Three
Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2021 Series One Bonds or 2021 Series Three Bonds), the difference constitutes “original issue discount,” the accrual of which, to the extent properly allocable to each Beneficial Owner thereof, is treated as interest
on the 2021 Series One Bonds or the 2021 Series Three Bonds which is excluded from gross income for federal income tax purposes. For this purpose, the issue price of a particular maturity of the 2021 Series One Bonds of the 2021 Series Three Bonds is the first price at which a substantial amount of such
maturity of the 2021 Series One Bonds or the 2021 Series Three Bonds is sold to the public (excluding bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents or wholesalers). The original issue discount with respect to any maturity of the 2021
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Series One Bonds or the 2021 Series Three Bonds accrues daily over the term to maturity of such 2021 Series One Bonds or 2021 Series Three Bonds on the basis of a constant interest rate compounded
semiannually (with straight-line interpolations between compounding dates). The accruing original issue discount is added to the adjusted basis of such 2021 Series One Bonds or 2021 Series Three Bonds to determine taxable gain or loss upon disposition (including sale, redemption, or payment on maturity) of
such 2021 Series One Bonds or Series 2021 Series Three Bonds. Beneficial Owners of the 2021 Series One Bonds or the 2021 Series Three Bonds should consult their own tax advisors with respect to the tax consequences of ownership of 2021 Series One Bonds or 2021 Series Three Bonds with original issue
discount, including the treatment of Beneficial Owners who do not purchase such Bonds in the original offering to the public at the first price at which a substantial amount of such 2021 Series One Bonds or 2021 Series Three Bonds is sold to the public.
2021 Series One Bonds and 2021 Series Three Bonds purchased, whether at original issuance or otherwise, for an amount higher than their principal amount payable at maturity (or, in some cases, at their earlier call date) (“Premium Bonds”) will be treated as having amortizable bond premium. No deduction is allowable for the amortizable bond premium in the case of bonds, like the Premium Bonds, the interest on which is excluded from gross income for federal income tax purposes. However, the
amount of tax-exempt interest received, and a Beneficial Owner’s basis in a Premium Bond, will be reduced by the amount of amortizable bond premium properly allocable to such Beneficial Owner. Beneficial Owners of Premium Bonds should consult their own tax advisors with respect to the proper
treatment of amortizable bond premium in their particular circumstances.
The Internal Revenue Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the
2021 Series One Bonds and the 2021 Series Three Bonds. The Bond Bank and each Governmental Unit have made certain representations and covenanted to comply with certain restrictions, conditions and requirements designed to ensure that interest on the 2021 Series One Bonds and the 2021 Series Three
Bonds will not be included in federal gross income. Inaccuracy of these representations or failure to comply with these covenants may result in interest on the 2021 Series One Bonds and the 2021 Series Three Bonds being included in gross income for federal income tax purposes, possibly from the date of
original issuance of the 2021 Series One Bonds and the 2021 Series Three Bonds, respectively. The opinion of Bond Counsel assumes the accuracy of these representations and compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken), or events occurring (or not occurring), or any other matters coming to Bond Counsel’s attention after the date of issuance of the 2021 Series One Bonds and the 2021 Series Three Bonds, respectively, may adversely affect the value of, or the tax status of interest on, the 2021 Series One Bonds and the 2021 Series Three Bonds. Accordingly, the opinion of Bond Counsel is not intended to, and may not, be relied upon in connection with any such actions, events or matters.
Although Bond Counsel is of the opinion that interest on the 2021 Series One Bonds and the 2021 Series Three Bonds is excluded from gross income for federal income tax purposes, the ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the 2021 Series One Bonds and
the 2021 Series Three Bonds may otherwise affect a Beneficial Owner’s federal, state or local tax liability. The nature and extent of these other tax consequences depends upon the particular tax status of the Beneficial Owner or the Beneficial Owner’s other items of income or deduction. Bond Counsel
expresses no opinion regarding any such other tax consequences.
Current and future legislative proposals, if enacted into law, clarification of the Internal Revenue Code or court decisions may cause interest on the 2021 Series One Bonds and the 2021 Series Three
Bonds to be subject, directly or indirectly, in whole or in part, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Beneficial Owners from realizing the full
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current benefit of the tax status of such interest. The introduction or enactment of any such legislative proposals or clarification of the Internal Revenue Code or court decisions may also affect, perhaps
significantly, the market price for, or marketability of, the 2021 Series One Bonds and the 2021 Series Three Bonds. Prospective purchasers of the 2021 Series One Bonds and the 2021 Series Three Bonds should consult their own tax advisors regarding the potential impact of any pending or proposed federal or
state tax legislation, regulations or litigation, as to which Bond Counsel is expected to express no opinion.
The opinion of Bond Counsel is based on current legal authority, covers certain matters not directly addressed by such authorities, and represents Bond Counsel’s judgment as to the proper treatment
of the Bonds for federal income tax purposes. It is not binding on the Internal Revenue Service (“IRS”) or the courts. Furthermore, Bond Counsel cannot give and has not given any opinion or assurance about the future activities of the Bond Bank or the Governmental Units or about the effect of future changes in the Internal Revenue Code, the applicable regulations, the interpretation thereof or the enforcement thereof by the IRS. The Bond Bank and the Governmental Units have covenanted, however, to comply with the requirements of the Internal Revenue Code.
Bond Counsel’s engagement with respect to the 2021 Series One Bonds and the 2021 Series Three Bonds ends with the issuance of the 2021 Series One Bonds and the 2021 Series Three Bonds, and,
unless separately engaged, Bond Counsel is not obligated to defend the Bond Bank, the Governmental Units or the Beneficial Owners regarding the tax-exempt status of interest on the 2021 Series One Bonds and the 2021 Series Three Bonds in the event of an audit examination by the IRS. Under current
procedures, parties other than the Bond Bank, the Governmental Units and their appointed counsel, including the Beneficial Owners, would have little, if any, right to participate in the audit examination process. Moreover, because achieving judicial review in connection with an audit examination of tax-
exempt bonds is difficult, obtaining an independent review of IRS positions with which the Bond Bank or the Governmental Units legitimately disagree, may not be practicable. Any action of the IRS, including but not limited to selection of the 2021 Series One Bonds and the 2021 Series Three Bonds for audit, or
the course or result of such audit, or an audit of bonds presenting similar tax issues may affect the market price for, or the marketability of, the 2021 Series One Bonds and the 2021 Series Three Bonds, and may cause the Bond Bank, the Governmental Units or the Beneficial Owners to incur significant expense.
2021 Series Two Bonds (Taxable)
In the opinion of Bond Counsel, interest on the 2021 Series Two Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Internal Revenue Code”). Bond Counsel is also of the opinion, based on existing laws of the State of Alaska, that interest on the 2021 Series Two Bonds is exempt from taxation by the State of Alaska except for transfer, estate, and inheritance taxes. Bond Counsel expresses no opinion regarding any other tax consequences relating to the ownership or disposition of, or the amount, accrual, or receipt of interest on, the 2021 Series Two Bonds. A complete copy of the proposed form of opinion of Bond Counsel is
included as Appendix A-1.
The following discussion summarizes certain U.S. federal income tax considerations generally applicable to U.S. Holders (as defined below) of the 2021 Series Two Bonds that acquire their 2021
Series Two Bonds in the initial offering. The discussion below is based upon laws, regulations, rulings, and decisions in effect and available on the date hereof, all of which are subject to change, possibly with retroactive effect. Prospective investors should note that no rulings have been or are expected to be sought
from the U.S. Internal Revenue Service (the “IRS”) with respect to any of the U.S. federal income tax considerations discussed below, and no assurance can be given that the IRS will not take contrary positions. Further, the following discussion does not deal with U.S. tax consequences applicable to any
given investor, nor does it address the U.S. tax considerations applicable to all categories of investors,
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some of which may be subject to special taxing rules (regardless of whether or not such investors constitute U.S. Holders), such as certain U.S. expatriates, banks, REITs, RICs, insurance companies, tax-
exempt organizations, dealers or traders in securities or currencies, partnerships, S corporations, estates and trusts, investors that hold their 2021 Series Two Bonds as part of a hedge, straddle or an integrated or conversion transaction, investors whose “functional currency” is not the U.S. dollar, or certain taxpayers
that are required to prepare certified financial statements or file financial statements with certain regulatory or governmental agencies. Furthermore, it does not address (i) alternative minimum tax consequences, (ii) the net investment income tax imposed under Section 1411 of the Code, or (iii) the
indirect effects on persons who hold equity interests in a holder. This summary also does not consider the taxation of the 2021 Series Two Bonds under state, local or non-U.S. tax laws. In addition, this summary generally is limited to U.S. tax considerations applicable to investors that acquire their 2021 Series Two Bonds pursuant to this offering for the issue price that is applicable to such 2021 Series Two Bonds (i.e., the price at which a substantial amount of the 2021 Series Two Bonds are sold to the public) and who will hold their 2021 Series Two Bonds as “capital assets” within the meaning of Section 1221 of the Code. The following discussion does not address tax considerations applicable to any investors in the 2021 Series Two Bonds other than investors that are U.S. Holders.
As used herein, “U.S. Holder” means a beneficial owner of a 2021 Series Two Bond that for U.S. federal income tax purposes is an individual citizen or resident of the United States, a corporation or other entity taxable as a corporation created or organized in or under the laws of the United States or any state
thereof (including the District of Columbia), an estate the income of which is subject to U.S. federal income taxation regardless of its source or a trust where a court within the United States is able to exercise primary supervision over the administration of the trust and one or more United States persons
(as defined in the Code) have the authority to control all substantial decisions of the trust (or a trust that has made a valid election under U.S. Treasury Regulations to be treated as a domestic trust). If a partnership holds 2021 Series Two Bonds, the tax treatment of such partnership or a partner in such
partnership generally will depend upon the status of the partner and upon the activities of the partnership. Partnerships holding 2021 Series Two Bonds, and partners in such partnerships, should consult their own tax advisors regarding the tax consequences of an investment in the 2021 Series Two Bonds (including
their status as U.S. Holders).
Prospective investors should consult their own tax advisors in determining the U.S. federal, state, local or non-U.S. tax consequences to them from the purchase, ownership and disposition of the 2021 Series Two Bonds in light of their particular circumstances.
U.S. Holders
Interest. Interest on the 2021 Series Two Bonds generally will be taxable to a U.S. Holder as ordinary interest income at the time such amounts are accrued or received, in accordance with the U.S. Holder’s method of accounting for U.S. federal income tax purposes.
To the extent that the issue price of any maturity of the 2021 Series Two Bonds is less than the amount to be paid at maturity of such 2021 Series Two Bonds (excluding amounts stated to be interest and payable at least annually over the term of such 2021 Series Two Bonds) by more than a de minimis
amount, the difference may constitute original issue discount (“OID”). U.S. Holders of 2021 Series Two Bonds will be required to include OID in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of interest (which may be before the
receipt of cash payments attributable to such income). Under this method, U.S. Holders generally will be required to include in income increasingly greater amounts of OID in successive accrual periods.
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2021 Series Two Bonds purchased for an amount in excess of the principal amount payable at maturity (or, in some cases, at their earlier call date) will be treated as issued at a premium. A U.S. Holder
of a 2021 Series Two Bond issued at a premium may make an election, applicable to all debt securities purchased at a premium by such U.S. Holder, to amortize such premium, using a constant yield method over the term of such 2021 Series Two Bond.
Sale or Other Taxable Disposition of the 2021 Series Two Bonds. Unless a nonrecognition provision of the Code applies, the sale, exchange, redemption, retirement (including pursuant to an offer by the Bond Bank) or other disposition of a 2021 Series Two Bond will be a taxable event for U.S.
federal income tax purposes. In such event, in general, a U.S. Holder of a 2021 Series Two Bond will recognize gain or loss equal to the difference between (i) the amount of cash plus the fair market value of property received (except to the extent attributable to accrued but unpaid interest on the 2021 Series Two Bond, which will be taxed in the manner described above) and (ii) the U.S. Holder’s adjusted U.S. federal income tax basis in the 2021 Series Two Bond (generally, the purchase price paid by the U.S. Holder for the 2021 Series Two Bond, decreased by any amortized premium, and increased by the amount of any OID previously included in income by such U.S. Holder with respect to such 2021 Series Two Bond). Any such gain or loss generally will be capital gain or loss. In the case of a non-corporate U.S. Holder of
the 2021 Series Two Bonds, the maximum marginal U.S. federal income tax rate applicable to any such gain will be lower than the maximum marginal U.S. federal income tax rate applicable to ordinary income if such U.S. holder’s holding period for the 2021 Series Two Bonds exceeds one year. The deductibility
of capital losses is subject to limitations.
Defeasance of the 2021 Series Two Bonds. If the Bond Bank defeases any 2021 Series Two Bond, the 2021 Series Two Bond may be deemed to be retired and reissued for U.S. federal income tax
purposes as a result of the defeasance. In that event, in general, a holder will recognize taxable gain or loss equal to the difference between (i) the amount realized from the deemed sale, exchange or retirement (less any accrued qualified stated interest which will be taxable as such) and (ii) the holder’s adjusted
U.S. federal income tax basis in the 2021 Series Two Bond.
Information Reporting and Backup Withholding. Payments on the 2021 Series Two Bonds generally will be subject to U.S. information reporting and possibly to “backup withholding.” Under
Section 3406 of the Code and applicable U.S. Treasury Regulations issued thereunder, a non-corporate U.S. Holder of the 2021 Series Two Bonds may be subject to backup withholding at the current rate of 24% with respect to “reportable payments,” which include interest paid on the 2021 Series Two Bonds and the gross proceeds of a sale, exchange, redemption, retirement or other disposition of the 2021 Series Two Bonds. The payor will be required to deduct and withhold the prescribed amounts if (i) the payee fails to furnish a U.S. taxpayer identification number (“TIN”) to the payor in the manner required, (ii) the IRS notifies the payor that the TIN furnished by the payee is incorrect, (iii) there has been a “notified payee underreporting” described in Section 3406(c) of the Code or (iv) the payee fails to certify under
penalty of perjury that the payee is not subject to withholding under Section 3406(a)(1)(C) of the Code. Amounts withheld under the backup withholding rules may be refunded or credited against the U.S. Holder’s federal income tax liability, if any, provided that the required information is timely furnished to
the IRS. Certain U.S. holders (including among others, corporations and certain tax-exempt organizations) are not subject to backup withholding. A holder’s failure to comply with the backup withholding rules may result in the imposition of penalties by the IRS.
Foreign Account Tax Compliance Act (“FATCA”)
Sections 1471 through 1474 of the Code impose a 30% withholding tax on certain types of payments made to foreign financial institutions, unless the foreign financial institution enters into an
agreement with the U.S. Treasury to, among other things, undertake to identify accounts held by certain
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U.S. persons or U.S.-owned entities, annually report certain information about such accounts, and withhold 30% on payments to account holders whose actions prevent it from complying with these and
other reporting requirements, or unless the foreign financial institution is otherwise exempt from those requirements. In addition, FATCA imposes a 30% withholding tax on the same types of payments to a non-financial foreign entity unless the entity certifies that it does not have any substantial U.S. owners or
the entity furnishes identifying information regarding each substantial U.S. owner. Under current guidance, failure to comply with the additional certification, information reporting and other specified requirements imposed under FATCA could result in the 30% withholding tax being imposed on payments
of interest on the 2021 Series Two Bonds. In general, withholding under FATCA currently applies to payments of U.S. source interest (including OID) and, under current guidance, will apply to certain “passthru” payments no earlier than the date that is two years after publication of final U.S. Treasury Regulations defining the term “foreign passthru payments.” Prospective investors should consult their own tax advisors regarding FATCA and its effect on them.
The foregoing summary is included herein for general information only and does not discuss all aspects of U.S. federal taxation that may be relevant to a particular holder of 2021 Series Two Bonds in light of the holder’s particular circumstances and income tax situation. Prospective investors are urged to
consult their own tax advisors as to any tax consequences to them from the purchase, ownership and disposition of 2021 Series Two Bonds, including the application and effect of state, local, non-U.S., and other tax laws.
CERTAIN LEGAL MATTERS
Bond Bank. Legal matters incident to the authorization, issuance, and sale by the Bond Bank of the 2021 Series One, Two and Three Bonds are subject to the approving legal opinion of Orrick,
Herrington & Sutcliffe LLP, Bond Counsel to the Bond Bank. The proposed form of the opinion of Bond Counsel for the 2021 Series One and 2021 Series Two Bonds is included as Appendix A-1. The proposed form of opinion of Bond Counsel for the 2021 Series Three Bonds is included as Appendix A-2.
Governmental Units. Certain legal matters will be passed upon for (1) the City of Ketchikan, the City and Borough of Sitka and SEAPA by their bond counsel, Stradling Yocca Carlson & Rauth, a Professional Corporation, Seattle, Washington; (2) the City and Borough of Juneau by its bond counsel, K&L Gates LLP, Seattle, Washington; (3) the Lake and Peninsula Borough by their bond counsel, Birch Horton Bittner & Cherot, Anchorage, Alaska; (4) the City of Homer, the Kenai Peninsula Borough and the City of Seward by their bond counsel, Jermain, Dunnagan & Owens P.C., Anchorage, Alaska; and (5) Aleutians East Borough, the City of Sand Point, and the Kodiak Island Borough by their bond counsel, Foster Garvey PC, Seattle, Washington.
Underwriters. Certain legal matters will be passed upon for the Underwriters by their special counsel, K&L Gates LLP, Seattle, Washington. Any opinion of such counsel will be limited in scope and delivered only to the Underwriters, and may not be relied upon by investors.
Relationships Among Parties. The firm of K&L Gates LLP is representing the Underwriters and the Governmental Unit of the City and Borough of Juneau in this transaction. From time to time, the firms of Orrick, Herrington & Sutcliffe LLP, Foster Garvey PC, Stradling Yocca Carlson & Rauth, a
Professional Corporation, and Jermain, Dunnagan & Owens P.C. represent the Underwriters in transactions unrelated to the issuance of the 2021 Series One, Two and Three Bonds.
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UNDERWRITING
The 2021 Series One Bonds are to be purchased from the Bond Bank at an aggregate purchase
price of $35,715,150.55 (the principal amount of the 2021 Series One Bonds, plus premium of $6,038,394.10, less Underwriters’ discount of $98,243.55), and the 2021 Series Two Bonds are to be purchased from the Bond Bank at an aggregate purchase price of $200,245,172.90 (the principal amount
of the 2021 Series Two Bonds, less Underwriters’ discount of $729,827.10); subject to the terms of a bond purchase contract (the “Purchase Contract”) between the Bond Bank and BofA Securities, Inc., acting on behalf of itself and as representative of RBC Capital Markets, LLC and Jefferies LLC (collectively, with respect to the 2021 Series One Bonds and 2021 Series Two Bonds, the “Underwriters”). The Purchase Contract provides that the Underwriters will purchase all of the 2021 Series One Bonds and 2021 Series Two Bonds if any are purchased and that the obligation of the Underwriters to accept and pay for the 2021 Series One Bonds and 2021 Series Two Bonds is subject to certain terms and conditions set forth therein, including the approval by counsel of certain legal matters.
The 2021 Series Three Bonds are to be purchased from the Bond Bank at an aggregate purchase price of $7,292,158.84 (the principal amount of the 2021 Series Three Bonds, plus premium of $1,589,887.20, less Underwriter’s discount of $22,728.36), subject to the terms of the Forward Bond
Delivery Purchase Agreement between the Bond Bank and BofA Securities, Inc. (with respect to the 2021 Series Three Bonds, the “Underwriter of the 2021 Series Three Bonds”). The Forward Delivery Bond Purchase Agreement provides that the Underwriter of the 2021 Series Three Bonds will purchase all of
the 2021 Series Three if any are purchased and that the obligation of the Underwriter of the 2021 Series Three Bonds to accept and pay for the 2021 Series Three Bonds is subject to certain terms and conditions set forth therein, including the approval by counsel of certain legal matters. See “CERTAIN FORWARD
DELIVERY CONSIDERATIONS.”
The initial offering prices or prices corresponding to the yields set forth on the inside cover of this Official Statement may be changed from time to time by the Underwriters without prior notice to any
person. The Underwriters may offer and sell the 2021 Series One, Two and Three Bonds to certain dealers, unit investment trusts, or money market funds at prices lower than the initial offering prices or prices corresponding to the yields set forth on the inside cover of this Official Statement.
The Underwriters and their affiliates are full-service financial institutions engaged in various activities that may include securities trading, commercial and investment banking, financial advisory, brokerage, and asset management. In the ordinary course of business, the Underwriters and their affiliates may actively trade debt and, if applicable, equity securities (or related derivative securities) and provide financial instruments (which may include bank loans, credit support or interest rate swaps). The Underwriters and their affiliates may engage in transactions for their own accounts involving the securities and instruments made the subject of this securities offering or other offerings of the Bond Bank or the Governmental Units. The Underwriters and their affiliates may make a market in credit default
swaps with respect to municipal securities in the future. The Underwriters and their affiliates may also communicate independent investment recommendations, market color, or trading ideas and publish independent research views in respect of this securities offering or other offerings of the Bond Bank and
the Governmental Units.
BofA Securities, Inc., an Underwriter of the 2021 Series One, Two and Three Bonds, has entered into a distribution agreement with its affiliate Merrill Lynch, Pierce, Fenner & Smith Incorporated
(“MLPF&S”). As part of this arrangement, BofA Securities, Inc. may distribute securities to MLPF&S, which may in turn distribute such securities to investors through the financial advisor network of MLPF&S. As part of this arrangement, BofA Securities, Inc. may compensate MLPF&S as a dealer for
their selling efforts with respect to the 2021 Series One, Two and Three Bonds.
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Jefferies LLC (“Jefferies”), an Underwriter of the 2021 Series One Bonds and 2021 Series Two Bonds, has entered into a distribution agreement with 280 Securities LLC (“280 Securities”) for the retail
distribution of municipal securities. Pursuant to the agreement, if Jefferies sells 2021 Series One Bonds and 2021 Series Two Bonds to 280 Securities, it will share a portion of its selling concession compensation with 280 Securities.
MUNICIPAL ADVISOR
The Bond Bank has retained PFM Financial Advisors LLC (“PFM”) to serve as municipal advisor to provide certain advice to the Bond Bank with respect to the issuance of the 2021 Series One,
Two and Three Bonds. PFM is not obligated to undertake, and has not undertaken, either to make an independent verification of or to assume responsibility for, the accuracy, completeness, or fairness of the information contained in this Official Statement. PFM is an independent financial advisory firm registered with the Securities and Exchange Commission and is not engaged in the business of underwriting, trading, or distributing municipal securities or other public securities.
FINANCIAL STATEMENTS
The financial statements of the Bond Bank for the fiscal year ended June 30, 2020, included in this Official Statement as Appendix D, have been audited by BDO USA, LLP, independent certified
public accountants, to the extent and for the periods indicated in their report thereon. Such financial statements have been included in reliance upon the report of BDO USA, LLP. The Bond Bank has not requested BDO USA, LLP to provide written consent for inclusion of the financial statements in this
Official Statement.
RATINGS
Moody’s Investors Service, Inc. (“Moody’s”), and S&P Global Ratings (“S&P”) have assigned
ratings of “A1” and “A+,” respectively, to the 2021 Series One, Two and Three Bonds. The Bond Bank has not retained Fitch Ratings, Inc. (“Fitch”) to rate the 2021 Series One, Two and Three Bonds. Fitch has rated other series of Bonds issued under the 2005 General Bond Resolution since 2014. Such ratings
reflect only the views of such organizations, and any desired explanation of the significance of such ratings should be obtained from the rating agency furnishing the same, at the following addresses: Moody’s, 7 World Trade Center, 250 Greenwich Street, New York, New York 10007, (212) 553-0300; S&P, 55 Water Street, New York, New York 10041, (212) 438-1000. Generally, a rating agency bases its rating on the information and materials furnished to it and on investigations, studies, and assumptions of its own. There can be no assurance that such ratings will continue for any given period of time or that such ratings will not be revised downward or withdrawn entirely by the rating agencies if, in the judgment of such rating agencies, circumstances so warrant, including prior to the Settlement
Date of the 2021 Series Three Bonds. So long as the ratings on the 2021 Series Three Bonds have not been downgraded by Moody’s and S&P below “Baa3” or “BBB-”, respectively, a rating downgrade will not result in the termination of the Forward Delivery Bond Purchase Agreement.
Any such downward revision or withdrawal of such ratings may have an adverse effect on the market price and marketability of the 2021 Series One, Two and Three Bonds.
CONTINUING DISCLOSURE UNDERTAKINGS
Bond Bank Continuing Disclosure Undertaking
The Bond Bank has covenanted for the benefit of the holders and Beneficial Owners of the 2021 Series One, Two and Three Bonds to provide, or to cause to be provided, certain historical financial and
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operating information not later than 210 days after the end of each Fiscal Year (currently June 30) in which any 2021 Series One, Two and Three Bonds are outstanding, commencing with its report for the
Fiscal Year ended June 30, 2021 (each an “Annual Report”). The Bond Bank has also covenanted to not later than 120 days after the end of each Fiscal Year notify each Governmental Unit that had, as of the end of such Fiscal Year, an amount of its Municipal Bonds equal to or greater than 20 percent of the
outstanding principal amount of the Municipal Bonds held by the Bond Bank under the 2005 General Bond Resolution, of such Governmental Unit’s continuing disclosure undertaking responsibility. In addition, the Bond Bank has covenanted to provide notices of the occurrence of certain enumerated
events. The Annual Reports are required to be filed by the Bond Bank with the MSRB through its EMMA system. The specific nature of information to be contained in the Annual Report and the enumerated events of which the Bond Bank is to give notice are set forth in the proposed form of the Continuing Disclosure Certificate of the Bond Bank included as Appendix G. These covenants have been made in order to assist the Underwriters in complying with paragraph (b)(5) of Securities and Exchange Commission Rule 15c2-12 (“Rule 15c2-12”).
Governmental Unit Continuing Disclosure Undertakings
Each of the Governmental Units from which the Bond Bank is purchasing Municipal Bonds with
proceeds of the 2021 Series One, Two and Three Bonds (the “2021 Series One, Two and Three Governmental Units”) has covenanted in its Loan Agreement that if its Municipal Bonds constitute 20 percent or more of the outstanding principal amount of the Municipal Bonds held by the Bond Bank
under the 2005 General Bond Resolution, such 2021 Series One, Two and Three Governmental Unit will execute a continuing disclosure agreement prepared by the Bond Bank for purposes of complying with Rule 15c2-12. There are currently no Governmental Units that reach this 20 percent threshold.
In connection with certain previous Bonds issued under the 2005 Master Resolution, each applicable Governmental Unit was required to covenant in its Loan Agreement to execute a continuing disclosure certificate if such Governmental Unit’s Municipal Bonds constituted 10 percent or more of the
outstanding principal amount of the Municipal Bonds held by the Bond Bank under the 2005 General Bond Resolution. As described above, the 10 percent threshold described in the previous sentence has been replaced with a 20 percent threshold for the 2021 Series One, Two and Three Governmental Units. The Bond Bank expects to retain the 20 percent threshold in connection with future Bonds issued under the 2005 Master Resolution.
Compliance with Prior Continuing Disclosure Undertakings
General. The Bond Bank has developed procedures to help ensure its compliance with its continuing disclosure obligations in all material respects. Although there have been instances of technical deficiencies with its previous undertakings, the Bond Bank has established appropriate written policies and procedures, including trainings and identifying a designated point of contact to help facilitate future compliance with Rule 15c2-12.
Governmental Units. The Bond Bank has been notified that certain Governmental Units that previously entered into continuing disclosure certificates have failed to fully comply with their continuing disclosure obligations. The Bond Bank has not verified such information.
DEFINITIONS
The following terms are used in this Official Statement with the following meanings. See also the definitions in Article I of the 2005 General Bond Resolution in Appendix E.
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“Act” — The Alaska Municipal Bond Bank Authority Act, codified as Chapter 85, Title 44, of the Alaska Statutes, as amended.
“Bond Bank” — The Alaska Municipal Bond Bank, a public corporation and instrumentality of the State of Alaska within the Department of Revenue but with legal existence independent of and separate from the State.
“Bonds” — Bonds issued by the Bond Bank under the 2005 General Bond Resolution pursuant to a Series Resolution. These include “Loan Obligations” and “Reserve Fund Obligations” as defined below.
“Code” — Internal Revenue Code of 1986 and the regulations thereunder, as amended.
“Credit Enhancement” — A letter of credit, a line of credit, a credit facility, a surety bond, bond insurance, or any other instrument or arrangement obtained in connection with the issuance of a Series of Bonds to further secure the payment of the Bonds of such Series or to satisfy the Reserve Fund Requirement.
“Credit Enhancement Agency” — Any bank or other institution that provides Credit Enhancement.
“Debt Service Fund” — A fund established by the 2005 General Bond Resolution to be
maintained and held by the Trustee. The 2005 General Bond Resolution defines and provides that the “Interest Account,” “Principal Account,” and “Redemption Account” are maintained within the Debt Service Fund.
“Fees and Charges” — All fees and charges authorized to be charged by the Bond Bank pursuant to Section 44.85.080(8), (15), and (16) of the Act and charged by the Bank to Governmental Units pursuant to the terms and provisions of the Loan Agreements.
“Governmental Unit” — A municipality or such other entity from which the Bond Bank is authorized by law to purchase its revenue bonds, general obligation bonds, notes, or other forms of indebtedness and which otherwise satisfies conditions found in the 2005 General Bond Resolution and in
the Loan Agreement.
“Loan Agreement” — An agreement, and any amendments thereto, entered into between the Bond Bank and a Governmental Unit setting forth the terms and conditions of a loan.
“Loan Obligations” — The amount of Bonds and the Bonds themselves issued by the Bond Bank for the purchase of Municipal Bonds of a Governmental Unit.
“Municipal Bonds” — General obligation bonds, revenue bonds, notes, or other evidence of debt issued by any Governmental Unit, as defined in the Act, which have been acquired by the Bond Bank as evidence of a loan to the Governmental Unit pursuant to the Act.
“Municipal Bonds Payment” — The amounts paid or required to be paid, from time to time, for principal and interest by a Governmental Unit to the Bond Bank on the Governmental Unit’s Municipal Bonds.
“Notes” — Any obligations referred to in the 2005 General Bond Resolution issued by the Bond Bank other than Bonds.
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“Operating Fund” — A fund established by the 2005 General Bond Resolution. This fund is not held by the Trustee and money therein is not pledged as security for Bonds.
“Outstanding” — When used with reference to Bonds, as of any date, Bonds theretofore or then being authenticated and delivered under the provisions of the 2005 General Bond Resolution, other than Bonds owned or held by or for the account of the Bond Bank except: (i) any Bonds cancelled by the Bond
Bank or the Trustee at or prior to such date, (ii) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds have been authenticated and delivered pursuant to the 2005 General Bond Resolution, and (iii) Bonds deemed to have been paid as provided in the 2005 General Bond
Resolution.
“Reserve Fund” — The reserve account established by the 2005 General Bond Resolution and held by the Trustee pursuant to the provisions of the 2005 General Bond Resolution.
“Reserve Fund Obligations” — Bonds issued by the Bond Bank to obtain funds to be deposited in the Reserve Fund.
“Reserve Fund Requirement” — The amount required to be on deposit in the 2005 General Bond Resolution Reserve Fund is the least of the following: (i) 10 percent of the initial principal amount of each Series of Bonds then Outstanding; (ii) maximum annual principal and interest requirements on all
Bonds then Outstanding; (iii) 125 percent of average annual principal and interest requirements on all Bonds then Outstanding; or (iv) such lower amount as may be required by law. The Reserve Fund Requirement may be satisfied entirely, or in part, by Credit Enhancement; provided, however, any Credit
Enhancement satisfying all or any part of the Reserve Fund Requirement after the initial issuance of Bonds or issued in substitution for any prior Credit Enhancement previously issued will not, by itself, cause a withdrawal or downward revision of the ratings maintained by any Rating Agency with respect to
the Bonds.
“Required Debt Service Reserve” — As of any date of calculation, the amount required to be on deposit in the Reserve Fund which amount is required to be at least equal to the Reserve Fund
Requirement.
“Series Resolution” — A resolution of the Bond Bank authorizing the issuance of a Series of Bonds in accordance with the terms of the 2005 General Bond Resolution.
“2005 General Bond Resolution” — The Bond Bank’s General Obligation Bond Resolution adopted July 13, 2005, as amended on August 19, 2009. The amendments adopted in the 2013 First Supplemental Resolution will be effective after all Bonds outstanding on February 19, 2013, are no longer are outstanding. See the forms of the 2005 General Bond Resolution and the 2013 First Supplemental Resolution in Appendix E.
MISCELLANEOUS
The summaries or descriptions of provisions in the 2005 General Bond Resolution and all references to other materials not purporting to be quoted in full are only brief outlines of certain
provisions thereof and do not constitute complete statements of such documents or provisions, and reference is hereby made to the complete documents and materials, copies of which will be furnished by the Bond Bank on request. The 2005 General Bond Resolution is included as Appendix E.
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Any statements made in this Official Statement indicated to involve matters of opinion or estimates are represented as opinions or estimates in good faith. No assurance can be given, however, that
the facts will materialize as so opined or estimated.
OFFICIAL STATEMENT
The Bond Bank has authorized the execution and distribution of this Official Statement.
ALASKA MUNICIPAL BOND BANK
By: /s/ Deven J. Mitchell Executive Director
[THIS PAGE INTENTIONALLY LEFT BLANK]
APPENDIX A-1
PROPOSED FORM OF OPINION OF BOND COUNSEL - SERIES 2021 ONE AND SERIES 2021 TWO
June 16, 2021
Alaska Municipal Bond Bank Juneau, Alaska
Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series One and 2021 Series Two (Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the Alaska Municipal Bond Bank (the “Bond Bank”) in connection with the issuance of (i) $29,775,000 aggregate principal amount of Alaska Municipal Bond
Bank General Obligation and Refunding Bonds, 2021 Series One (the “2021 Series One Bonds”), and (ii) $200,975,000 aggregate principal amount of Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series Two (the “2021 Series Two Bonds” and, together with the 2021 Series One Bonds, the “Bonds”), each issued pursuant to the General Obligation Bond Resolution, adopted by the Board of Directors (the “Board”) of the Bond Bank on July 13, 2005 (as amended, the “2005 General Bond Resolution”), as supplemented by Resolution No. 2021-01, adopted by the Board on April 15, 2021 (the “2021 Series One and 2021 Series Two Resolution” and together with the 2005 General Bond Resolution, the “Bond Resolution”). The Bond Bank has appointed The Bank of New York Mellon Trust
Company, N.A., as trustee (the “Trustee”) under the Bond Resolution. The Bonds are issued for the stated purposes of: (i) making a loan to the City and Borough of Sitka, Alaska (“Sitka”), a Governmental Unit, to finance a portion of the costs related to the refinancing of an existing loan made to Sitka by the Alaska
Energy Authority related to Sitka’s electric utility; (ii) making a loan to the Southeast Alaska Power Agency (“SEAPA”), a Governmental Unit, to finance a portion of the capital costs of certain renewal and replacement capital projects for SEAPA’s electric utility assets, (iii) making a loan to the City of Sand
Point, Alaska ( “Sand Point”), a Governmental Unit, to finance a portion of the capital costs to replace Sand Point’s harbor boat lift, (iv) making loans to Sitka, Sand Point and eight other Governmental Units to refund Municipal Bonds previously issued to the Bond Bank by the Governmental Units to finance or
refinance projects and to refund corresponding portions of bonds previously issued by the Bond Bank; and (v) paying costs of issuing the Bonds. In connection with such loans, the Bond Bank is purchasing Municipal Bonds issued by the Governmental Units to secure payments to be made pursuant to the Loan
Agreements and Amendatory Loan Agreements mentioned below. Capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Bond Resolution.
In such connection, we have reviewed the Bond Resolution; the Loan Agreements between the Bond Bank and each of Sitka, SEAPA and Sand Point, the 2021 Amendatory Loan Agreements, between the Bond Bank and each of the Aleutians East Borough, Alaska, the City of Homer, Alaska, the City and Borough of Juneau, Alaska, the Kenai Peninsula Borough, Alaska, the City of Ketchikan, Alaska, the Kodiak Island Borough, Alaska, the Lake and Peninsula Borough, Alaska, Sand Point, Alaska, the City of Seward, Alaska, and Sitka; the Tax Certificate, dated the date hereof, of the Bond Bank (the “Tax
Certificate”); authorizing ordinances and resolutions of the Governmental Units; tax certificates of the
A-1-2
Governmental Units issuing Municipal Bonds as tax-exempt obligations; a Certificate of the State of Alaska Department of Law, as counsel to the Bond Bank; opinions of counsel to the Governmental Units;
certificates of the Bond Bank, the Trustee, the Governmental Units and others; and such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and
court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken
or omitted or events do occur or any other matters come to our attention after original delivery of the Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. We disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against, any parties other than the Bond Bank. We have assumed, without undertaking to verify, the accuracy of the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed
compliance with all covenants and agreements contained in the Bond Resolution, each of the Loan Agreements, the 2021 Amendatory Loan Agreements and the Tax Certificate and in each of the tax certificates of the Governmental Units issuing Municipal Bonds as tax-exempt obligations, including
(without limitation) covenants and agreements compliance with which is necessary to assure that future actions, omissions or events will not cause interest on the 2021 Series One Bonds to be included in gross income for federal income tax purposes. We call attention to the fact that the rights and obligations under
the Bonds, the Bond Resolution, the Loan Agreements, the 2021 Amendatory Loan Agreements, the Municipal Bonds and the Tax Certificate and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws
relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public corporations of the State of Alaska. We express no opinion with respect to any indemnification, contribution,
liquidated damages, penalty (including any remedy deemed to constitute or having the effect of a penalty), right of set-off, arbitration, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality of title to or interest in any of the assets described in or as subject to the lien of the Bond Resolution, the Loan Agreements, the 2021 Amendatory Loan Agreements or the Municipal Bonds or agreements related thereto or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy,
completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the
following opinions:
1. The Bonds constitute the valid and binding general obligations of the Bond Bank.
2. The Bond Resolution has been duly adopted by, and constitutes the valid and binding
obligation of, the Bond Bank. To secure the payment of the principal of and interest on the Bonds, the Bond Resolution creates a valid pledge of the Municipal Bonds, all Municipal Bonds Payments, the investments thereof and the proceeds of such investments, and any other amounts held by the Trustee in
any fund or account established pursuant to the Bond Resolution, except the Rebate Fund, subject to the
A-1-3
provisions of the Bond Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Bond Resolution.
3. Interest on the 2021 Series One Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”). Interest on the 2021 Series One Bonds is not a specific preference item for purposes of the federal alternative minimum tax.
Interest on the 2021 Series Two Bonds is not excluded from gross income for federal income tax purposes under Section 103 of the Code. Interest on the Bonds is exempt from taxation by the State of Alaska except for transfer, inheritance and estate taxes. We express no opinion regarding other tax consequences
related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
per
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APPENDIX A-2
PROPOSED FORM OF OPINION OF BOND COUNSEL - SERIES 2021 THREE
December 2, 2021
Alaska Municipal Bond Bank Juneau, Alaska
Alaska Municipal Bond Bank General Obligation Refunding Bonds, 2021 Series Three (AMT Forward Delivery) (Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the Alaska Municipal Bond Bank (the “Bond Bank”) in connection with the issuance of $5,725,000 aggregate principal amount of Alaska Municipal Bond Bank General Obligation Refunding Bonds, 2021 Series Three (AMT Forward Delivery) (the “Bonds”), issued
pursuant to the General Obligation Bond Resolution, adopted by the Board of Directors (the “Board”) of the Bond Bank on July 13, 2005 (as amended, the “2005 General Bond Resolution”), as supplemented by Resolution No. 2021-01, adopted by the Board on April 15, 2021 (the “2021 Series Three Resolution” and together with the 2005 General Bond Resolution, the “Bond Resolution”). The Bond Bank has appointed The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”) under the Bond Resolution. The Bonds are issued for the stated purposes of: (i) making a loan to the City and Borough of Juneau, Alaska (“Juneau”), a Governmental Unit, to refund a Municipal Bond previously issued to the Bond Bank by Juneau to finance projects and to refund corresponding portions of bonds
previously issued by the Bond Bank and (ii) paying costs of issuing the Bonds. In connection with such loans, the Bond Bank is purchasing a Municipal Bond issued by Juneau to secure payments to be made pursuant to the Amendatory Loan Agreement mentioned below. Capitalized terms not otherwise defined
herein shall have the meanings ascribed thereto in the Bond Resolution.
In such connection, we have reviewed the Bond Resolution; the 2021 Amendatory Loan Agreement, between the Bond Bank Juneau; the Tax Certificate of the Bond Bank, dated the date hereof
(together, the “Tax Certificate”), of the Bond Bank; authorizing ordinances, resolutions and the tax certificate of Juneau; a Certificate of the State of Alaska Department of Law, as counsel to the Bond Bank; opinions of counsel to Juneau; certificates of the Bond Bank, the Trustee, Juneau and others; and
such other documents, opinions and matters to the extent we deemed necessary to render the opinions set forth herein.
The opinions expressed herein are based on an analysis of existing laws, regulations, rulings and
court decisions and cover certain matters not directly addressed by such authorities. Such opinions may be affected by actions taken or omitted or events occurring after original delivery of the Bonds on the date hereof. We have not undertaken to determine, or to inform any person, whether any such actions are taken or omitted or events do occur or any other matters come to our attention after original delivery of the Bonds on the date hereof. Accordingly, this letter speaks only as of its date and is not intended to, and may not, be relied upon or otherwise used in connection with any such actions, events or matters. We disclaim any obligation to update this letter. We have assumed the genuineness of all documents and signatures provided to us and the due and legal execution and delivery thereof by, and validity against,
any parties other than the Bond Bank. We have assumed, without undertaking to verify, the accuracy of
A-2-2
the factual matters represented, warranted or certified in the documents and of the legal conclusions contained in the opinions, referred to in the second paragraph hereof. Furthermore, we have assumed
compliance with all covenants and agreements contained in the Bond Resolution, the 2021 Amendatory Loan Agreement and the Tax Certificate and in the tax certificate of Juneau, including (without limitation) covenants and agreements compliance with which is necessary to assure that future actions,
omissions or events will not cause interest on the Bonds to be included in gross income for federal income tax purposes.. We call attention to the fact that the rights and obligations under the Bonds, the Bond Resolution, the 2021 Amendatory Loan Agreement, the Municipal Bond and the Tax Certificate
and their enforceability may be subject to bankruptcy, insolvency, receivership, reorganization, arrangement, fraudulent conveyance, moratorium and other laws relating to or affecting creditors’ rights, to the application of equitable principles, to the exercise of judicial discretion in appropriate cases and to the limitations on legal remedies against public corporations of the State of Alaska. We express no opinion with respect to any indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute or having the effect of a penalty), right of set-off, arbitration, choice of law, choice of forum, choice of venue, non-exclusivity of remedies, waiver or severability provisions contained in the foregoing documents, nor do we express any opinion with respect to the state or quality
of title to or interest in any of the assets described in or as subject to the lien of the Bond Resolution, the 2021 Amendatory Loan Agreement or the Municipal Bond or agreements related thereto or the accuracy or sufficiency of the description contained therein of, or the remedies available to enforce liens on, any
such assets. Our services did not include financial or other non-legal advice. Finally, we undertake no responsibility for the accuracy, completeness or fairness of the Official Statement or other offering material relating to the Bonds and express no opinion with respect thereto.
Based on and subject to the foregoing, and in reliance thereon, as of the date hereof, we are of the following opinions:
1. The Bonds constitute the valid and binding general obligations of the Bond Bank.
2. The Bond Resolution has been duly adopted by, and constitutes the valid and binding obligation of, the Bond Bank. To secure the payment of the principal of and interest on the Bonds, the Bond Resolution creates a valid pledge of the Municipal Bonds, all Municipal Bonds Payments, the
investments thereof and the proceeds of such investments, and any other amounts held by the Trustee in any fund or account established pursuant to the Bond Resolution, except the Rebate Fund, subject to the provisions of the Bond Resolution permitting the application thereof for the purposes and on the terms and conditions set forth in the Bond Resolution.
3. Interest on the 2021 Series One Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”), except that no opinion is expressed as to the status of interest on any Bond for any period that such Bond is held by a “substantial user” of the facilities financed or refinanced by the Bonds or by a “related person” within the
meaning of Section 147(a) of the Code. Interest on the Bonds is a specific preference item for purposes of the federal alternative minimum tax. Interest on the Bonds is exempt from taxation by the State of Alaska except for transfer, inheritance and estate taxes. We express no opinion regarding other tax
consequences related to the ownership or disposition of, or the amount, accrual or receipt of interest on, the Bonds.
Faithfully yours,
ORRICK, HERRINGTON & SUTCLIFFE LLP
per
APPENDIX B
STATE PAYMENTS TO GOVERNMENTAL UNITS
The State of Alaska (the “State”) disburses to Alaskan cities and boroughs funds that may be available for uses other than paying municipal bond debt service. In the event of default by a Governmental Unit with respect to a Loan Agreement, the Act requires that such funds held in custody by
the State prior to disbursement be paid over to the Bond Bank. The State, however, may at any time reduce or terminate the disbursements or programs under which they are made. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA.” In addition, other State agencies have similar
rights to intercept State payments to Governmental Units. No assurance can be given that the Bond Bank’s claim would have priority over any other eligible State agency’s claim. Four of the departments of the State that disburse money to Governmental Units are as follows:
(1) Department of Education and Early Development. The Department of Education and Early Development (“DEED”) disburses State aid for educational purposes primarily through the school debt reimbursement, foundation funding, and pupil transportation programs, in addition to funding for boarding homes, residential boarding, youth in detention, special schools, and the Alaska Challenge Youth Academy programs.
The school debt reimbursement program provides a system under which the State, subject to annual appropriation by the Legislature, reimburses municipalities that operate school districts for certain costs of school construction. State reimbursement applies to debt service on locally issued general
obligation school bonds. Timing of reimbursements is determined by municipalities’ debt service payments, and is made throughout the year. This program provides that subject to statutory and regulatory conditions, the State will reimburse municipalities for a pre-determined percentage of debt service
incurred for such bonds, depending on when such bonds were issued and the project components. The State may appropriate less than the full amount to which the municipalities are entitled. When appropriations are less than 100 percent of the entitlement, funds have been allocated pro rata among the
eligible school districts. See Appendix F – “INFORMATION CONCERNING THE STATE OF ALASKA – Government Budgets and Appropriations” and “– Public Debt and Other Obligations of the State.”
Under the foundation funding program, the State aids local school districts in paying operating
expenses under the State “K-12 foundation” funding, which provides education-related aid for operating costs associated with qualified K-12 schools as well as programs such as the handicapped facilities and nutrition programs. The program provides for monthly distributions to school districts.
Under the pupil transportation program, the State aids local school districts for pupil transportation. The program provides for monthly distributions to school districts.
Under other programs, the State has provided one-time grant funds.
(2) Department of Revenue. The Department of Revenue disburses shares of various State taxes collected by the Department of Revenue within the jurisdiction of certain Governmental Units,
including aviation fuel, commercial passenger vessel, electric, telephone, liquor, and fisheries resources landed and business taxes. Payments are distributed both semi-annually in January and July and annually in October depending upon the type of tax.
(3) Department of Commerce, Community and Economic Development. The Department of Commerce, Community and Economic Development (“DCCED”) administers a payment in lieu of taxes program under which the federal government pays a fee for use of land. The payments received from the
B-2
federal government are passed through the State to certain Governmental Units. Distributions occur annually in July. The State also disburses money to certain Governmental Units through DCCED’s
Capital Matching Grants program to provide assistance in financing capital projects. Distributions are made throughout the year as approved projects are constructed. Additionally, the State Revenue Sharing program provides an annual transfer to certain Governmental Units based on population. The revenue
sharing transfers occur in the first quarter of the fiscal year.
(4) Department of Corrections. The Department of Corrections transfers monthly amounts to pay operational expenses of local communities that house prisoners in municipal-owned facilities.
In addition to the four sources listed above, the State disburses to Governmental Units funds that are not available for intercept by the Bond Bank. A reduction in the amount of such funds and the distribution of such funds, such as State assistance to Governmental Units to address pension liabilities, also could have a negative impact on the finances of Governmental Units.
The enacted budget reduced State payments to Governmental Units subject to the Bond Bank’s intercept authority under the Act by reducing payments for the SDRP and for the State’s Transportation and Infrastructure Debt Service Reimbursement Program (the “TIDSRP”) by 100 percent from authorized amounts, among other reductions.
The table included below sets forth the amount of State payments to Governmental Units that have borrowed from the Bond Bank subject to intercept under the Act as well as the fiscal year 2021 Loan Obligations and estimated coverage provided by those State payments.
B-3
Alaska Municipal Bond Bank Capability to Intercept Funds
* Communities that are located in a borough which operates the public schools in the community and receives that related Education Support Funding. (1) Matching grants are appropriated by the Legislature and can vary significantly from year to year. (2) Interceptable revenue of the University of Alaska is comprised of direct appropriations from the State of Alaska; appropriations listed are for fiscal year 2021. Source: State of Alaska Department of Administration—Finance Division; State of Alaska, Office of Management and Budget; and State of Alaska Department of Revenue—Tax Division. Further information regarding the State of Alaska may be found in Appendix F.
FY 2020 Shared
Taxes & Fees one
time transfers for 7 categories of tax and license type
FY 2021 School Debt Reimbursement
transferred as debt
service comes due semi-annually (current year annual appropriation)
FY 2021 Education Support transferred in 12 level monthly
installments during
fiscal year (current year annual appropriation)
Active Matching Grants
as of March 26, 2021, willbe drawn down as
projects complete
(current and past year capital grant appropriations) (1)
FY 2021 Community Jails - Transferred in
12 level monthly
payments during fiscal year (current year annual appropriation)FY 2021 PILT transfers
Revenue Sharing FY
2021, disbursed at one
time by October of fiscal year (annual appropriation)Total Intercept Capability
Fiscal Year 2021 Total Debt Service Coverage Ratio
Boroughs
Aleutians East Borough $1,717,808 $0 $4,565,842 $1,276,621 0 $0 $315,789 $7,876,060 $2,492,493 3.16
Municipality of Anchorage 1,368,709 0 328,805,864 23,209,032 0 0 473,184 353,856,789 296,375 1,193.95
Fairbanks North Star Borough 393,223 0 113,402,308 7,287,972 0 0 494,824 121,578,327 8,026,476 15.15
Haines Borough 446,269 0 2,456,959 627,771 215,954 0 407,424 4,154,377 1,363,269 3.05
City & Borough of Juneau 6,507,267 0 37,090,490 153,671 0 0 385,761 44,137,189 19,365,334 2.28
Kenai Peninsula Borough 1,303,178 0 78,010,226 46,951 0 0 739,196 80,099,551 16,156,242 4.96
Ketchikan Gateway Borough 3,066,889 0 25,396,819 0 0 0 301,750 28,765,458 3,345,085 8.60
Kodiak Island Borough 1,133,047 0 24,746,546 252,658 0 0 317,746 26,449,997 9,348,346 2.83
Lake & Peninsula Borough 245,675 0 9,269,801 0 0 0 442,410 9,957,886 1,423,250 7.00
Northwest Arctic Borough 4,737 0 37,829,962 2,000,000 0 0 316,194 40,150,893 6,874,225 5.84
Petersburg Borough 346,961 0 6,148,104 0 173,626 0 301,090 6,969,781 1,419,025 4.91
City & Borough of Sitka 1,262,576 0 12,197,841 684,175 391,194 0 377,870 14,913,656 10,501,675 1.42
Municipality of Skagway 5,099,750 0 1,119,904 8,811,031 0 0 316,157 15,346,842 1,507,288 10.18
City & Borough of Wrangell 261,906 0 3,882,367 808,060 325,274 0 375,807 5,653,414 266,875 21.18
Cities
Adak $208,049 $0 $0 $0 $0 $59,177 $75,100 $342,326 $100,500 3.41
Bethel*$20,409 0 0 0 0 948,661 77,106 1,046,176 251,150 4.17
Cordova 1,598,319 0 4,386,412 15,705,240 135,303 471,413 75,788 22,372,475 1,802,545 12.41
Craig 158,310 0 4,509,583 615,000 322,724 303,457 75,361 5,984,435 136,238 43.93
Dillingham 593,884 0 6,140,562 0 526,851 484,326 75,783 7,821,406 1,345,050 5.81
Hoonah 1,376,715 0 2,413,208 0 0 165,662 75,263 4,030,848 93,125 43.28
Homer* 154,764 0 0 0 424,080 0 76,843 655,687 688,800 0.95
Ketchikan*3,033,463 0 0 850,000 0 0 77,726 3,961,189 7,380,014 0.54
Kenai*133,688 0 0 3,417,130 0 0 77,374 3,628,192 128,775 28.17
King Cove*379,684 0 0 522,519 0 0 75,309 977,512 203,483 4.80
Klawock 1,320 0 2,075,756 0 0 215,020 75,256 2,367,352 88,825 26.65
Kodiak*1,015,419 0 0 40,074 991,552 0 76,957 2,124,002 844,444 2.52
Nome 21,173 0 8,796,590 1,415,468 0 508,874 76,241 10,818,346 723,000 14.96
North Pole*20,371 0 0 0 0 0 75,703 96,074 101,900 0.94
Palmer*148,441 0 0 0 0 0 77,032 225,473 105,725 2.13
Sand Point*186,486 0 0 0 0 0 75,302 261,788 183,680 1.43
Saxman*0 0 0 52,150 0 0 75,146 127,296 11,875 10.72
Seward*757,923 0 0 1,049,133 368,952 0 75,856 2,251,864 2,900,263 0.78
Soldotna*48,302 0 0 0 0 0 76,424 124,726 157,800 0.79
Unalaska 7,781,323 0 4,278,124 0 431,207 911,887 76,545 13,479,086 4,551,150 2.96
Valdez 470,620 0 5,141,951 0 354,749 779,854 76,304 6,823,478 340,225 20.06
Wasilla*240,547 0 0 237,748 0 0 77,939 556,234 0 N/A
Whittier 962,726 0 0 0 0 56,336 75,094 1,094,156 155,525 7.04
Other Jurisdictions
University of Alaska (2)286,452,669 5,585,838 51.28
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APPENDIX C
GOVERNMENTAL UNIT STATISTICS REGARDING PARTICIPATION IN THE BOND BANK
2005 GENERAL BOND RESOLUTION OUTSTANDING LOAN PRINCIPAL TO GOVERNMENTAL UNIT BORROWERS AS OF APRIL 1, 2021
(Does Not Include 2021 Series One, Two and Three Bonds)
Outstanding Percent of
Borrower Principal Outstanding
City and Borough of Sitka $126,115,000 14.05%
Kenai Peninsula Borough 100,710,000 11.22%
City and Borough of Juneau 95,655,000 10.66%
City of Ketchikan 92,140,000 10.27%
University of Alaska 81,175,000 9.05%
Fairbanks North Star Borough 79,720,000 8.88%
Kodiak Island Borough 71,585,000 7.98%
City of Unalaska 52,130,000 5.81% City of Seward 27,530,000 3.07% Ketchikan Gateway Borough 23,520,000 2.62%
Northwest Arctic Borough 20,275,000 2.26%
Aleutians East Borough 17,335,000 1.93%
Municipality of Skagway 17,065,000 1.90%
Lake & Peninsula Borough 13,690,000 1.53%
City of Cordova 12,520,000 1.40%
City of Kodiak 11,040,000 1.23%
City of Dillingham 9,660,000 1.08%
Haines Borough 7,090,000 0.79% City of Homer 6,675,000 0.74% Petersburg Borough 5,810,000 0.65%
SE Alaska Power Agency 3,475,000 0.39%
Municipality of Anchorage 2,955,000 0.33%
City of King Cove 2,430,000 0.27%
City of Nome 2,100,000 0.23%
City of Sand Point 2,075,000 0.23%
City of Whittier 1,805,000 0.20%
City of Bethel 1,490,000 0.17%
City of Craig 1,435,000 0.16% City of Soldotna 1,240,000 0.14% City of Valdez 1,225,000 0.14%
City of Klawock 1,185,000 0.13%
City of Kenai 935,000 0.10%
City of Hoonah 775,000 0.09%
City of North Pole 460,000 0.05%
City of Palmer 390,000 0.04%
City of Adak 370,000 0.04%
City of Saxman 135,000 0.02%
Reserve Obligations 1,390,000 0.15%
Total Outstanding Par $897,310,000 100.00%
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APPENDIX D
FINANCIAL STATEMENTS OF THE ALASKA MUNICIPAL BOND BANK FOR THE YEAR ENDED JUNE 30, 2020
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ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Financial Statements
For the Year Ended June 30, 2020
Together with Independent Auditor’s Report Thereon
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Table of Contents
Page
Independent Auditor’s Report 1-2
Management’s Discussion and Analysis 3-10
Financial Statements
Statement of Net Position and Governmental Funds Balance Sheets 11
Statement of Activities and Governmental Funds Statement of
Revenues, Expenditures, and Changes in Fund Balances/Net Position 12
Notes to Financial Statements 13-31
Supplementary Information
Supplemental Schedule of Statutory Reserve Accounts – Assets, Liabilities,
and Account Reserves 32
Continuing Disclosure Tables 33-40
BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of
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3601 C Street, Suite 600
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Tel: 907-278-8878
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Independent Auditor's Report
Board of Directors
Alaska Municipal Bond Bank Authority
Juneau, Alaska
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities and
each major fund of the Alaska Municipal Bond Bank Authority (the Authority), a component
unit of the State of Alaska, as of and for the year ended June 30, 2020, and the related
notes to the financial statements, which collectively comprise the Authority’s basic financial
statements as listed in the table of contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States
of America; this includes the design, implementation, and maintenance of internal control
relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United
States of America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our audit opinions.
2
Opinions
In our opinion, the financial statements referred to above present fairly, in all material
respects, the respective financial position of the governmental activities and each major
fund of the Authority, as of June 30, 2020, and the respective changes in financial position
for the year then ended in accordance with accounting principles generally accepted in the
United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3-10 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial
statements, is required by the Governmental Accounting Standards Board who considers it to
be an essential part of financial reporting for placing the basic financial statements in an
appropriate operational, economic, or historical context. We have applied certain limited
procedures to the required supplementary information in accordance with auditing standards
generally accepted in the United States of America, which consisted of inquiries of
management about the methods of preparing the information and comparing the information
for consistency with management’s responses to our inquiries, the basic financial
statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information
because the limited procedures do not provide us with sufficient evidence to express an
opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the Authority’s basic financial statements. The supplemental
schedule of statutory reserve accounts and continuing disclosure tables are presented for
purposes of additional analysis and are not a required part of the basic financial statements.
The supplemental schedule of statutory reserve accounts and continuing disclosure tables
are the responsibility of management and were derived from and relates directly to the
underlying accounting and other records used to prepare the basic financial statements.
Such information has been subjected to the auditing procedures applied in the audit of the
basic financial statements and certain additional procedures, including comparing and
reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and
other additional procedures in accordance with auditing standards generally accepted in the
United States of America. In our opinion, the supplemental schedules of statutory reserve
accounts and continuing disclosure tables are fairly stated, in all material respects, in
relation to the basic financial statements as a whole.
Anchorage, Alaska
September 29,2020
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 3 -
This Management's Discussion and Analysis (MD&A) is required by GASB Statement No. 34, a
standard established by the Governmental Accounting Standards Board. This section is intended
to make the financial statements more understandable to the average reader who is not familiar
with traditional accounting terminology.
This financial report has two integral parts: this MD&A and the financial statements with the
accompanying notes that follow. Together, they present the Alaska Municipal Bond Bank
Authority’s (Bond Bank) financial performance during the fiscal year ended June 30, 2020.
Summarized prior fiscal year information is shown within this MD&A, as needed, for comparative
purposes.
Required Financial Statements
GASB Statement No. 34 requires two types of financial statements: The Statement of Net Position
and Governmental Fund Balance Sheets and the Statement of Activities and Governmental Fund
Revenues, Expenditures and Changes in Fund Balances/Net Position. These statements report
financial information about the Bond Bank's activities using accounting principles generally
accepted in the United States of America. In addition to the basic financial statements, the Notes
to Financial Statements provide information that is essential to a full understanding of the data
provided in the basic financial statements.
Financial Highlights
During fiscal year 2020, the Bond Bank issued approximately $22.2 million in bonds that
generated approximately $25.5 million to fund five loan agreements with two communities
resulting in an estimated $1 million in savings.
In comparison, during fiscal year 2019 the Bond Bank issued approximately $44.2 million in bonds
that generated approximately $49.8 million and provided a $0.6 million direct loan to fund nine
loan agreements resulting in an estimated $4.3 million in savings.
Statement of Net Position
The Statement of Net Position reports assets, liabilities, and net position of the Bond Bank.
Assets
Assets represent 1) The value of the Bond Bank's investments and investment income receivable
on the financial statement date, recorded at fair market value, and 2) Bond principal and interest
payments receivable from borrowers. The investments generate income for the Bond Bank, used
to meet reserve requirements and pay operating costs. Historically excess operating account
earnings were transferred to the State of Alaska’s (State) general fund each year. Since fiscal year
2009, and continuing through fiscal year 2021, the State operating budget has appropriated any
excess earnings of the operating account to the Bond Bank’s reserve fund (HB 205, Sec. 38(e)).
Interest received on bonds purchased from borrowers is used to pay the Bond Bank's
corresponding interest payments on the bonds that it has issued, other than reserve obligation
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 4 -
bonds issued by the Bond Bank to satisfy a portion of the reserve requirement, paid for by interest
earnings of the Bond Bank.
Liabilities
Liabilities represent claims against the fund for 1) goods and services provided before the financial
statement date but not yet paid for at that date, and 2) interest and bond payments due to
purchasers of the Bond Bank's bonds after the financial statement date.
Restricted and Unrestricted Net Position
Net position is comprised of two components. The restricted portion reflects monies maintained
in separate trust accounts where their use is limited by applicable bond covenants for repayment
of bonds. The unrestricted portion reflects monies that are available for any authorized purpose
of the Bond Bank.
The following table shows the value of Bond Bank assets summarized as of June 30, 2020 and
2019, as well as liabilities and net position:
The Bond Bank's investments are all held in U.S. Government securities and Certificates of Deposit.
The decrease in bonds and bond interest receivable, as well as in bonds and bond interest payable,
reflects the issuance of approximately $22.2 million in new bonds during the year, net of principal
payments on bonds previously issued of approximately $67.0 million and defeasance of bonds
previously issued of approximately $32.2 million. The Bond Bank realized a net decrease in 2020
long term debt balances due to greater principal payments during the fiscal year on bonds
previously issued when compared to the issuance activity during the fiscal year. The Bond Bank
issued the 2019 Series Three and Four in the aggregate principal amount of approximately $22.2
million during the year to make loans to authorized borrowers.
Changes from 2019 to 2020
2020 2019 Dollars Percent
Assets:
Cash and investments 67,839,010$ 66,970,604$ 868,406$ 1.30%
Bonds and bond interest receivable 1,049,970,971 1,127,903,301 (77,932,330) -6.91%
Other receivables - 9,323 (9,323) -100.00%
Total assets 1,117,809,981 1,194,883,228 (77,073,247) -6.45%
Liabilities:
Accounts payable and accrued liabilities 11,172,314 12,257,469 (1,085,155) -8.85%
Bonds and bond interest payable 1,047,365,642 1,125,168,299 (77,802,657) -6.91%
Total liabilities 1,058,537,956 1,137,425,768 (78,887,812) -6.94%
Net Position:
Restricted 37,394,279 36,532,035 862,244 2.36%
Unrestricted 21,877,746 20,925,425 952,321 4.55%
Total net position 59,272,025$ 57,457,460$ 1,814,565$ 3.16%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 5 -
Statement of Activities
The statement of activities shows how the Bond Bank’s net position changed during the most
recent fiscal year.
Revenues
Revenues include total return on investments and interest payments received from municipalities.
Earnings on investments include interest on fixed income marketable securities and the change
in fair market value of those investments.
Expenses
Expenses include interest payments made to bond holders who purchased the Bond Bank's bonds,
payments made to the State of Alaska and operating expenses. Operating expenses include all
expenses required to issue bonds during the current year and include in-house expenses, as well
as external consultant fees. Expenses are subtracted from revenues.
The following is a condensed statement of the Bond Bank’s changes in net position as of June 30,
2020, and 2019:
Interest income and expense on bonds receivable and payable are a function of the total amount
of bonds outstanding, the age of the bonds and the interest rates at which they are issued. The
interest income and expense decreases are consistent with the decreases in bond receivable and
payable balances, respectively.
Investment earnings are a function of market conditions, and active management. The Bond Bank
uses other assets to subsidize debt service of reserve obligation bonds when the earnings of
reserve obligation proceeds are insufficient. The net position increased in fiscal year 2020, but the
increase was less than in the prior year due to decreases in interest income on bonds receivable
and investment earnings exceeding the reduction in interest expense on bonds payable and
operating expenses compared to the prior year.
Changes from 2019 to 2020
2020 2019 Dollars Percent
Revenues:
Interest income on bonds receivable 49,009,352$ 51,784,009$ (2,774,657)$ -5.36%
Investment earnings 2,300,144 4,135,937 (1,835,793) -44.39%
Total revenues 51,309,496 55,919,946 (4,610,450) -8.24%
Expenses:
Interest expense on bonds payable 48,986,982 51,927,628 (2,940,646) -5.66%
Operating expenses 507,949 684,379 (176,430) -25.78%
Total expenses 49,494,931 52,612,007 (3,117,076) -5.92%
Change in net position 1,814,565 3,307,939 (1,493,374) -45.15%
Net position, beginning of period 57,457,460 54,149,521 3,307,939 6.11%
Net position, end of period 59,272,025$ 57,457,460$ 1,814,565$ 3.16%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 6 -
Governmental Funds
The governmental funds include the General Fund, which accounts for the primary operations of
the Bond Bank, and the Debt Service Fund, which accounts for the resources accumulated and
payments made on the long-term debt of the Bond Bank. The primary difference between the
governmental funds balance sheet and the statement of net position is the elimination of inter-
fund payables and receivables. Bond proceeds are reported as an other financing source in the
governmental funds statement of revenues, expenditures and changes in fund balances, and this
contributes to the change in fund balance. In the statement of net position, however, issuing debt
increases long-term liabilities and does not affect the statement of activities. Payments made to
refunded bond escrow agent are reported as an other financing use in the governmental funds
statement of revenues, expenditures and changes in fund balances, and this contributes to the
change in fund balance. In the statement of net position, however, refunding debt deceases long-
term liabilities and does not affect the statement of net position. Similarly, repayment of debt
principal is recorded as an expenditure in the governmental funds statement of revenues,
expenditures and changes in fund balances and reduces the liability in the statement of net
position.
The following tables show governmental funds’ condensed balance sheets and statements of
revenues, expenditures and changes in fund balances as of June 30, 2020, and 2019.
General Fund
Changes from 2019 to 2020
2020 2019 Dollars Percent
Assets:
Cash, investments and related
accrued interest 9,526,331$ 8,301,893$ 1,224,438$ 14.75%
Bonds and bond interest receivable 4,018,496 5,087,690 (1,069,194) -21.02%
Other receivables - 9,323 (9,323) -100.00%
Interfund receivable 11,046,268 10,876,628 169,640 1.56%
Total assets 24,591,095 24,275,534 315,561 1.30%
Liabilities:
Accounts payable and accrued liabilities 261,641 158,471 103,170 65.10%
Fund Balance:
Restricted for debt service 4,956,430 4,956,430 - 0.00%
Unassigned 19,373,024 19,160,633 212,391 1.11%
Total fund balance 24,329,454 24,117,063 212,391 0.88%
Total liabilities and fund balance 24,591,095$ 24,275,534$ 315,561$ 1.30%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 7 -
Debt Service Fund
General Fund
Changes from 2019 to 2020
2020 2019 Dollars Percent
Assets:
Cash, investments and related
accrued interest 58,312,679$ 58,668,711$ (356,032)$ -0.61%
Bonds and bond interest receivable 1,045,952,475 1,122,815,611 (76,863,136) -6.85%
Total assets 1,104,265,154 1,181,484,322 (77,219,168) -6.54%
Liabilities:
Accounts payable and accrued liabilities 10,910,673 12,098,998 (1,188,325) -9.82%
Interfund payables 11,046,268 10,876,628 169,640 1.56%
Total liabilities 21,956,941 22,975,626 (1,018,685) -4.43%
Fund Balance:
Restricted for debt service 1,082,308,213 1,158,508,696 (76,200,483) -6.58%
Total liabilities and fund balance 1,104,265,154$ 1,181,484,322$ (77,219,168)$ -6.54%
As of June 30, Increase/(Decrease)
Changes from 2019 to 2020
2020 2019 Dollars Percent
Revenues:
Interest income on bonds receivable 102,299$ 113,043$ (10,744)$ -9.50%
Investment earnings 448,402 441,446 6,956 1.58%
Total income 550,701 554,489 (3,788) -0.68%
Expenditures:
Operating expenditures 507,949 684,379 (176,430) -25.78%
Excess (deficiency) of revenues
over expenditures 42,752 (129,890) 172,642 132.91%
Other financing sources - transfers 169,639 148,819 20,820 13.99%
Net change in fund balance 212,391 18,929 193,462 1022.04%
Fund balance, beginning of year 24,117,063 24,098,134 18,929 0.08%
Fund balance, end of year 24,329,454$ 24,117,063$ 212,391$ 0.88%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 8 -
Debt Service Fund
Long-term Debt
At June 30, 2020, the Bond Bank had $1,034,165,000 of bonds outstanding, down 6.92% from
$1,111,080,000 at June 30, 2019. This excludes conduit debt obligations of the Coastal Energy
Loan Program. Payment of principal and interest on the Bond Bank’s Coastal Energy Bond is not
secured by a pledge of any amounts held by or payable to the Bond Bank under the General Bond
Resolution, including the Reserve Account, and is not in any way a debt or liability of the Bond
Bank and accordingly, are not included in the basic financial statements. Please see note (8) to
the financial statements.
As discussed in the previous section, the net decrease in 2020 long-term debt balances is due to
the defeasance of bonds and greater principal payments during the fiscal year on bonds
previously issued as compared to new issuance activity from the Bond Bank’s 2019 Series Three
and Four bonds.
AS 44.85.180(c) was originally enacted in 1975, limiting the Bond Bank outstanding bonds at any
time to $150 million. This Statute has been periodically amended to raise the limit and modify
the definition of authorized borrowers. The total debt limit as of June 30, 2020 was
$1,792,500,000, comprised of $1.5 billion in authority for political subdivisions including joint
action agencies and the Alaska Municipal League’s Joint Insurance Association, $87.5 million for
the University of Alaska, and $205 million for Regional Health Organizations. Total Bond Bank
bonds outstanding as of June 30, 2020 was $1,034,165,000. The limit on additional bond issuance
Changes from 2019 to 2020
2020 2019 Dollars Percent
Revenues:
Interest income on bonds receivable 48,907,053$ 51,670,966$ (2,763,913)$ -5.35%
Investment earnings 1,851,742 3,694,491 (1,842,749) -49.88%
Total revenues 50,758,795 55,365,457 (4,606,662) -8.32%
Expenditures:
Interest payments 49,874,639 52,237,321 (2,362,682) -4.52%
Principal payments 66,965,000 74,810,000 (7,845,000) -10.49%
Total expenditures 116,839,639 127,047,321 (10,207,682) -8.03%
Deficiency of revenues
over expenditures (66,080,844) (71,681,864) 5,601,020 -7.81%
Other financing sources (uses):
Bonds issued 22,245,000 44,225,000 (21,980,000) -49.70%
Payments to Bond Escrow Agent (32,195,000) - (32,195,000) 100.00%
Transfers (169,639) (148,819) (20,820) 13.99%
Total other financing sources (uses):(10,119,639) 44,076,181 (54,195,820) -122.96%
Net change in fund balance (76,200,483) (27,605,683) (48,594,800) 176.03%
Fund balance, beginning of year 1,158,508,696 1,186,114,379 (27,605,683) -2.33%
Fund balance, end of year 1,082,308,213$ 1,158,508,696$ (76,200,483)$ -6.58%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 9 -
as of June 30, 2020 was approximately $758.3 million, of which $649.4 million of authority is
available for the main political subdivision program, $4.6 million is available to the University of
Alaska, and $104.3 million is available to Regional Health Organizations.
Outstanding long-term debt is comprised of the following bonds at year end:
Credit Ratings
As of June 30, 2020, the Bond Bank's ratings were A+/A/A1 from S&P Global Ratings (S&P), Fitch
Ratings (Fitch), and Moody's Investors Service, Inc., respectively. The outlook on all ratings is
negative. The Bond Bank receives certain credit support from the State of Alaska, with ratings
linked to the State's General Obligation debt rating. On September 5, 2019, Fitch downgraded the
State of Alaska. At the same time, Fitch downgraded its underlying rating on the Bond Bank's
outstanding general obligation debt to 'A+' from 'AA-.' On April 17, 2020, S&P downgraded the
State of Alaska. At the same time, S&P downgraded its underlying ratings on the Bond Bank's
outstanding general obligation debt to 'A+' from 'AA-.' On May 6, 2020, Fitch downgraded the
State of Alaska. At the same time, Fitch downgraded its underlying rating on the Bond Bank's
outstanding general obligation debt to 'A' from 'A+.'
COVID-19
The continued spread of COVID-19 and the continued impact on social interaction, travel,
economies, and financial markets may adversely impact the Authority and authorized borrowers’
financial condition, results of operations or liquidity and may: (1) continue to adversely affect the
ability of the Authority and authorized borrowers to conduct their operations and adversely affect
the cost of operations, (2) adversely affect financial markets and consequently adversely affect the
returns on and value of the Authority’s investments, and (3) adversely affect the secondary market
for and value of the Authority’s Bonds. The full impact of COVID-19, the CARES Act, and the scope
of any adverse impact on the Authority and authorized borrowers’ financial condition, results of
operations or liquidity cannot be fully determined at this time. Management will continue to
evaluate the impact on the Authority's borrowers, and the collectability of outstanding
receivables.
Subsequent Events
On July 7, 2020, the Authority closed on the 2020 Series One bonds. The 2020 Series One bonds
consisted of $98.31 million in general obligation and refunding bonds with interest rates ranging
between 4% and 5%. The proceeds of the 2020 Series One bonds were used to make new loans
to authorized borrowers, and to refund certain outstanding bonds previously issued by the
Changes from 2019 to 2020
2020 2019 Dollars Percent
GO bonds payable 1,034,165,000$ 1,111,080,000$ (76,915,000)$ -6.92%
1,034,165,000$ 1,111,080,000$ (76,915,000)$ -6.92%
As of June 30, Increase/(Decrease)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska) Management’s Discussion and Analysis
Year Ended June 30, 2020
- 10 -
Authority, including all or a portion of the 2010-1A, 2010-1B, 2010-2B, 2010-3B, 2010-4A, 2010-
4B of the 2005 General Bond Resolution, and all or a portion of the 2010 A-2 of the 2010 General
Bond Resolution.
On September 4, 2020, the Alaska Supreme Court issued a ruling in S17377 – Eric Forrer v. State
of Alaska and Lucinda Mahoney. In that decision the Court found that the Alaska Tax Credit
Certificate Bond Corporation (ATCCBC) debt construct was unconstitutional. There are some
similarities between the statutory construct of the ATCCBC and the Alaska Municipal Bond Bank
Authority, and the Bond Bank’s bond counsel firm and the Alaska Department of Law are analyzing
what, if any, impact the decision will have on the Bond Bank.
Contacting the Bond Bank’s Financial Management
This financial report is designed to provide our customers, investors, and creditors with a general
overview of the Bond Bank’s finances and to demonstrate the Bond Bank’s accountability of its
assets. If you have any questions about this report or need additional financial information,
contact the Finance Director or the Executive Director of the Bond Bank at (907) 465-2893 or (907)
465-3750, respectively.
ASSETS
Cash and cash equivalents 593,109$ 5,964,864$ 6,557,973$ -$ 6,557,973$
Investments, at fair value (note 4)8,896,429 52,143,841 61,040,270 - 61,040,270
Accrued interest receivable:
Bonds receivable 29,897 13,177,475 13,207,372 - 13,207,372
Investment securities 36,793 203,974 240,767 - 240,767
Bonds receivable (note 5)3,988,599 1,032,775,000 1,036,763,599 - 1,036,763,599
Interfund receivables 11,046,268 - 11,046,268 (11,046,268) -
Total assets 24,591,095$ 1,104,265,154$ 1,128,856,249$ (11,046,268) 1,117,809,981
LIABILITIES
Accounts payable 91,764$ -$ 91,764$ -$ 91,764$
Due to Primary Government 164,239 - 164,239 - 164,239
Principal and interest payments received in advance - 3,917,523 3,917,523 - 3,917,523
Arbitrage interest rebate payable 5,638 - 5,638 - 5,638
Accrued interest payable - - - 13,200,642 13,200,642
Interfund payables - 11,046,268 11,046,268 (11,046,268) -
Bond proceeds held in reserve (note 6)- 6,993,150 6,993,150 - 6,993,150
Long-term liabilities (note 7):
Portion due or payable within one year:
General obligation bonds payable - - - 67,245,000 67,245,000
Portion due or payable after one year:
General obligation bonds payable - - - 966,920,000 966,920,000
Total liabilities 261,641 21,956,941 22,218,582 1,036,319,374 1,058,537,956
FUND BALANCES/NET POSITION
Fund balances:
Restricted for debt service (note 2)4,956,430 1,082,308,213 1,087,264,643 (1,087,264,643) -
Unassigned 19,373,024 - 19,373,024 (19,373,024) -
Total fund balances 24,329,454 1,082,308,213 1,106,637,667 (1,106,637,667) -
Total liabilities and fund balances 24,591,095$ 1,104,265,154$ 1,128,856,249$
Net position:
Restricted (note 2) 37,394,279 37,394,279
Unrestricted 21,877,746 21,877,746
Total net position 59,272,025$ 59,272,025$
June 30, 2020
General Fund
Debt Service
Fund
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Statement of Net Position and
Governmental Funds Balance Sheets
Total Adjustments
Statement of Net
Position
The accompanying notes to the financial statements are an integral part of these statements.
- 11 -
Revenues:
Investment earnings 448,402$ 1,851,742$ 2,300,144$ -$ 2,300,144$
Interest income on bonds receivable 102,299 48,907,053 49,009,352 - 49,009,352
Total revenues 550,701 50,758,795 51,309,496 - 51,309,496
Expenditures / expenses:
Debt service:
Principal payments - 66,965,000 66,965,000 (66,965,000) -
Interest payments / expense - 49,874,639 49,874,639 (887,657) 48,986,982
Current:
Professional services 292,746 - 292,746 - 292,746
Personal services 198,990 - 198,990 - 198,990
Administrative travel 5,297 - 5,297 - 5,297
Office 10,916 - 10,916 - 10,916
Total expenditures / expenses 507,949 116,839,639 117,347,588 (67,852,657) 49,494,931
Excess (deficiency) of revenues
over expenditures / expenses 42,752 (66,080,844) (66,038,092) 67,852,657 1,814,565
Other financing sources / (uses):
Bonds issued - 22,245,000 22,245,000 (22,245,000) -
Payments to refunded bond escrow agent - (32,195,000) (32,195,000) 32,195,000 -
Transfers - internal activities 169,639 (169,639) - - -
Total other financing sources / (uses)169,639 (10,119,639) (9,950,000) 9,950,000 -
Net change in fund balance /
net position 212,391 (76,200,483) (75,988,092) 77,802,657 1,814,565
Fund balances / net position:
Beginning of the year 24,117,063 1,158,508,696 1,182,625,759 (1,125,168,299) 57,457,460
End of the year 24,329,454$ 1,082,308,213$ 1,106,637,667$ (1,047,365,642)$ 59,272,025$
Statement of
ActivitiesGeneral Fund Debt Service Fund Total Adjustments
Changes in Fund Balances/Net Position
For the Year Ended June 30, 2020
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Statement of Activities and
Governmental Funds Statement of Revenues, Expenditures, and
The accompanying notes to the financial statements are an integral part of these statements.
- 12 -
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 13 -
For the Year Ended June 30, 2020
(1) History/Reporting Entity
The Alaska Municipal Bond Bank Authority (Authority or Bond Bank) was created pursuant to
Alaska Statute, Chapter 85, Title 44, as amended, (Act) as a public corporation and
instrumentality of the State of Alaska (State), but with a legal existence independent of and
separate from the State. The Authority is a discretely presented component unit of the State
of Alaska for purposes of financial reporting. The Authority commenced operations in August
1975.
The Authority was created for the purpose of making monies available to authorized borrowers
within the State to finance capital projects primarily through the issuance of bonds by the
Authority. Bond proceeds are then used to purchase, from authorized borrowers, general
obligation and revenue bonds.
The bonds are obligations of the Authority, payable only from revenues or funds of the
Authority, and the State of Alaska is not obligated to pay principal or interest thereon, and
neither the faith and credit nor the taxing power of the State is pledged to the bonds. The
municipal bonds and municipal bond payments, investments thereof and proceeds of such
investments, if any, and all funds and accounts established by the bond resolution to be held
by the Trustee (with the exception of the Coastal Energy Loan Debt Service Program, which is
administered by the Authority) are pledged and assigned for the payment of bonds.
Alaska Statue (AS) 44.85.180(c) was originally enacted in 1975, limiting Bond Bank outstanding
bonds at any time to $150 million. This Statue has been periodically amended to raise the
limit, and modify the definition of authorized borrowers. At the beginning of fiscal year 2015,
the limit was $1.5875 billion.
During fiscal year 2015, the legislature passed, and the Governor signed into law a bill to
authorize the Authority to make loans to Joint Action Agencies and Regional Health
Organizations, effective May 26, 2015. Joint Action Agency lending is now part of the main
political subdivision program. Regional Health Organization lending is limited to no more
than $205 million in total, no more than 49% of any single project where the other 51% of the
project’s funding is in place, and not more than $102.5 million for any single project.
With the 2015 legislation, the total debt limit as of June 30, 2020 was $1,792,500,000, comprised
of $1.5 billion in authority for political subdivisions, $87.5 million for the University of Alaska,
and $205 million for Regional Health Organizations. Total Bond Bank bonds and notes
outstanding as of June 30, 2020 was $1,034,165,000. The limit on additional bond issuance as
of June 30, 2020 was approximately $758.3 million, of which $649.4 million of authority is
available for the main political subdivision program, $4.6 million is available to the University
of Alaska, and $104.3 million is available to Regional Health Organizations.
(2) Summary of Significant Accounting Policies
The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body
for establishing governmental accounting and financial principles. The most significant of the
Authority’s accounting policies are described below.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 14 -
(a) Government-wide and Fund Financial Statements
The government-wide statement of net position and the statement of activities report
information on all of the activities of the Authority. For the most part, the effect of
interfund activity has been removed from these statements. The balance sheet and
statement of revenues, expenditures and changes in fund balances are provided for
governmental funds. Due to the single purpose nature of the activities of the Authority, the
government-wide and fund financial statements have been presented together with an
adjustments column reconciling the two statements.
(b) Measurement Focus, Basis of Accounting, and Financial Statement Presentation
The government-wide financial statements are reported using the economic resources
measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of
related cash flows. Governmental fund financial statements are reported using the current
financial resources measurement focus and the modified accrual basis of accounting.
Revenues are recognized as soon as they are both measurable and available. Revenues are
considered to be available when they are collectible within the current period or soon
enough thereafter to pay liabilities of the current period. For this purpose, the government
considers revenues to be available if they are collected within 180 days of the end of the
current fiscal period. Expenditures generally are recorded when a liability is incurred, as
under accrual accounting. However, debt service expenditures are recorded only when
payment is due.
The Authority reports the following major governmental funds:
The General Fund is the Authority’s primary operating fund. It accounts for all financial
resources of the Authority, except those required to be accounted for in another fund. The
Authority adopts an annual budget for the operating account only which does not
encompass entire operations of the General Fund, therefore, budgetary comparison
information for the General Fund is not presented.
The Debt Service Fund accounts for the resources accumulated and payments made for
principal and interest on long-term debt of the Authority. The Authority does not adopt a
budget for the Debt Service Fund because it is not legally required to do so.
The purposes of each of these funds are described in the following paragraphs:
General Fund
The General Fund is comprised of a Custodian Account and an Operating Account. The
Custodian Account is established to account for appropriations by the State of Alaska
Legislature available to fund the Special Reserve Accounts. The Operating Account is
established to account for the ordinary operations of the Authority. Monies are derived
from the following sources: (a) amounts appropriated by the Legislature, (b) fees and
charges collected, (c) income on investments of the Statutory Reserve Account in excess
of required debt service reserves required by bond resolutions and (d) any other monies
made available for purposes of the General Fund from any other source. Amounts in the
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 15 -
Operating Account may be used to pay (a) administrative expenditures of the Authority,
(b) fees and expenditures of the Trustee and paying agents, (c) financing costs incurred
with respect to issuance of bonds and (d) any expenditures in carrying out any other
purpose then authorized by the Act. The excess revenues of the Operating Account are
returned to the State of Alaska. The State of Alaska may appropriate the excess revenues
to the Bond Bank Custodian Account to fund Reserve Accounts.
Debt Service Fund
Within the Debt Service Fund, separate Debt Service Programs have been established for
each bond resolution to account for the portion of bond sale proceeds used to purchase
obligations of the authorized borrowers and for the payment of interest and principal on
all bonds of the Authority issued under its resolutions. Each program is comprised of an
“interest account” and a “principal account”, both of which are maintained by a trustee.
The receipts of interest and principal from the authorized borrowers and the Statutory
Reserve Account are deposited in these programs and are used to pay interest and
principal on the Authority bonds. One additional Debt Service Program has been
established to account for transactions not involving bond resolutions. This is the
Coastal Energy Loan Debt Service Program. The Coastal Energy Loan Debt Service
Program is not maintained by a trustee. Payments of interest and principal by
municipalities having coastal energy loans are made directly to the federal government
by the municipalities and are accounted for in the Coastal Energy Loan Debt Service
Program.
Each Debt Service Fund Program contains a Statutory Reserve Account established to
account for (a) money available to fund debt service reserves required by future bond
sales under various bond resolutions (Custodian Account) and (b) debt service reserves
which have already been established under various bond resolutions which are to be
used in the case of deficiency in a Debt Service Program in accordance with its respective
bond resolution (reserve accounts). Separate reserve accounts exist under each bond
resolution as follows:
2005 General Bond Resolution – The reserve fund may be funded with transfers from the
custodian account, surety policies, bond proceeds, or other funds available to the Bond
Bank.
2010 General Bond Resolution – The reserve fund may be funded with transfers from the
custodian account, surety policies, bond proceeds, or other funds available to the Bond
Bank.
2016 Master Bond Resolution – The reserve fund may be funded with transfers from the
custodian account, surety policies, bond proceeds, or other funds available to the Bond
Bank.
At June 30, 2020, the 2005 General Bond Resolution, 2010 General Bond Resolution and
2016 Master Bond Resolution reserves must be the least of: (i) 10% of the initial principal
amount of each Series of Bonds outstanding; (ii) the maximum annual principal and
interest requirements on all bonds outstanding; (iii) 125% of the average annual debt
service on all bonds then outstanding; or (iv) such lower amount as may be allowed by
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 16 -
law. Amounts in excess of the debt service reserve requirement in any reserve are
transferred to the Operating Account on a periodic basis.
(c) Adjustments
Certain adjustments are considered to be necessary to the governmental funds in order to
present the Authority’s financial position and the results of its operations. These
adjustments include the elimination of inter-fund payables and receivables. Bond proceeds
are reported as other financing sources and payments to refunding escrow agents as other
financing uses in governmental funds and thus contribute to the change in fund balance.
Accrued interest is not reported in the governmental funds but is reported as a liability in
the statement of net position. Issuing debt increases long-term liabilities in the statement
of net position and does not affect the statement of activities. Repayment of principal is an
expenditure in the governmental funds and reduces the liability in the statement of net
position.
(d) Restricted Assets and Net Position Restricted for Debt Service
Certain resources set aside for the repayment of the Authority’s bonds, net of certain
proceeds from additional bonds issued, are classified as restricted on the statement of net
position because they are maintained in separate trust accounts and their use is limited by
applicable bond covenants. Cash and cash equivalents and investments include
$37,394,279 of restricted assets. These assets were funded as follows:
Original State of Alaska appropriation 18,601,414$
2008 appropriation of excess earnings 855,347
2009 appropriation of excess earnings 819,843
2010 appropriation of excess earnings 32,628
2011 appropriation of excess earnings 86,814
2012 appropriation for loan forgiveness 13,000,000
Total State of Alaska appropriated equity 33,396,046$
Net Position Restricted for Debt Service:
Appropriated amounts residing in reserve accounts 28,439,616$
Appropriated amounts residing in Custodial account,4,956,430
Total State of Alaska appropriated equity 33,396,046
Bond Bank equity residing in reserve accounts 3,998,233
Total restricted for debt service 37,394,279
Total restricted net position 37,394,279$
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 17 -
(e) Bond Receivables
Bond receivables are secured by the pledged revenues or are general obligations of the
authorized borrowers. Interest rates correspond with the interest rates on the related
bonds payable by the Authority. The bond receivables mature during the same period as
the related bond payables. Bond receivables are recorded at the par amount of the bonds
issued.
(f) Long-Term Obligations
In the government-wide financial statements, long-term debt and other long-term
obligations are reported as liabilities in the statement of net position. Any premium or
discount on bond issuance or refunding is not recorded by the Authority, as the premium
or discount is recorded by the authorized borrowers associated with the issuance and
amortized by them. Therefore, bonds payable are presented at par. Bond issue costs are
generally paid by the authorized borrowers but when a portion is paid by the Authority
they are paid from the General Account and considered operating expenditures/expenses.
(g) Fund Equity
Generally, fund equity represents the difference between the current assets and current
liabilities and is classified as fund balance. Bond Bank, in accordance with GASB Statement
No. 54 provisions, which require classification of fund balance as nonspendable, restricted,
committed, assigned or unassigned, had fund balances in restricted and unassigned
categories.
Restricted Fund Balance – Restricted fund balance is that portion of fund equity that has
constraints placed upon the use of the resources either by an external party or imposed by
law.
Unassigned Fund Balance – this classification represents fund balance that has not been
restricted, committed or assigned to specific purposes within the general fund.
The Authority does not have a policy for its use of unrestricted fund balance amounts,
therefore, it considers that committed amounts are reduced first (if any), followed by
assigned amounts (if any), and then unassigned amounts when expenditures are incurred
for purposes for which amounts in any of those unrestricted fund balance classifications
could be used.
In the government-wide financial statements, restrictions of net position are reported when
constraints placed on net position are either externally imposed by creditors or laws or
regulations of other governments or imposed by law through constitutional provisions or
enabling legislation.
(h) Interfund Receivables, Payables and Transfers
Interfund balances represent cash collected or disbursed on behalf of another fund. Interfund
transfers are transfers between funds that are required when revenue is generated in one
fund and expenditures are paid from another fund.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 18 -
(i) Interest Arbitrage Rebate
Bonds issued and funds segregated into reserves after August 15, 1986 are subject to Internal
Revenue Service income tax regulations which require rebates to the U.S. Government of
interest income earned on investments purchased with the proceeds from the bonds or any
applicable reserves in excess of the allowable yield of the issue. Amounts owed are
expensed when paid and refunds are recorded when received at the five year anniversary
date of the bond issue or upon final repayment. The Bond Bank’s arbitrage rebate
consultant will update all general obligation bond rebate analysis annually as of June 30.
The Bond Bank had an arbitrage rebate liability of $5,638 as of June 30, 2020.
(j) Income Taxes
The Authority is exempt from paying federal and state income taxes.
(3) Cash
The Authority considers all highly liquid investments purchased with an original maturity of
three months or less at the date of purchase to be cash equivalents. Cash and cash
equivalents at June 30, 2020 consist of money market accounts.
The bank balance of all of the Authority’s cash and cash equivalents are collateralized by
securities held in the Authority’s name by its custodial agent.
(4) Investments
In accordance with the authoritative guidance on fair value measurements and disclosures, the
Authority discloses the fair value of its investments in a hierarchy that ranks the inputs to
valuation techniques used to measure the fair value. The hierarchy gives the highest ranking
to valuations based upon unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest ranking to valuations based upon
unobservable inputs that are significant to the valuation (Level 3 measurements). The
guidance establishes three levels of the fair value hierarchy as follows:
Level 1 - Quoted prices in active markets for identical assets.
Level 2 - Inputs other than quoted prices that are observable for the assets, including quoted
prices for similar investments based on interest rates, credit risk and like factors.
Level 3 - Unobservable inputs for the assets.
Investments are assigned a level based upon the observability of the inputs which are significant
to the overall valuation. The inputs and methodology used for valuing securities are not
necessarily an indication of the risk associated with investing in those securities.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 19 -
The aggregate fair value by input level, as of June 30, 2020 is as follows:
Debt Securities 6/30/2020 1 2 3
General Fund
U.S. Treasury securities 8,496,313$ 8,496,313$ -$ -$
Certificates of deposits 400,116 - 400,116 -
Total General Fund 8,896,429 8,496,313 400,116 -
Debt Service Fund
U.S. Treasury securities 49,703,045 49,703,045 - -
U.S. Government agency securities 1,013,210 - 1,013,210 -
Certificates of deposits 1,427,586 - 1,427,586 -
Total Debt Service Fund 52,143,841 49,703,045 2,440,796 -
Total Debt Securities 61,040,270$ 58,199,358$ 2,840,912$ -$
Level
U.S. Treasury securities are liquid and have quoted market prices. Fair value of U.S. Treasuries
securities is based on live trading feeds. U.S. Treasury securities are categorized in Level 1 of
the fair value hierarchy. Government agency securities use market-based and observable
inputs. As such, these securities are classified as Level 2 of the fair value hierarchy. Certificates
of deposits are determined by using other significant observable inputs (including quoted
prices for similar investments, interest rates, etc). This results in a level 2 fair value
measurement.
The fair value of debt security investments by contractual maturity as of June 30, 2020 is shown
below.
Less than 1 Year 1-5 Years 6-10 Years More than 10 Years Total
General Fund
U.S. Treasury securities 1,067,050$ 6,470,909$ 958,354$ -$ 8,496,313$
Certificates of deposits 400,116 - - - 400,116
Total General Fund 1,467,166 6,470,909 958,354 - 8,896,429
Debt Service Fund
U.S. Treasury securities 4,105,240 36,841,708 8,756,097 - 49,703,045
U.S. Government agencies
securities 1,013,210 - - - 1,013,210
Certificates of deposits 482,331 945,255 - - 1,427,586
Total Debt Service Fund 5,600,781 37,786,963 8,756,097 - 52,143,841
Total investments 7,067,947$ 44,257,872$ 9,714,451$ -$ 61,040,270$
Expected maturities may differ from contractual maturities because borrowers may have the
right to call or prepay obligations with or without penalty.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 20 -
(a) Investment Policies
The Authority has distinct investment objectives and policies associated with funds held in the
Custodian Account, Reserve Funds, and municipal debt payments received prior to
scheduled debt service payment dates. The three classes of funds are listed below:
Custodian Account
The Custodian Account investment portfolio is designed with the objective of attaining
the highest market rate of return subject to the required use of the Custodian Account
for operations, funding transfers to the state, and funding reserves. The Custodian
Account balance must maintain a minimum balance of $5 million, and be forecasted to
maintain that $5 million balance for the subsequent twelve-month period, and an
analysis of risk profile and historical benefit between the varying strategies must be
undertaken before any shift in the investment strategy of the Account. Up to
$1,000,000 shall be used for longer term, 5 to 10 year U.S. Treasury and Agency
securities. The Custodian Account has to maintain sufficient liquidity to meet operating
requirements, provide the prior fiscal year’s state dividend (if not otherwise
appropriated back to the Bond Bank), and to allow transfers to reserves as needed for
bond issuance activity. Long-term preservation of principal is the third objective of the
Custodian Account’s investment program. Investments shall be undertaken in a
manner that minimizes the probability of long-term loss.
o There are no arbitrage restrictions.
The bond resolutions limit investments to:
o 5% +/- 2% money market funds (no less than $350,000).
o 95% +/- 3% government agencies and U.S. Treasuries.
o The performance benchmark is 5% +/- 2% three month U.S. Treasury Bill, and 95%
+/- 3% Barclays 1-5 year government bond index; Barclays U.S. Aggregate.
The following transactions are prohibited with the Custodian Account unless those
transactions have the prior written consent of the Investment Committee:
o Short sale of securities (the sale and settlement of a security not currently owned by the Authority and a formal agreement to borrow the security to facilitate the settlement of the short sale);
o Purchases of futures, forwards or options for the purpose of speculating (currency futures, forwards and options are permitted only for hedging or to facilitate otherwise permissible transactions);
o Borrowing to leverage the return on investments. Extended settlement of securities purchases executed to facilitate or improve the efficiency of a transaction will not be considered borrowing, provided that sufficient cash equivalent securities or receivables are available to facilitate the extended settlement;
o Purchases of "private placement" or unrated corporate bonds.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 21 -
Bond Reserve Funds
Preservation of principal is the foremost objective of the Bond Reserve Funds investment
program. These funds shall be managed to ensure that the corpus is preserved. These
funds will not be expended until the final maturity of the bond issue they secure,
unless there is a failure to pay debt service by a borrower. As there is limited benefit
in maximizing return it is the least important objective of the Bond Reserve Funds. It is
anticipated that the Reserve Funds cumulative average return should target the
blended arbitrage yield limit of the bond issues secured.
Bond resolutions limit allowed investment of these funds. Investment risk is examined
on an annual basis to ensure that no greater than the minimum level of risk required
to achieve the highest probability of earning the arbitrage yield limit on the bonds is
incurred.
The 2005, 2010 and 2016 Reserve Fund bond resolutions limit investments to:
o 90% +/- 10% government agencies and U.S. Treasuries with maturities of less than 5 years.
o 10% +/- 10% government agencies and U.S. Treasuries with maturities of more than 5 years and less than 10 years.
o Performance benchmark is 90% Barclays U.S. 1-5 year government bond index and 10% Barclays U.S. Aggregate index.
Municipal Debt Payments
Preservation of principal and liquidity are the foremost objectives of the Municipal Debt
Payments investment program, as these funds will be expended within seven business
days of receipt. Return on investment is a benefit of holding these funds for the
advance payment period, but not the focus of investing the funds. The bond
resolutions limit investments to:
o 100% Money Market Fund.
o Performance benchmark is three-month U.S. Treasury Bill.
(b) Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of the Authority’s
investment in a single issuer. Concentration limits are not established in the bond
indentures and governing agreements for pledged investments.
At June 30, 2020, the Authority's investments had no concentrations exceeding five percent
from any issuer, other than U.S. Treasury securities that are explicitly guaranteed by the U.S.
government.
The Authority’s policies set out maximum concentration limits for investments managed by
the external investment manager.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 22 -
(c) Credit Risk
Credit risk is the risk of loss due to the failure of the security or backer. The Authority
mitigates its credit risk by limiting investments permitted in the investment policies. U.S.
Treasury securities that are explicitly guaranteed by the U.S. government are not
considered to have credit risk. Government Sponsored Entities are considered to have an
implicit guarantee. The Federal Home Loan Bank carries senior debt credit ratings of ‘Aaa’
by Moody’s Investors Service and ‘AA+’ by Standard and Poor’s. Certificates of deposit are
not rated.
(d) Custodial Credit Risk
The Authority assumes levels of custodial credit risk for its deposits with financial institutions,
bank investment agreements, and investments. For deposits, custodial credit risk is the risk
that, in the event of a bank failure, the Authority’s deposits may not be returned. For an
investment, custodial credit risk is the risk that, in the event of the failure of the
counterparty, the Authority will not be able to recover the value of the investment or
collateral securities that are in the possession of an outside party. The Authority has not
established a formal custodial credit risk policy for its investments. The Authority had no
investments registered in the name of a counterparty.
(e) Interest Rate Risk
Interest rate risk is the risk that the market value of investments will decline as a result of
changes in general interest rates. For non-pledged investments, the Authority mitigates
interest rate risk by structuring its investments’ maturities to meet cash requirements,
thereby avoiding the need to sell securities in the open market prior to maturity. For
investments held in trust, investment maturities are structured to meet cash requirements
as outlined in its bond indentures and contractual and statutory agreements.
(5) Bonds Receivable
The General Fund includes bonds receivable with interest rates varying from 1% to 5% due from
the City of Galena, Kenai Peninsula Borough and Kodiak Island Borough with maturities as
follows:
City of Galena
Kenai Peninsula
Borough
Kodiak Island
Borough
Total General Fund
Bonds Receivable
2021 170,494$ 861,000$ 50,000$ 1,081,494$
2022 172,207 879,000 50,000 1,101,207
2023 173,937 900,000 55,000 1,128,937
2024 175,684 - 55,000 230,684
2025 156,277 - 55,000 211,277
2026-2030 - - 235,000 235,000
848,599$ 2,640,000$ 500,000$ 3,988,599$
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 23 -
Bonds receivable by debt service program at June 30, 2020 mature in varying annual
installments as follows:
Year
Ending
June 30 2005 General 2010 General 2016 General Total Principal
2021 67,075,000$ 170,000 -$ 67,245,000$
2022 65,915,000 175,000 2,155,000 68,245,000
2023 64,590,000 180,000 2,220,000 66,990,000
2024 61,870,000 185,000 2,310,000 64,365,000
2025 54,450,000 190,000 2,425,000 57,065,000
2026-2030 240,295,000 1,070,000 13,940,000 255,305,000
2031-2035 191,375,000 1,280,000 17,085,000 209,740,000
2036-2040 97,765,000 285,000 20,850,000 118,900,000
2041-2045 71,290,000 - 26,825,000 98,115,000
2046-2049 13,900,000 - 12,905,000 26,805,000
928,525,000$ 3,535,000$ 100,715,000$ 1,032,775,000$
(6) Authority Reserve Funds Derived from Series 2017A Bond Proceeds
The Authority deposited bond proceeds from the issuance of the Series 2017A bonds to satisfy
the Authority’s 2016 Master Resolution Reserve requirement. The Yukon-Kuskokwim Health
Corporation (2017A Borrower) is obligated by the loan agreement to pay all interest expense
associated with the Series 2017A bonds including the bonds that funded the deposit to the
2016 Master Resolution. These reserve funds are held by the Trustee until the maturity of the
bonds when per the loan agreement proceeds attributable to funding the Authority’s 2016
Master Resolution reserve requirement will be used to repay the 2017A bonds that funded
them. The amount initially required to satisfy the Authority’s reserve at time of issuance was
$6,993,150.
(7) Long–Term Liabilities
The Authority does not have unused lines of credit, direct borrowings or direct placements,
which would now be required presentation in accordance with GASB Statement No. 88
Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements.
During the year ended June 30, 2020 the Authority’s long-term liabilities changed as follows:
Beginning End Due within
of Year New Debt of Year One Year
General obligation
bonds payable 1,111,080,000$ 22,245,000$ (99,160,000)$ 1,034,165,000$ 67,245,000$
Total 1,111,080,000$ 22,245,000$ (99,160,000)$ 1,034,165,000$ 67,245,000$
Repayments/
Refundings
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 24 -
Bond Bank’s long-term liabilities consist of the following as of June 30, 2020:
Debt Service Account
Issue Interest Rate
Principal
Outstanding Interest Rate
Principal
Outstanding
2005 Bond Resolution:
2009-B-Four Series - Ketchikan Gateway Borough 4.63%-5.40%17,955,000$ --$
2010-A-Series One 2.00%-5.00%680,000 --
Ketchikan, City of
Ketchikan Gateway Borough
Kenai, City of
Northwest Arctic Borough
Petersburg
Unalaska
2010-B Series One 5.99%-6.34%7,225,000 --
Kenai, City of
Northwest Arctic Borough
Petersburg
Unalaska
2010-B Series Two 3.75%-4.91%8,605,000 --
Juneau, City and Borough of
Cordova
King Cove, City of
2010-B Series Three 4.93%-5.43%6,900,000 --
Aleutians East Borough
Unalaska
King Cove, City of
2010-A Series Four 2.00%-5.00%8,680,000 --
Kenai Peninsula Borough
Ketchikan, City of
Ketchikan Gateway Borough
Sitka, City and Borough of
Sitka , City and Borough of (Refunding)
Soldotna
2010-B Series Four 1.42%-6.26%40,785,000 --
Kenai Peninsula Borough
Ketchikan, City of
Ketchikan Gateway Borough
Sitka, City and Borough of
Soldotna
2011-Series One 3.00%-5.13%5,210,000 --
Kodiak Island Borough
Wrangell
2011-Series Two 2.00%-4.38%4,195,000 --
Juneau, City and Borough of
Sitka, City and Borough of
2011-Series Three 2.00%-5.00%31,925,000 2.00%-5.00%1,390,000
Wrangell
Aleutians East Borough
Northwest Arctic Borough
Ketchikan Gateway Borough
Kenai Peninsula Borough
Cordova
Hoonah
Skagway
Seward
Kodiak Island Borough
(continued)
Statutory Reserve Account Ordinary
Reserve Sub-Account
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 25 -
Debt Service Account
Issue Interest Rate
Principal
Outstanding Interest Rate
Principal
Outstanding
2012-Series One 2.00%-5.00%2,775,000 --
Juneau, City and Borough of (Wildflower Court)
Juneau, City and Borough of
2012-Series Two 1.75%-5.00%20,630,000 --
Juneau, City and Borough of
Ketchikan, City of
Ketchikan Gateway Borough
Kodiak Island Borough
Nome, City of
North Pole, City of
Palmer, City of
Petersburg
Sitka, City and Borough of
Valdez
2012-Series Three 1.50%-5.00%8,890,000 --
Juneau, City and Borough of (School)
Juneau, City and Borough of (REF)
Petersburg
Haines Borough
2013-Series One 2.00%-5.00%79,390,000 --
Juneau, City and Borough of (Hospital Rev REF)
Juneau, City and Borough of
Kenai Peninsula Borough
Ketchikan Gateway Borough
Kodiak Island Borough
Sand Point, City of
Sitka, City and Borough of (Harbor)
Sitka, City and Borough of (Electric)
2013-Series Two A 2.00%-4.00%13,585,000 --
Homer, City of
Ketchikan, City of
Ketchikan, City of (REF)
Skagway
2013-Series Two B 3.00%-4.00%11,415,000 --
Kodiak Island Borough
2013 Series Three 1.50%-5.00%59,850,000 --
Juneau, City and Borough of
Kenai Peninsula Borough
Lake and Peninsula Borough
Sitka, City and Borough of
2014-Series One A 0.38%-5.00%44,115,000 --
Juneau, City and Borough of
Kodiak Island Borough
Kenai Peninsula Borough- Exempt
Kenai Peninsula Borough- Taxable
2014-Series Two A 3.00%-5.00%41,470,000 --
Ketchikan, City of (Harbor)
Ketchikan, City of (Hospital)
King Cove, City of
(continued)
Statutory Reserve Account Ordinary
Reserve Sub-Account
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 26 -
Debt Service Account
Issue Interest Rate
Principal
Outstanding Interest Rate
Principal
Outstanding
2014-Series Three 1.25%-5.00%44,335,000 --
City & Borough of Juneau
City of Saxman
City & Borough of Sitka
City of Adak (REF)
Municipality of Ancorage (Rev REF)
Haines Borough (REF)
Kenai Peninsula
City of Nome (REF)
Northwest Arctic Borough (REF)
Petersburg Borough (REF)
City of Seward (REF)
City of Seward (REF) - 2
2015-Series One 2.00%-5.00%39,355,000 --
City of Craig - New Money
City of Cordova - New Money
City of Cordova (REF2005A)
City of Ketchikan (REF2005A)
Northwest Arctic Borough (REF2005A)
City and Borough of Sitka (REF2005A)
City of Unalaska (REF2005A)
Ketchikan Gateway Borough (REF2005E)
Aleutians East Borough (REF2006A)
City of Nome (REF2006A)
City of Wrangell (REF2006A)
City and Borough of Sitka (REF2008-2)
City of Unalaska (REF2009-1)
City of Cordova (REF2009-2)
City of Nome (REF2009-2)
2015-Series Two 2.00%-5.00%47,535,000 --
City of Cordova - CC
Municipality of Skagway - PSB
City and Borough of Juneau - PP
Municipality of Skagway - PP
City and Borough of Juneau - School
City and Borough of Juneau (REF2007-3)
Kenai Peninsula Borough (REF2007-4)
2015-Series Three 2.00%-5.25%91,435,000 --
University of Alaska
Haines Borough
Kodiak Island Brough - School
Kodiak Island Borough - R&R
King Cove, City of
2016-Series One 2.00%-5.00%29,050,000 --
Kenai Peninsula Borough CES 7-Year Loan
Kenai Peninsula Borough CES 15-Year Loan
City of Klawock
Kodiak Island Borough - R&R
Kodiak Island Borough - School
City of Seward (REF2008-1)
City of Seward (REF 2008-2)
2016-Series Two 3.00%-5.00%49,850,000 --
Fairbanks North Star Borough
Ketchikan, City of
(continued)
Statutory Reserve Account Ordinary
Reserve Sub-Account
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 27 -
Debt Service Account
Issue Interest Rate
Principal
Outstanding Interest Rate
Principal
Outstanding
2016-Series Three 2.00%-5.00%55,495,000 --
City of Petersburg 2007 One Current Refunding
City of Nome 2007 One Refunding
Northwest Arctic Borough 2007 One Refunding
City of Seward 2007 One Refunding
City of Wasilla 2007 One Refunding
City and Borough of Sitka 2007 One Refunding
Aleutians East Borough 2007 Two Refunding
Kenai Peninsula Borough 2007 Two Refunding
City of Bethel 2007 Three Refunding
City of Kodiak 2007 Five Float Refunding
City of Kodiak 2007 Five Lift Refunding
City of Dillingham 2008 One Loan Refunding
City of Kodiak 2008 One Loan Refunding
Kodiak Island Borough 2008 One Loan Refunding
City of Skagway 2008 Two Loan Refunding
City of Kodiak 2009 One Loan Refunding
City and Borough of Juneau 2006B Refunding
City and Borough of Juneau New Money
2016-Series Four 2.00%-5.00%25,805,000 --
City of Ketchikan Port 2006 Two Loan Refunding
City of Ketchikan Port New Money
2017-Series One 2.50%-5.00%9,310,000 --
Kenai Peninsula Borough Hospital Loan
City of Seward
Kenai Peninsula Borough Solid Waste Loan
2017-Series Two 3.63%-5.00%30,775,000 --
City of Unalaska
City of Whittier
2017-Series Three 3.00%-5.00%27,115,000 --
Central Peninsula Hospital District
2018-Series One 5.00%11,505,000 --
Sitka Airport Loan
Sitka Harbor Loan
2019-Series One 5.00%27,055,000 --
Fairbanks North Star Borough - Tax-Exempt
City of Homer Police Station
Northwest Arctic Borough Loan to Kivalina
SE Alaska Power - Refunding
City of Dillingham
2019-Series Two 2.65%-3.600%3,380,000 --
Fairbanks North Star Borough - Taxable
2019-Series Three 5.00%18,000,000 --
City and Borough of Juneau Airport AMT
City and Borough of Juneau Revenue
Kenai Peninsula Borough - ERV
2019-Series Four 5.00%4,245,000 --
City and Borough of Juneau Airport
City and Borough of Juneau Revenue
Total 2005 Bond Resolution 928,525,000 1,390,000
2010 Bond Resolution:
2010-A-2 Series One - Ketchikan Gateway Borough 5.78%-6.86%3,535,000 --
Total 2010 Bond Resolution 3,535,000 -
2016 Master Bond Resolution:
2017 Series A - Yukon-Kuskokwim Health Corporation 3.00%-5.50%100,715,000 --
Total 2016 Master Bond Resolution 100,715,000 -
Total Long-Term Liabilities 1,032,775,000$ 1,390,000$
Statutory Reserve Account Ordinary
Reserve Sub-Account
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 28 -
All bonds are secured by bonds receivable and by amounts in the reserve account. The Act
further provides that if an authorized borrower defaults on its principal and/or interest
payments, upon written notice by the Authority, the State of Alaska must consider paying to
the Authority all funds due from the defaulting authorized borrower from the State in an
amount sufficient to clear the default. The Bond Bank Executive Director is obligated per
resolution to seek and the State may provide an appropriation annually to replenish reserves.
On August 6, 2019, the outstanding Bond Bank Series 2016A Bonds, in the amount of
$32,195,000, were defeased. Escrow obligations, together with additional funds, were
deposited with the Bond Bank's Trustee as escrow agent to satisfy such defeasance. All funds
used to defease debt were contributed by the underlying borrower. As a result, these bonds
are considered defeased, and the Authority removed the liability from its financial
statements. The Series 2016A Bonds maturing on or after April 1, 2021, will be optionally
redeemed on October 1, 2020. The outstanding principal of these defeased bonds was
$26,970,000 at June 30, 2020.
The above bonds mature in varying annual installments. The maturities at June 30, 2020 are as
follows:
2010 Resolution 2016 Resolution
Year Ending
June 30 General Reserve General General
2021 67,075,000$ -$ 170,000$ -$
2022 65,915,000 235,000 175,000 2,155,000
2023 64,590,000 1,155,000 180,000 2,220,000
2024 61,870,000 - 185,000 2,310,000
2025 54,450,000 - 190,000 2,425,000
2026-2030 240,295,000 - 1,070,000 13,940,000
2031-2035 191,375,000 - 1,280,000 17,085,000
2036-2040 97,765,000 - 285,000 20,850,000
2041-2045 71,290,000 - - 26,825,000
2046-2049 13,900,000 - - 12,905,000
928,525,000$ 1,390,000$ 3,535,000$ 100,715,000$
Year Ending
June 30 Total Principal Total Interest
2021 67,245,000$ 47,617,978$
2022 68,480,000 44,538,472
2023 68,145,000 41,363,511
2024 64,365,000 38,191,891
2025 57,065,000 35,194,350
2026-2030 255,305,000 136,553,480
2031-2035 209,740,000 80,945,326
2036-2040 118,900,000 43,925,084
2041-2045 98,115,000 19,206,813
2046-2049 26,805,000 1,985,024
1,034,165,000$ 489,521,929$
2005 Resolution
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 29 -
(8) Conduit Debt
Under the Coastal Energy Loan Program (Program), the Authority issued $5,000,000 1986 Series
A Coastal Energy Bonds (Bonds) payable to the National Oceanic and Atmospheric
Administration (NOAA). The proceeds of these bonds were used to purchase port revenue
bonds from the City of Nome. The City of Nome entered into a tripartite agreement with
NOAA and the Authority effective August 2, 1994 to defer payment of the principal and
accrual of interest for ten years. Effective January 29, 2009 a second amendment to the
tripartite agreement was executed. The amendment authorized the issuance of 2009A Bonds
for the purpose of refunding by exchange the outstanding City of Nome, Alaska, Port
Revenue Bond 1986 Series A. As of June 30, 2020 the aggregate amount outstanding for
conduit debt obligations was $3,742,692.
Also under the Program, the Authority issued $6,563,000 1987 Series A Coastal Energy Bonds
payable to NOAA. The proceeds of these bonds were used to purchase port revenue bonds
from the City of St. Paul. The City of St. Paul entered into a tripartite agreement with NOAA
and the Authority effective December 14, 2000 to modify and defer payment. As of June 30,
2020 the aggregate amount outstanding for the City of St. Paul conduit debt obligations was
$6,005,878.
The related loan payables do not represent a general obligation of the Authority as they are
payable only from proceeds received from the City of Nome and St. Paul, respectively.
Payment of principal and interest on the Bond Bank’s Coastal Energy Bond is not secured by a
pledge of any amounts held by or payable to the Bond Bank under the General Bond
Resolution, including the Reserve Account, and is not in any way a debt or liability of the
Bond Bank and accordingly, are not included in the basic financial statements.
The Coastal Energy Bonds and related accounts are included in the Bond Bank’s statutory limit
for total bonds outstanding.
(9) Commitments
During 2011 State Legislature appropriated $2,450,000 to the Bond Bank to issue a 15-year, one
percent interest loan to the City of Galena to retire existing debt obligations and make certain
utility improvements. The intent of the legislature was that loan repayments made for the
loan be paid into the State of Alaska General Fund in accordance with the provisions of the AS
44.85.270(h). The amount of receipts available to the Authority during fiscal year 2020 as
discussed in Note 2(d), included $168,798 of City of Galena loan repayments for the year
ended June 30, 2020. There were no excess receipts over operating expenditures during fiscal
year 2020.
The amount of Authority receipts determined under AS 44.85.270(h) and, as discussed in Note
2(d), available for transfer by the Authority and appropriation to the Bond Bank Authority
Reserve Fund under AS 44.85.270(a) was $-0- for fiscal year 2020; the cumulative state
appropriated amount, therefore, remained $33,396,046 at June 30, 2020.
The entire Custodian Account balance is available for appropriation, at any time, by the State
Legislature.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 30 -
(10) Infectious Disease Outbreak – COVID-19
The outbreak of COVID-19, a respiratory disease caused by a new strain of coronavirus, which
was first detected in China and has since spread to other countries, including the United
States (and the State of Alaska), has been declared a pandemic by the World Health
Organization. The outbreak of the disease has affected travel, commerce, and financial
markets globally.
On March 11, 2020, Governor Dunleavy declared a public health disaster emergency under State
law, as a result of COVID-19. On March 13, 2020, President Trump declared a national
emergency due to the COVID-19 outbreak. On March 27, 2020, President Trump signed into
law the "Coronavirus Aid, Relief, and Economic Security (CARES) Act." The CARES Act, among
other things, appropriated funds for the Coronavirus Relief Fund to be used to make
payments for specified uses to States and certain governments. On April 9, 2020, President
Trump declared that a major disaster exists in the State of Alaska and ordered federal
assistance to supplement State, tribal, and local recovery efforts in the areas affected by
COVID-19.
The continued spread of COVID-19 and the continued impact on social interaction, travel,
economies, and financial markets may adversely impact the Authority and authorized
borrowers’ financial condition, results of operations or liquidity and may: (1) continue to
adversely affect the ability of the Authority and authorized borrowers to conduct their
operations and adversely affect the cost of operations, (2) adversely affect financial markets
and consequently adversely affect the returns on and value of the Authority’s investments,
and (3) adversely affect the secondary market for and value of the Authority’s Bonds. The full
impact of COVID-19, the CARES Act, and the scope of any adverse impact on the Authority
and authorized borrowers’ financial condition, results of operations or liquidity cannot be fully
determined at this time. Management will continue to evaluate the impact on the Authority's
borrowers, and the collectability of outstanding receivables.
(11) Subsequent Events
On July 7, 2020, the Authority closed on the 2020 Series One bonds. The 2020 Series One bonds
consisted of $98.31 million in general obligation and refunding bonds with interest rates
ranging between 4% and 5%. The proceeds of the 2020 Series One bonds were used to make
new loans to authorized borrowers, and to refund certain outstanding bonds previously
issued by the Authority, including all or a portion of the 2010-1A, 2010-1B, 2010-2B, 2010-3B,
2010-4A, 2010-4B of the 2005 General Bond Resolution, and all or a portion of the 2010 A-2
of the 2010 General Bond Resolution.
On September 3, 2020, the Bond Bank Board of Directors approved a resolution authorizing the
issuance of the 2020 Series Two bonds. The Bond Bank may issue the 2020 Series Two bonds
before the end of calendar year 2020.
On September 4, 2020, the Alaska Supreme Court issued a ruling in S17377 – Eric Forrer v. State
of Alaska and Lucinda Mahoney. In that decision the Court found that the Alaska Tax Credit
Certificate Bond Corporation (ATCCBC) debt construct was unconstitutional. There are some
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
- 31 -
similarities between the statutory construct of the ATCCBC and the Alaska Municipal Bond
Bank Authority, and the Bond Bank’s bond counsel firm and the Alaska Department of Law are
analyzing what, if any, impact the decision will have on the Bond Bank.
(12) Recent Accounting Pronouncements
There are several recently issued Governmental Accounting Standards Board standards that the
Bond Bank must consider with upcoming implementation dates.
• GASB 94 - Public-Private and Public-Public Partnerships and Availability Payment
Arrangements. Effective for fiscal years beginning after June 15, 2022.
• GASB 96 - Subscription-Based Information Technology Arrangements. Effective for
fiscal years beginning after June 15, 2022.
• GASB 97 - Certain Component Unit Criteria, and Accounting and Financial Reporting for
Internal Revenue Code Section 457 Deferred Compensation Plans. Effective
for reporting years beginning after June 15, 2021.
The Government Accounting Standards board released GASB 95 in May 2020 and postponed
the effective dates of certain provisions in Statements that first became effective or are
scheduled to become effective for periods beginning after June 15, 2018, and later.
The following pronouncements were delayed by one year by GASB 95:
• GASB 84 - Fiduciary Activities. Originally effective for fiscal years beginning after
December 15, 2018.
• GASB 89 - Accounting for Interest Cost Incurred before the End of a Construction
Period. Originally effective for fiscal years beginning after December 15,
2019.
• GASB 90 - Majority Equity Interest – an Amendment of GASB Statement No. 14 and No.
61 – Originally effective for reporting periods beginning after December 15,
2018.
• GASB 91 - Conduit Debt Obligations. Originally effective for reporting periods
beginning after December 15, 2020.
• GASB 92 - Omninus 2020. Originally effective for reporting periods beginning after
June 15, 2020 (for paragraphs 8, 9, 10 and 12), and originally effective for
fiscal years beginning after June 15, 2020 (for paragraphs 6 and 7).
• GASB 93 - Replacement of Interbank Offered Rate. Originally effective for fiscal years
beginning after June 15, 2020.
The following pronouncement was delayed by eighteen months by GASB 95:
• GASB 87 - Leases. Originally effective for fiscal years beginning after December 15,
2019.
Currently, the Bond Bank does not expect any of these standards to have any significant impact
on the financial statements of the Bond Bank.
Supplemental Schedule
ASSETS
Cash 89,804$ 13,043$ 6,720$ 109,567$
Accrued interest receivable 178,009 1,528 24,437 203,974
Marketable securities 44,381,309 415,158 7,347,374 52,143,841
Total Assets 44,649,122$ 429,729$ 7,378,531$ 52,457,382$
LIABILITIES
Accrued interest payable 23,167$ -$ -$ 23,167$
Interaccount payables 9,072,773 16,260 19,461 9,108,494
Bond proceeds held in reserve - - 6,993,150 6,993,150
Bonds payable 1,390,000 - - 1,390,000
Total Liabilities 10,485,940 16,260 7,012,611 17,514,811
RESERVES
State appropriated 28,046,530 393,086 - 28,439,616
Unappropriated 3,974,305 2,296 21,632 3,998,233
Unrealized gain 2,142,347 18,087 344,288 2,504,722
Total Reserves 34,163,182 413,469 365,920 34,942,571
Total Liabilities & Reserves 44,649,122$ 429,729$ 7,378,531$ 52,457,382$
(A Component Unit of the State of Alaska)
ALASKA MUNICIPAL BOND BANK AUTHORITY
June 30, 2020
Supplemental Schedule of Statutory Reserve Accounts - Assets, Liabilities, and Account Reserves
Total2005 Resolution 2010 Resolution 2016 Resolution
See Independent Auditor's report
- 32 -
Continuing Disclosure Tables
Pursuant to the Securities and Exchange Commission Rule 15c2-12 and the Authority's continuing
disclosure undertakings, the Authority is obligated to provide annual financial information. In addition
to annual financial statements the Authority must provide a statement of authorized, issued and
outstanding bonded debt, reserve fund balances, and government unit statistics in substantially the
same form as Appendix C of official statements of the Authority. The following supplemental
information related to the 2005, 2010 general and 2016 master resolutions is provided in compliance
with the Appendix C filing requirement.
Outstanding Percent of
Borrower Par Outstanding
City and Borough of Sitka 136,355,000$ 14.66%
Kenai Peninsula Borough 112,320,000 12.08%
City and Borough of Juneau 110,630,000 11.90%
City of Ketchikan 84,850,000 9.12%
University of Alaska 82,890,000 8.91%
Kodiak Island Borough 74,410,000 8.00%
Fairbanks North Star Borough 58,995,000 6.34%
City of Unalaska 54,670,000 5.88%
City of Seward 29,215,000 3.14%
Northwest Arctic Borough 25,910,000 2.79%
Ketchikan Gateway Borough 22,885,000 2.46%
Aleutians East Borough 18,930,000 2.04%
Municipality of Skagway 17,755,000 1.91%
Lake & Peninsula Borough 14,430,000 1.55%
City of Cordova 13,685,000 1.47%
City of Kodiak 11,450,000 1.23%
City of Dillingham 10,400,000 1.12%
Haines Borough 8,085,000 0.87%
Petersburg Borough 7,175,000 0.77%
City of Homer 6,675,000 0.72%
SE Alaska Power Agency 3,475,000 0.37%
Municipality of Anchorage 3,100,000 0.33%
City of Nome 2,705,000 0.29%
City of King Cove 2,260,000 0.24%
City of Sand Point 2,155,000 0.23%
City of Whittier 1,805,000 0.19%
City of Bethel 1,665,000 0.18%
City of Soldotna 1,550,000 0.17%
City of Craig 1,505,000 0.17%
City of Valdez 1,500,000 0.16%
City of Klawock 1,230,000 0.13%
City of Kenai 1,165,000 0.13%
City of Hoonah 830,000 0.09%
City of North Pole 540,000 0.06%
City of Palmer 475,000 0.05%
City of Adak 450,000 0.05%
City and Borough of Wrangell 260,000 0.03%
City of Saxman 140,000 0.02%
Reserve Obligations 1,390,000 0.15%
Total Outstanding Par 929,915,000$ 100.00%
*On July 7, 2020, the Authority closed on approximately $98.3 million in general obligation and refunding
bonds, the 2020 Series One, authorized by Series Resolution 2020-01. On September 3, 2020, the Authority's
board approved Series Resolution 2020-03, authorizing the issuance of $247.9 million to refund bonds
previously issued by the bond bank, and to make a new loan of approximately $6 million.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2005 Bond Resolution Program -
June 30, 2020
Borrower Concentration*
See Independent Auditor's report
- 33 -
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7
5
0
67
,
5
0
0
70
,
2
5
0
67,750
70,250 72,500
Ci
t
y
a
n
d
B
o
r
o
u
g
h
o
f
J
u
n
e
a
u
2
0
1
3
T
h
r
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e
90
2
,
1
2
5
90
2
,
0
0
0
90
5
,
0
0
0
90
2
,
0
0
0
-
-
-
-
- -
Ke
n
a
i
P
e
n
i
n
s
u
l
a
B
o
r
o
u
g
h
1,6
2
7
,
3
2
5
1,6
2
8
,
5
0
0
1,6
2
7
,
6
7
5
1,6
3
0
,
1
7
5
1,
6
3
0
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1
7
5
1,6
2
7
,
6
7
5
1,6
2
7
,
5
5
0
1,6
2
9
,
5
5
0
1,628,550 1,629,425
La
k
e
a
n
d
P
e
n
i
n
s
u
l
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h
2
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3
T
h
r
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e
1,4
2
3
,
2
5
0
1,4
2
4
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2
5
0
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2
3
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5
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0
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2
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0
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0
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4
2
3
,
3
7
5
1,4
2
2
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5
0
0
1,4
1
9
,
3
7
5
1,4
2
3
,
7
5
0
1,420,500 1,419,625
Ci
t
y
a
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B
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r
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h
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S
i
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2
0
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h
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4
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9
7
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4
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9
7
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9
7
5
1,2
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4
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9
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5
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2
7
4
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9
7
5
1,2
7
4
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9
7
5
1,2
7
4
,
9
7
5
1,2
7
4
,
9
7
5
1,274,975 1,274,975
Ke
n
a
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P
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n
i
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u
l
a
B
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u
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2
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1
4
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n
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2,9
5
9
,
1
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5
5
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8
4
9
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5
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5
0
0
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5
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5
0
0
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9
5
8
,
2
5
0
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5
9
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5
0
0
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5
7
,
7
5
0
2,9
6
0
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0
0
0
2,955,750 -
Ko
d
i
a
k
I
s
l
a
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d
B
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h
2
0
1
4
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n
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7
2
,
1
1
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7
6
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3
6
3
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7
3
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1
1
3
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7
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6
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3
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7
6
9
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6
1
3
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7
4
,
9
2
5
1,7
7
2
,
4
2
5
1,7
7
2
,
1
7
5
1,773,925 1,772,425
Ci
t
y
a
n
d
B
o
r
o
u
g
h
o
f
J
u
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a
u
2
0
1
4
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n
e
40
3
,
1
3
8
40
4
,
6
3
8
40
5
,
6
3
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40
6
,
1
3
8
40
6
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1
3
8
40
4
,
5
7
5
40
3
,
8
2
5
40
7
,
5
7
5
405,575 408,075
Ci
t
y
o
f
K
e
t
c
h
i
k
a
n
H
o
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p
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l
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)
2
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5
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7
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6
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4
5
0
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5
7
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7
0
0
2,5
5
6
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4
5
0
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5
5
7
,
7
0
0
2,5
6
1
,
2
0
0
2,5
6
1
,
7
0
0
2,5
5
9
,
2
0
0
2,556,800 2,562,400
Ci
t
y
o
f
K
e
t
c
h
i
k
a
n
H
a
r
b
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r
(
G
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O
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2
0
1
4
T
w
o
20
5
,
3
0
0
20
4
,
8
0
0
20
9
,
0
5
0
20
7
,
8
0
0
20
6
,
3
0
0
20
9
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5
5
0
20
7
,
3
0
0
20
9
,
8
0
0
208,400 206,800
Ci
t
y
o
f
K
i
n
g
C
o
v
e
E
l
e
c
t
r
i
c
2
0
1
4
T
w
o
42
,
0
5
0
41
,
0
5
0
40
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0
5
0
39
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0
5
0
38
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0
5
0
37
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0
5
0
41
,
0
5
0
39,800
38,800 37,800
Ci
t
y
a
n
d
B
o
r
o
u
g
h
o
f
J
u
n
e
a
u
2
0
1
4
T
h
r
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e
91
1
,
3
7
5
90
7
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6
2
5
90
7
,
7
5
0
91
1
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5
0
0
90
8
,
8
7
5
90
9
,
8
7
5
90
9
,
3
7
5
90
7
,
3
7
5
908,750 908,375
Ci
t
y
a
n
d
B
o
r
o
u
g
h
o
f
S
i
t
k
a
2
0
1
4
T
h
r
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e
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
81
6
,
2
5
0
816,250 816,250
Ci
t
y
o
f
S
a
x
m
a
n
2
0
1
4
T
h
r
e
e
11
,
8
7
5
11
,
6
2
5
11
,
3
7
5
16
,
0
0
0
15
,
5
0
0
15
,
0
0
0
14
,
5
0
0
14,000
13,500 13,000
Ci
t
y
o
f
A
d
a
k
R
e
f
u
n
d
i
n
g
2
0
1
4
T
h
r
e
e
10
0
,
5
0
0
10
1
,
3
7
5
10
2
,
0
0
0
10
2
,
3
7
5
10
2
,
5
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0
-
-
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Mu
n
i
c
i
p
a
l
i
t
y
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f
A
n
c
h
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R
e
f
u
n
d
i
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g
2
0
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4
T
h
r
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e
29
6
,
3
7
5
29
4
,
0
0
0
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6
,
2
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0
29
8
,
0
0
0
29
4
,
3
7
5
29
0
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5
0
0
29
1
,
2
5
0
29
6
,
3
7
5
291,000 295,125
Ha
i
n
e
s
B
o
r
o
u
g
h
R
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n
d
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2
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T
h
r
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1,1
9
1
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1
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4
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6
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Ke
n
a
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P
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n
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l
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B
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R
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d
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2
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4
T
h
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18
3
,
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,
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7
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8
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17
9
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3
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-
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Ci
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o
m
e
R
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u
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d
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26
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26
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,
6
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1
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6
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-
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No
r
t
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w
e
s
t
A
r
c
t
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c
B
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R
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2
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h
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44
7
,
2
5
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44
9
,
7
5
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44
6
,
3
7
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44
7
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1
2
5
44
2
,
0
0
0
44
5
,
8
7
5
-
-
- -
Pe
t
e
r
s
b
u
r
g
B
o
r
o
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g
h
R
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f
u
n
d
i
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2
0
1
4
T
h
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e
40
1
,
1
2
5
40
0
,
5
0
0
39
9
,
1
2
5
40
1
,
8
7
5
39
8
,
7
5
0
39
9
,
7
5
0
-
-
- -
Ci
t
y
o
f
S
e
w
a
r
d
2
0
0
5
R
e
f
u
n
d
i
n
g
2
0
1
4
T
h
r
e
e
10
5
,
2
5
0
10
6
,
1
2
5
10
6
,
7
5
0
10
7
,
1
2
5
10
2
,
3
7
5
10
2
,
5
0
0
-
-
- -
Ci
t
y
o
f
S
e
w
a
r
d
2
0
0
6
R
e
f
u
n
d
i
n
g
2
0
1
4
T
h
r
e
e
31
8
,
9
7
5
31
6
,
9
7
5
31
9
,
3
5
0
32
0
,
9
7
5
32
1
,
8
5
0
63
7
,
1
0
0
-
-
- -
Ci
t
y
o
f
C
o
r
d
o
v
a
2
0
1
5
O
n
e
N
e
w
M
o
n
e
y
13
6
,
0
7
5
13
2
,
5
7
5
13
3
,
9
5
0
13
5
,
0
7
5
13
5
,
9
5
0
13
6
,
5
7
5
13
6
,
9
5
0
13
7
,
0
7
5
136,950 136,575
Ci
t
y
o
f
C
o
r
d
o
v
a
2
0
1
5
O
n
e
2
0
0
9
R
e
f
u
n
d
i
n
g
1,3
5
4
,
0
0
0
1,3
4
8
,
5
0
0
1,3
4
5
,
8
7
5
1,3
4
5
,
8
7
5
1,
3
4
3
,
3
7
5
1,3
4
3
,
2
5
0
1,3
3
0
,
6
2
5
1,3
2
5
,
5
0
0
1,327,375 -
Ci
t
y
o
f
C
r
a
i
g
2
0
1
5
O
n
e
N
e
w
M
o
n
e
y
13
6
,
2
3
8
13
2
,
7
3
8
13
4
,
1
1
3
13
5
,
2
3
8
13
6
,
1
1
3
13
6
,
7
3
8
13
7
,
1
1
3
13
7
,
2
3
8
137,113 136,738
Al
e
u
t
i
a
n
s
E
a
s
t
B
o
r
o
u
g
h
2
0
1
5
O
n
e
2
0
0
6
R
e
f
u
n
d
i
n
g
25
1
,
3
7
5
25
5
,
7
5
0
26
9
,
1
2
5
16
9
,
1
2
5
11
7
,
5
0
0
97
,
3
7
5
-
-
- -
No
m
e
2
0
1
5
O
n
e
2
0
0
6
R
e
f
u
n
d
i
n
g
86
,
1
2
5
87
,
7
5
0
89
,
1
2
5
90
,
2
5
0
86
,
2
5
0
87
,
1
2
5
-
-
- -
No
m
e
2
0
1
5
O
n
e
2
0
0
9
R
e
f
u
n
d
i
n
g
52
,
6
2
5
50
,
8
7
5
49
,
1
2
5
52
,
2
5
0
50
,
2
5
0
48
,
2
5
0
51
,
1
2
5
53,750
51,250 -
No
r
t
h
w
e
s
t
A
r
c
t
i
c
B
o
r
o
u
g
h
2
0
1
5
O
n
e
2
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0
5
R
e
f
u
n
d
i
n
g
1,6
4
0
,
0
0
0
-
-
-
-
-
-
-
- -
Sit
k
a
2
0
1
5
O
n
e
2
0
0
8
R
e
f
u
n
d
i
n
g
53
3
,
5
0
0
53
9
,
1
2
5
53
8
,
6
2
5
53
7
,
6
8
8
53
6
,
0
0
0
53
7
,
8
7
5
53
3
,
6
2
5
53
8
,
1
2
5
- -
Un
a
l
a
s
k
a
2
0
1
5
O
n
e
2
0
0
9
R
e
f
u
n
d
i
n
g
1,8
5
3
,
1
2
5
1,8
4
9
,
8
4
4
1,8
4
8
,
9
9
4
1,8
4
6
,
1
3
8
1,
8
4
1
,
8
2
5
1,8
4
0
,
5
7
5
1,8
4
1
,
2
0
0
1,8
3
3
,
7
0
0
1,837,825 1,833,325
Wr
a
n
g
e
l
l
2
0
1
5
O
n
e
2
0
0
6
R
e
f
u
n
d
i
n
g
24
0
,
8
7
5
-
-
-
-
-
-
-
- -
Co
r
d
o
v
a
2
0
1
5
T
w
o
21
2
,
4
0
0
21
1
,
9
0
0
21
1
,
1
5
0
21
3
,
7
5
0
21
2
,
5
0
0
21
1
,
0
0
0
21
4
,
2
5
0
21
2
,
0
0
0
214,500 216,500
Sk
a
g
w
a
y
2
0
1
5
T
w
o
68
2
,
9
0
0
68
0
,
9
0
0
68
3
,
4
0
0
68
3
,
1
0
0
68
4
,
6
0
0
68
0
,
3
5
0
68
0
,
6
0
0
68
0
,
1
0
0
683,850 681,600
Ci
t
y
a
n
d
B
o
r
o
u
g
h
o
f
J
u
n
e
a
u
2
0
1
5
T
w
o
(
H
a
r
b
o
r
R
e
f
u
n
d
i
n
g
)
73
8
,
3
5
0
73
7
,
6
0
0
74
0
,
8
5
0
74
1
,
6
5
0
74
3
,
1
5
0
73
8
,
4
0
0
73
7
,
6
5
0
73
5
,
6
5
0
737,400 737,650
Ke
n
a
i
P
e
n
i
n
s
u
l
a
B
o
r
o
u
g
h
2
0
1
5
T
w
o
1,0
9
0
,
8
0
0
1,0
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395,250 395,500
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872,000 871,500
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- 3
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-
Outstanding Percent of
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Ketchikan Gateway Borough 3,535,000$ 100.00%
Total Outstanding Par 3,535,000$ 100.00%
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2010 Bond Resolution Program - Borrower
Concentration
June 30, 2020
See Independent Auditor's report
- 37 -
Bo
r
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w
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20
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2029 2030
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Yukon-Kuskokwim Health Corporation 100,715,000$ 100.00%
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ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2016 Master Resolution Program -
June 30, 2020
Borrower Concentration
See Independent Auditor's report
- 39 -
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APPENDIX E
2005 GENERAL BOND RESOLUTION AND 2013 FIRST SUPPLEMENTAL RESOLUTION
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APPENDIX F
INFORMATION CONCERNING THE STATE OF ALASKA
The information concerning the State of Alaska (“Alaska” or the “State”) set forth in this Appendix is dated as of the date of the Official Statement. The information contained herein is subject in all respects to the complete text of the financial reports referenced. The information contained herein has
been obtained from sources that the State believes to be reliable but is not guaranteed as to accuracy.
General
Although payments made by the Governmental Units on their Municipal Bonds are the primary security for the payment of principal of and interest on the Bonds, including the 2021 Series One, Two and Three Bonds, the Bond Bank also maintains the Reserve Fund as additional security for the payment of the Bonds. The Bond Bank is required under the Act to annually report the sufficiency of and to seek appropriations from the Legislature to replenish the Reserve Fund if needed. Starting in fiscal year 2010, the Bond Bank has been obligated by the 2005 General Bond Resolution to seek an annual appropriation from the State’s General Fund for the Reserve Fund, in the event of a deficiency due to a payment default. From fiscal year 2010, and each subsequent year including fiscal year 2021, the Bond Bank has obtained an annual appropriation from the State’s General Fund to replenish the Reserve Fund, which includes the
Bond Bank reserve accounts under the 2010 Master Bond Resolution and the 2016 Master Bond Resolution in the event of a deficiency due to a payment default. No such defaults have occurred and none of the replenishment appropriation has been used. The State is not obligated to make such
appropriation. During these same years the Bond Bank has obtained an appropriation for any earnings on reserve accounts held by the Bond Bank in excess of the Bond Bank’s operating expenses for the fiscal year; the Act otherwise would require such earnings to be appropriated to the General Fund. See
“SECURITY AND SOURCES OF PAYMENT FOR THE BONDS – 2005 General Bond Resolution Reserve Fund” in the front of this Official Statement and “– Government Budgets and Appropriations” below.
Alaska is a sovereign state of the United States of America, located in the far northwest of North
America to the west of Canada, with its southeastern border approximately 500 miles north of the State of Washington. Alaska became a state in 1959. The State’s population grew each year and increased approximately 7.7 percent between fiscal year 2008 and fiscal year 2016; however, since 2016 the
population has contracted by approximately 1.6 percent with a population estimate as of June 30, 2020 of 728,903 (Alaska Department of Labor and Workforce Development, Research & Analysis Section). The State’s fiscal year is July 1 to June 30.
Alaska includes approximately 586,412 square miles (approximately 365 million acres) of land and is the largest state of the United States (roughly equivalent in size to one-fifth of all of the other 49 states combined). Unlike the other 49 states, where significant portions of the land may be owned by individuals or entities in the private sector, less than one percent of the land in Alaska is owned by private, non-Alaska Native owners. As described below, most of the State’s revenue is derived from
resources owned by the State itself, including petroleum and minerals extracted from State-owned lands and investment income on securities in funds owned by the State.
State Government
Alaska became the 49th state in 1959 pursuant to the Alaska Statehood Act, which was enacted by the United States Congress in 1958 (the “Statehood Act”). The Alaska Constitution was adopted by the Constitutional Convention on February 5, 1956, ratified by the people of Alaska on April 24, 1956, and
became operative with the formal proclamation of statehood on January 3, 1959.
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Alaska government has three branches: legislative, executive, and judicial. The legislative power of the State is vested in a legislature consisting of a Senate with a membership of 20 and a House of
Representatives with a membership of 40 (the “Legislature”). The executive power of the State is vested in the Governor. The judicial power of the State is vested in a supreme court, a superior court, and the courts established by the Legislature. The jurisdiction of courts and judicial districts is prescribed by law.
The courts constitute a unified judicial system for operation and administration.
The State provides or funds a range of services including education, health and human services, transportation, law enforcement, judicial, public safety, community and economic development, public
improvements, and general administrative services.
There are 19 organized boroughs in Alaska and 145 cities, 49 of which are located within an organized borough and 96 of which are located within the unorganized borough. Of these, 15 boroughs and 21 cities impose property taxes and 9 boroughs and 94 cities impose general sales taxes.
State Revenues
The State does not currently impose personal income taxes and has never imposed statewide general sales taxes. The State does, however, impose a number of business-related taxes that, together with rents and royalties and fines and fees, represented nearly 100 percent of designated and unrestricted
non-investment General Fund revenue in fiscal year 2020. Grants, contributions, and other revenue from the federal government and interest and investment income represent the remaining portions of State revenue.
The key drivers of the Alaska economy include natural resource development, federal (including national defense) and State government, seafood, and tourism. Approximately 25.6 percent of the State’s total nonfarm employment is derived from government (including federal, state, and local). Other major
industries in Alaska include the education and health services industry, and trade, transportation, and utilities, making up 16.4 percent and 19.2 percent of total nonfarm employment, respectively. The State’s major exports are oil, seafood (primarily salmon, halibut, cod, pollock, and crab), coal, gold, silver, zinc,
and other minerals (Alaska Department of Labor and Workforce Development, Research & Analysis, Employment Statistics; 2020 Annual Average).
The Department of Revenue – Tax Division (the “Tax Division”) produces a semi-annual revenue
sources book. The revenue sources book published each fall is the comprehensive annual forecast released in December, and the revenue forecast published in the spring is an annual, partial update of the revenue sources book published in the preceding fall. The most recent revenue forecast comes from the Revenue Sources Book Spring 2021 Revenue Forecast (the “Spring 2021 Revenue Forecast”), released by the Tax Division on March 15, 2021. The next comprehensive annual forecast, the Revenue Sources Book Fall 2021, is anticipated to be released in the last quarter of calendar year 2021.
The State has seen significant reductions in petroleum-related revenue since fiscal year 2015, which is largely a function of lower oil prices related to global market supply/demand fluctuations, and
more recently, the outbreak of the 2019 novel coronavirus (“COVID-19”). In 2018, the Legislature enacted Senate Bill 26 (“SB 26”), which directs the State to appropriate amounts from the earnings reserve of the Alaska Permanent Fund to the General Fund as unrestricted General Fund revenue,
diminishing the percentage of unrestricted revenue of the State that petroleum-related revenue represents.
The Spring 2021 Revenue Forecast reflects an increase in both expected petroleum and non-petroleum revenue as compared to the Fall 2020 Revenue Forecast. For fiscal year 2021, projected
unrestricted General Fund revenue has increased by $332 million, with a $299 million increase to
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expected petroleum revenue and a $33 million increase to expected non-petroleum revenue, including investment. In updating its projections in the Spring 2021 Revenue Forecast, the Tax Division analyzed
the effects of the COVID-19 outbreak on its assumptions stemming from:
Investment Revenue: The forecast is based on a most likely case for expected investment returns which presumes continued stable growth in markets.
Federal Revenue: The forecast incorporates stimulus funding through February 2021 and is based on a return to more typical levels of federal funding. The forecast does not include any potential new stimulus funds including the stimulus package currently being discussed as of early March 2021. See “CERTAIN BONDOWNERS’ RISKS – Infectious Disease Outbreak – COVID-19” in the Official Statement. Petroleum Revenue: Following low prices and production curtailments impacting oil and gas in April through June of 2020, the oil market has become more stabilized. The forecast is based on oil prices as indicated by futures markets and does not assume any further production curtailments.
Non-Petroleum Revenue: The Spring 2021 forecast is based on a scenario for a return to normalcy following COVID-19. The scenario assumes that business shutdowns will reverse over the course of fiscal year 2021, and that most economic activity will return to baseline levels by FY 2022. For
tourism, the forecast assumes that the 2021 summer tourism season (fiscal year 2021-2022) is largely lost with no large cruise ship visits and minimal independent tourists. The 2022 summer season (fiscal year 2022-2023) is expected to proceed, including resumption of large cruise ship visits, but only at 50% of
previously expected levels. For summer 2023 (fiscal year 2023-2024), tourism activity is assumed to return to 75% of previously expected levels. From summer 2024 (fiscal year 2024-2025) on, activity is expected to be back to previously expected levels. These assumptions reflect no inside knowledge and are
intended simply to provide one possible baseline for budget planning purposes. The COVID-19 outbreak is a significant event that has had and will continue to have ongoing,
material effects on the State and the Governmental Units. Although the effects of COVID-19 cannot be predicted with certainty, COVID-19 and related social distancing measures implemented in response to COVID-19 have had and are expected to continue to have a material adverse effect on the global economy and financial markets; economic activity within the State, including the oil and gas, tourism, and healthcare industries, among others; revenues collected by the State and Governmental Units; and the value of the Alaska Permanent Fund and Earnings Reserve. Historic information in this Official Statement about the finances and operations of the State, the Bond Bank, and the Governmental Units that predates the outbreak of COVID-19 should be considered in light of the possible or probable negative
effects the COVID-19 outbreak may have on the current and future finances and operations thereof. Any budgets or projections that have been updated since the outbreak of COVID-19 should be considered in light of the possible or probable further negative impact from the COVID-19 outbreak. The Spring 2021
Revenue Forecast and any other budget and projection information and all other forward-looking statements in this Official Statement are based on current expectations and are not intended as representations of fact or guarantees of results. Any such forward-looking statements are inherently
subject to a variety of risks and uncertainties that could cause actual results or performance to differ materially from those that have been forecast, estimated, or projected.
Historically, petroleum-related revenue has been the largest source of unrestricted revenue for the General Fund. In fiscal year 2018 approximately 80% of total unrestricted General Fund revenue was generated from oil production. In 2018, the Legislature enacted SB 26, which directs the State to
appropriate amounts from the earnings reserve of the Alaska Permanent Fund to the General Fund as unrestricted General Fund revenue, diminishing the percentage of unrestricted revenue that petroleum-
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related revenue represents. As a result of this change, in fiscal year 2020 only 24 percent of total unrestricted General Fund revenue was generated from petroleum.
The Alaska Permanent Fund was established by a voter-approved constitutional amendment that took effect in February 1977. Pursuant to legislation enacted in 1982, annual appropriations are made from the Permanent Fund Earnings Reserve, first for dividends to qualified Alaska residents and then for
inflation-proofing. The principal portion of the Permanent Fund, which was approximately $59.1 billion as of March 31, 2021, unaudited, may not be spent without amending the State Constitution. The earnings reserve, approximately $17.2 billion as of March 31, 2021, unaudited, (subsequent to June 30, 2020, and with enacted legislation in the fiscal year 2021 budget, this amount included approximately $3.1 billion committed to the General Fund for fiscal year 2021), may be appropriated by a majority vote of the Legislature. See “Government Funds – The Alaska Permanent Fund” below.
In fiscal year 2019, pursuant to SB 26, the State began appropriating amounts from the Permanent Fund Earnings Reserve to the General Fund as unrestricted General Fund revenue. SB 26 adjusted the transfers from the Permanent Fund Earnings Reserve to an amount determined by taking 5.25 percent of the average market value of the Permanent Fund for the first five of the preceding six fiscal years, including the fiscal year just ended. Effective July 1, 2021, the amount determined for transfers from the
Permanent Fund Earnings Reserve is reduced to 5.00 percent of the average market value of the fund for the first five of the preceding six fiscal years, including the fiscal year just ended. As described below in “Government Funds – The Alaska Permanent Fund,” this calculation does not include the principal
attributable to the settlement of State v. Amerada Hess. The Alaska Permanent Fund Corporation, which manages the Permanent Fund, projects these annual transfers to the General Fund as unrestricted revenue in their monthly history and projections report, as reflected in Table 2. For fiscal year 2020, SB 26
resulted in transfers of approximately $2.9 billion from the Permanent Fund Earnings Reserve to unrestricted General Fund revenue. For fiscal year 2021, SB 26 will result in transfers of approximately $3.1 billion from the Permanent Fund Earnings Reserve to unrestricted General Fund revenue. For fiscal
year 2022, SB 26 is projected to result in transfers of approximately $3.1 billion from the Permanent Fund Earnings Reserve to unrestricted General Fund revenue. The Permanent Fund Dividend may be paid out of these transfers, and any residual revenue is available for other appropriation. In fiscal year 2019, the
Permanent Fund Dividend appropriation was approximately $1.02 billion. The 2019 Permanent Fund Dividend amount was $1,606 per qualified resident, and the 2020 Permanent Fund Dividend amount is $992 per qualified resident.
In the Spring 2021 Revenue Forecast, the general purpose unrestricted revenue for fiscal year 2020 was $4,529.1 million and is forecast to be $4,663.5 million for fiscal year 2021. This compares to $5,349.8 million for fiscal year 2019 and $2,413.5 million for fiscal year 2018. The primary reason for reductions in total general purpose unrestricted revenues since 2019 was the decrease in petroleum revenues from $2,043.8 million in fiscal year 2019 to $1,083.1 million in fiscal year 2020, and an
estimated $1,160.8 million in fiscal year 2021. The increase in general purpose unrestricted revenue from fiscal year 2018 to fiscal year 2019 is attributable to the enactment of SB 26.
The Spring 2021 Revenue Forecast estimates that Alaska North Slope (“ANS”) oil prices in fiscal
year 2021 will average approximately $53.05 compared to actual prices of $52.12 in fiscal year 2020 and $69.46 in fiscal year 2019. The estimate for ANS production in fiscal year 2021 is approximately 482.0 thousand barrels of oil per day, compared to 471.8 thousand barrels of oil per day in 2020 and
496.9 thousand barrels of oil per day in fiscal year 2019. The Spring 2021 Revenue Forecast includes the State’s forecast for ANS oil prices and production, and for general purpose unrestricted revenue through fiscal year 2030. See Table 4.
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Oil and Gas Revenues. The State’s unrestricted General Fund revenues have historically been generated primarily from petroleum production activities. The State receives petroleum revenues (some of
which are restricted) from five sources: oil and gas property taxes, oil and gas production taxes, bonuses and rents, oil and gas royalties, and corporate income taxes.
Oil and Gas Property Tax. The State levies an oil and gas property tax on the value of taxable oil
and gas exploration, production and pipeline transportation property in the State at a rate of 20 mills (two percent) of the assessed value of the property. This is the only centrally assessed statewide property tax program in Alaska. Oil and gas reserves, oil or gas leases, the rights to explore or produce oil or gas, and
intangible drilling expenses are not considered taxable property under the statute. The most notable properties that are subject to this tax are the Trans-Alaska Pipeline System, including the terminal at Valdez (“TAPS”) and the field production systems at Prudhoe Bay. The assessed value of all existing properties subject to this tax was approximately $29.0 billion as of January 1, 2020, $28.5 billion as of January 1, 2019, $28.2 billion as of January 1, 2018, $28.4 billion as of January 1, 2017, and $27.7 billion as of January 1, 2016.
Property taxes on exploration property are based upon estimated market value of the property. For property taxes on production property, values are based upon replacement cost, less depreciation
based on the economic life of the proven reserves (or the economic limit in the case of taxes on offshore platforms or onshore facilities). The amount collected from property taxes on existing production property is expected to decrease in the future. For property taxes on pipeline transportation property (primarily
TAPS property), values are determined based upon the economic value, taking into account the estimated life of the proven reserves of gas or unrefined oil expected to be transported by the pipeline and replacement cost, less depreciation based on the economic life of the reserves.
When the oil and gas property is located within the jurisdiction of a municipality, the municipality may also levy a tax on the property at the same rate the municipality taxes all other non-oil and gas property. The tax paid to a municipality on oil and gas property acts as a credit toward the
payment to the State. Of the $579.8 million of gross tax levied in fiscal year 2020 on oil and gas property in the State, the State’s share was approximately $122.9 million. In the Spring 2021 Revenue Forecast, the State forecasts income from the oil and gas property tax to be $122.2 million in fiscal year 2021 and
$114.9 million in fiscal year 2022.
Revenue from oil and gas property taxes is deposited in the General Fund; however, the State Constitution requires that settlement payments received by the State after a property tax assessment dispute be deposited in the Constitutional Budget Reserve Fund (the “CBRF”). In fiscal year 2020, $281.2 million in total settlements were deposited into the CBRF, and in the Spring 2021 Revenue Forecast, the State forecasts settlements to be $40 million in fiscal year 2021 and $45 million in fiscal year 2022. See “Government Funds – The Constitutional Budget Reserve Fund” below.
Oil and Gas Production Taxes. The State levies a tax on oil and gas production income generated
from production activities in the State. The tax on production is levied on sales of all onshore oil and gas production, except for federal and State royalty shares and on offshore developments within three miles of shore.
The oil and gas production tax can be a significant source of revenue and in many past years has been the State’s single largest source of revenue. The production tax is levied differently based upon the type of production (oil versus gas) and the geographical location (North Slope versus Cook Inlet, the
State’s two producing petroleum basins).
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For North Slope oil and export gas, the tax uses the concept of “Production Tax Value” (“PTV”), which is the gross value at the point of production minus lease expenditures. PTV is similar in concept to
net profit, but different in that all lease expenditures can be deducted in the year incurred; that is, capital expenditures are not subject to a depreciation schedule. The production tax rate is 35 percent of PTV with an alternative minimum tax of 0 percent to 4 percent of gross value, with the 4 percent minimum tax
applying when average ANS oil prices for the year exceed $25 per barrel.
Several tax credits and other mechanisms are available for North Slope oil production to provide incentives for additional investment. A per-taxable-barrel credit is available, which is reduced
progressively from $8 per barrel to $0 as wellhead value increases from $80 per barrel to $150 per barrel. A company that chooses to take this credit may not use any other credits to reduce tax paid to below the gross minimum tax. An additional incentive applies for qualifying new production areas on the North Slope. The so-called “Gross Value Reduction” (“GVR”) allows a company to exclude 20 percent or 30 percent of the gross value for that production from the tax calculation. Qualifying production includes areas surrounding a currently producing area that may not be commercial to develop, as well as new oil pools. Oil that qualifies for this GVR receives a flat $5 per-taxable-barrel credit rather than the sliding-scale credit available for most other North Slope production. As a further incentive, this $5 per-taxable-
barrel credit can be applied to reduce tax liability below the minimum tax. The GVR is available only for the first seven years of production and ends early if ANS prices exceed $70 per barrel for any three years.
Effective January 1, 2022, for North Slope export gas, the tax rate will be 13 percent of gross
value at the point of production. Currently, only a very small amount of gas is technically export gas, which is sold for field operations in federal offshore leases. However, this tax rate would apply to any major gas export project developed in the future.
For the North Slope, a Net Operating Loss (“NOL”) credit in the amount of 35 percent of losses was available until December 31, 2017. It allowed a credit to be carried forward to offset a future tax liability or, in some cases, to be transferred or repurchased by the State. Effective January 1, 2018, the
NOL credit was replaced with a new carried-forward annual loss provision. In lieu of credits, a company may carry forward 100 percent of lease expenditures not applied against the tax and may apply all or part of lease expenditures in a future year. A carried-forward annual loss may not reduce tax below the
minimum tax and may only be used after the start of regular production from the area in which the expenditures were incurred. An unused carried-forward annual loss declines in value by one-tenth each year beginning in the eighth or eleventh year after it is earned, depending on whether the carried-forward annual loss was earned from a producing or non-producing area.
Cook Inlet oil production is officially subject to the same tax rate of 35 percent of PTV. However, the tax is limited by statute to a maximum of $1 per barrel.
For Cook Inlet gas production, the tax rate is 35 percent of PTV, and the tax is limited to a maximum value averaging 17.7 cents per thousand cubic feet. This rate also applies to North Slope gas
used for qualifying in-State uses, commonly referred to as “non-export gas.”
Taxpayers are required to make monthly estimated payments, based upon activities of the preceding month. These payments are due on the last day of the following month, and taxpayers are
required to file an annual tax return to “true up” any tax liabilities or overpayments made during the year. From fiscal year 2007 through fiscal year 2017, as an incentive for new exploration, companies without tax liability against which to apply credits could apply for a refund of the value of most of the credits,
subject to appropriation. In fiscal year 2016, the State credited for potential purchase $498 million from companies claiming such credits. For fiscal year 2017, the State appropriated the minimum provided for in the statutorily based formula of $32.7 million for payments of such credits. In fiscal year 2018, the
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State purchased $75 million in tax credits through the Oil and Gas Tax Credit Fund and purchased an additional $103 million in fiscal year 2019. As of the Fall 2020 Revenue Sources Book and Forecast, an
estimated $760 million in tax credits are projected to be available for State repurchase, with the majority of those being credits earned in prior years. Payments of these credits are subject to future fiscal year appropriation.
In 2017, House Bill 111 (“HB 111”) was enacted, making multiple changes to the State’s oil and gas production tax and tax credit statutes. Following passage of HB 111, new credits were no longer be eligible for cash repurchase. Instead, companies retained their credits until such time as they owe a tax
liability to the State, at which time the credits could be used to offset the company’s oil and gas production taxes.
In 2018, House Bill 331 was enacted, creating a tax credit bonding program that would have allowed the State to purchase outstanding oil and gas tax credits at a discount to face value, and spread the funding out over several years through issuance of subject to appropriation bonds. A legal challenge culminated in an Alaska Supreme Court decision on September 4, 2020 that determined this bonding program unconstitutional.
The Governor included a $60 million appropriation from the Alaska Industrial Development and
Export Authority to provide for tax credit repayment in his proposed 2022 operating budget. As of the Fall 2020 Revenue Sources Book and Forecast, an estimated $760 million in tax credits are projected to be available for State repurchase, with the majority of those being credits earned in prior years.
All unrestricted revenue generated by the oil and gas production taxes ($0.2 billion in fiscal year 2016, $0.1 billion in fiscal year 2017, $0.7 billion in fiscal year 2018, $0.6 billion in 2019, $0.3 billion in 2020, and forecasted in the Spring 2021 Revenue Forecast to be $0.3 billion in fiscal year 2021) is
deposited in the General Fund, except that any payments received as a result of an audit assessment under the oil and gas production tax or as a result of litigation with respect to the tax are deposited into the CBRF. See Table 1.
Oil and Gas Royalties, Rents and Bonuses. In fiscal year 2020, approximately 97 percent of all current oil production in the State, including the reserves at Prudhoe Bay, was from State land leased for exploration and development. As the land owner, through the Department of Natural Resources (“DNR”),
the State earns revenue from leasing as (i) upfront bonuses, (ii) annual rent charges and (iii) retained royalty interests in the oil and gas production. State land historically has been leased largely based on a competitive bonus bid system. Under this system, the State retains a statutorily prescribed minimum royalty interest of at least 12.5 percent on oil and gas production from land leased from the State, although some leases contain royalty rates of 16.67 percent and some also include a net profit-share or sliding scale component. Under all lease contracts the State has ever written, the State reserves the right to switch between taking its royalty in-kind or in cash (in cash royalty is valued according to a formula based upon the contract prices received by the producers, net of transportation charges). When the State
elects to take its royalty share in-kind, the State becomes responsible for selling and transporting that royalty share, which means establishing complex contracts to accomplish these tasks. The State regularly negotiates these contracts and has historically sold roughly 95 percent of North Slope oil royalties in this
way. State royalty revenue from production on State land that is not obligated to the Permanent Fund or Public School Trust Fund is unrestricted revenue that is available for general appropriations.
In addition to royalties from production on State land, the State receives 50 percent of royalties
and lease bonuses and rents received by the federal government from leases of federal lands in the National Petroleum Reserve Alaska (the “NPR-A”). The State is required to deposit its entire share of lease bonuses, rents, and royalties from oil activity in the NPR-A in the NPR-A Special Revenue Fund,
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from which a portion is used to make grants to municipalities that demonstrate present or future impact from oil development in the NPR-A. Of the revenue in the NPR-A Special Revenue Fund that is not
appropriated to municipalities, 50 percent is to be deposited to the Permanent Fund, with up to 0.5 percent to the Public School Trust Fund and then to the Power Cost Equalization Fund. Any remaining amount is then available for General Fund appropriations. The State also receives a portion of revenues from federal
royalties and bonuses on all other federal lands located within State borders and from certain federal waters.
Table 1 summarizes the sources and initial applications of oil and other petroleum-related
revenue for fiscal years 2011 through 2020.
Table 1
Sources and Initial Applications of Oil and Other Petroleum-Related Revenue Fiscal Years Ended June 30, 2011 – 2020
($ millions)
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Oil Revenue to the General Fund
Property Tax ..... $ 110.6 $ 111.2 $ 99.3 $ 128.1 $ 125.2 $ 111.7 $ 120.4 $ 121.6 $ 119.5 $ 122.9
Corporate Income Tax (1) . 542.1 568.8 434.6 307.6 94.8 (58.8) (59.4) 66.4 217.7 (0.2)
Production Tax .. 4,552.9 6,146.1 4,050.3 2,614.7 389.7 186.0 134.4 749.9 595.5 285.1
Royalties (including bonuses, rents and interest) (2)(3) 1,843.3 2,031.7 1,767.8 1,712.4 1,078.2 870.6 681.5 1,002.3 1,111.1 675.3
Subtotal .............. $ 7,048.9 $ 8,857.8 $ 6,352.0 $ 4,762.8 $ 1,687.9 $ 1,109.5 $ 877.0 $ 1,940.2 $ 2,043.8 $ 1,083.1
Oil Revenue to Other Funds
Royalties to the Permanent Fund and School Fund (2)(3) ......... $ 870.9 $ 919.6 $ 855.9 $ 786.2 $ 518.3 $ 396.9 $ 340.0 $ 363.1 $ 382.3 $ 256.1
Tax settlements to CBRF .......... 167.3 102.8 357.4 177.4 149.9 119.1 481.9 121.3 181.2 281.2
NPR-A royalties, rents and bonuses (4) ............ 3.0 4.8 3.6 6.8 3.2 1.8 1.4 23.7 12.3 16.4
Subtotal .............. 1,041.2 1,027.2 1,216.9 970.4 671.4 517.8 823.3 508.1 575.8 553.7
Total Oil Revenue $8,090.1 $ 9,885.0 $ 7,568.9 $ 5,733.2 $ 2,359.3 $ 1,627.3 $ 1,700.3 $ 2,448.3 $ 2,619.6 $1,636.8
(1) Corporate income tax collections for fiscal years 2016, 2017 and 2020 were negative due to refunds of prior-year estimated taxes and low estimated taxes for fiscal years 2016, 2017 and 2020.
(2) Net of deposits in the Permanent Fund and the CBRF. The State Constitution requires the State to deposit at least 25 percent in the Permanent Fund, and between 1980 and 2003, State statutes required the State to deposit at least 50 percent in the Permanent Fund. The statutory minimum was changed to 25 percent beginning July 1, 2003, and changed back to 50 percent as of October 1, 2008. In fiscal years 2018 and 2019, only the constitutionally required 25 percent of royalties were deposited into the Permanent Fund. See “Government Funds – The Alaska Permanent Fund” below.
(3) Includes proceeds of royalties taken in-kind.
(4) By federal statute, the State receives 50 percent of federal revenues from oil and gas lease sales located in the NPR-A.
Source: 2011 through 2020 Fall Revenue Sources Books and Spring 2021 Revenue Forecast, Tax Division.
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As a result of the COVID-19 outbreak, the related economic disruption and other market forces, income from the oil and gas industry in the State may not match prior performance or meet current
expectations. See “CERTAIN BONDOWNERS’ RISKS – Infectious Disease Outbreak – COVID-19.”
Corporate Income Tax. The State levies a corporate income tax on Alaska taxable net income of corporations doing business in Alaska (other than certain qualified small businesses and income received
by certain corporations from the sale of salmon or salmon eggs). Corporate income tax rates are graduated and range from zero percent to 9.4 percent of income earned in Alaska. Taxable income generally is calculated using the provisions of the federal Internal Revenue Code, and the calculation of Alaska taxable income varies, depending upon whether the corporation does business solely in Alaska, does business both inside and outside Alaska, or is part of a group of corporations that operate as a unit in the conduct of a single business (a “unitary” or “combined” group). Oil and gas companies are combined on a world-wide basis, although for other industries only the companies doing business in the United States are combined. Taxpayers may claim all federal incentive credits, but federal credits that refund other federal taxes are not allowed as credits against State corporate income taxes. In addition to the federal incentive credits, the State provides additional incentives, including an education credit for contributions made to accredited State universities or colleges for education purposes, a minerals exploration incentive, an oil
and gas exploration incentive, and a gas exploration and development tax credit.
Most corporate net income tax collections are deposited in the General Fund, although collections from corporate income tax audit assessments of oil and gas corporations are deposited in the CBRF.
Non-Oil Revenues. The State also receives unrestricted and restricted General Fund revenues from activities unrelated to petroleum. The State receives revenues from corporate income taxes paid by corporations other than petroleum producers, cigarette/tobacco/marijuana excise taxes, motor fuel taxes,
alcoholic beverage taxes, fishery business taxes, electric and telephone cooperative taxes, insurance premium taxes, commercial passenger vessel excise taxes and service charges, permit fees, fines and forfeitures, mining license taxes, and miscellaneous revenues. See “Government Budgets and
Appropriations – General Appropriations” below. A number of these non-oil tax, license, and fee revenues (but not investment income and federal revenue) are shared with municipalities. In fiscal year 2020, unrestricted revenues unrelated to petroleum production (excluding investment income and federal
revenues) was $454.8 million, and in the Spring 2021 Revenue Forecast, the State forecasts the value to be $389.0 million in fiscal year 2021 and $355.0 million in fiscal year 2022. Contained in the non-oil figures is the minerals industry, which contributes State revenue in the form of corporate income tax, mining license tax, and mining rents and royalties. For additional information, see “Government Budgets and Appropriations – General Appropriations” below.
Federal Revenue. The federal government is a significant employer in Alaska, directly and indirectly, in connection with its military bases and as a result of procurement contracts, grants, and other spending. In addition to expenditures in connection with federal military bases and other activities in
Alaska, the State receives funding from the federal government, approximately $2.6 billion in fiscal year 2016, $3.2 billion in fiscal year 2017, $3.1 billion in fiscal year 2018, and $3.4 billion in fiscal year 2019, and $4.2 billion in fiscal year 2020. In the Spring 2021 Revenue Forecast, the State forecasts restricted
federal revenue to be approximately $5.1 billion in fiscal year 2021 and $4.1 billion in fiscal year 2022. The forecasts represent total budgeted spending authority for federal receipts, and actual federal receipts are subject to change. The federal funds are used primarily for road and airport improvements, aid to
schools, and Medicaid payments, all of which are restricted by legislative appropriation to specific uses. Federal funds are most often transferred to the State on a reimbursement basis, and all transfers are subject to federal and State audit. Most federal funding requires State matching. The unrestricted general
fund State match for federal spending in fiscal year 2020 was approximately $761 million for the operating budget and $86 million for the capital budget. For a discussion of COVID-19 stimulus funding
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received, see “CERTAIN BONDOWNERS’ RISKS – Infectious Disease Outbreak – COVID-19” in the Official Statement.
Investment Revenues. The State earns unrestricted and restricted by custom investment earnings from a number of internal funds. Two primary sources of investment income for the State are the two constitutionally-mandated funds, the Permanent Fund and the CBRF. The Permanent Fund had a fund
balance (principal and earnings reserve), unaudited, of approximately $76.3 billion as of March 31, 2021, which included the value of the fiscal year 2022 General Fund transfer commitment of approximately $3.1 billion. The Permanent Fund had a fund balance of approximately $65.3 billion as of June 30, 2020, which included the value of the fiscal year 2021 General Fund transfer commitment of approximately $3.1 billion. The Permanent Fund had a fund balance of approximately $66.3 billion as of June 30, 2019, which included the value of the fiscal year 2020 General Fund transfer commitment of approximately $2.9 billion and approximately $4.0 billion committed to the principal of the Permanent Fund for inflation proofing. The Permanent Fund had a fund balance of $64.9 billion as of June 30, 2018, which included the value of the fiscal year 2019 General Fund transfer commitment of approximately $2.7 billion, $59.8 billion as of June 30, 2017, and $52.8 billion as of June 30, 2016. The CBRF had an unaudited asset balance of approximately $1.1 billion as of March 31, 2021. The CBRF had an asset balance of
approximately $1.9 billion as of June 30, 2020, $1.8 billion as of June 30, 2019, $2.4 billion as of June 30, 2018, $3.9 billion as of June 30, 2017, and $7.3 billion as of June 30, 2016. Restricted investment revenue from the CBRF was approximately $62.8 million in fiscal year 2020. In the Spring 2021 Revenue
Forecast, the State forecasts restricted investment revenue from the CBRF to be $2.0 million in fiscal year 2021. The Permanent Fund Earnings Reserve balance is available for appropriation with a majority vote of the Legislature, while appropriation of the Permanent Fund’s principal balance requires amendment of
the State Constitution. The balance of the CBRF is available for appropriation with a three-fourths vote of each house of the Legislature, and as described below, the State has historically borrowed from the CBRF when needed to address mismatches between revenue receipts and expenditures in the General Fund
and/or to balance the budget at the end of the fiscal year.
As previously described, Senate Bill 26 (“SB 26”), relating to the earnings of the Permanent Fund, was enacted in 2018. The Alaska Permanent Fund Corporation (“APFC”) projects these annual
transfers of unrestricted General Fund revenue from the Permanent Fund Earnings Reserve to the General Fund in their monthly history and projections report, as reflected in Table 2.
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Table 2
State of Alaska Transfers from the Permanent Fund Earnings Reserve to the General Fund for the Fiscal Year Ending June 30, 2021 APFC Forecast for Fiscal Years Ending June 30, 2022 – 2030
($ millions)
Fiscal Year Transfer Amount
2021 $3,092
Projected (1)
2022 3,069
2023 3,207
2024 3,289
2025 3,335
2026 3,382
2027 3,456
2028 3,535
2029 3,616
2030 3,701
(1) APFC transfer projections as of the unaudited March 31, 2021 projection report, and subject to change.
General Fund asset balances listed as of June 30 may include borrowings from the CBRF for future fiscal year operating requirements. All CBRF values for fiscal year 2021 stated above are unaudited asset values. See “Government Funds – The Constitutional Budget Reserve Fund” and “– The
Alaska Permanent Fund” below.
In the past, the State has also received earnings on the Statutory Budget Reserve Fund (the “SBRF”). Earnings on the SBRF are considered General Fund unrestricted revenue unless otherwise
appropriated back to the SBRF. Article IX, Section 17(d) of the Alaska Constitution provides that the amount of money in the General Fund available for appropriation at the end of each succeeding fiscal year is to be deposited in the CBRF until the amount appropriated from the CBRF is repaid. The available
fund balance of the SBRF diminished to zero by June 30, 2016, where it has remained since. See “Government Funds – The Statutory Budget Reserve Fund” below.
In addition to investment income from the above-described funds, the State receives investment income (including interest paid) from investment of other unrestricted funds ($12.2 million in fiscal year 2020, $93.3 million in fiscal year 2019, $16.3 million in fiscal year 2018, $17.3 million in fiscal year 2017, and $22.5 million in fiscal year 2016). In the Spring 2021 Revenue Forecast, the State forecasts investment revenue of other unrestricted funds to be approximately $0.2 million in fiscal year 2021 and $3.9 million in fiscal year 2022. See “Government Funds” below.
As a result of the COVID-19 outbreak and related economic disruption, investment returns on the State’s funds may not match prior performance or meet current expectations. See “CERTAIN BONDOWNERS’ RISKS – Infectious Disease Outbreak – COVID-19.”
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Major Components of State Revenues. Table 3 summarizes the sources of unrestricted and restricted revenues available to the State in fiscal years 2015 through 2020, with a forecast for fiscal years
2021 and 2022 from the Spring 2021 Revenue Forecast.
Table 3
Total State Government Revenue by Major Component Fiscal Years Ended June 30, 2015 – 2020 Forecast for Fiscal Years Ended and Ending June 30, 2021 – 2022
($ millions)
2015 2016 2017 2018 2019 2020 2021 (2) 2022 (2)
Revenue Source
Unrestricted
Oil Revenue $ 1,687.9 $ 1,109.5 $ 877.0 $ 1,940.2 $ 2,043.8 $ 1,083.1 $ 1,160.8 $ 1,286.5
Non-Oil Revenue 520.5 400.7 460.3 457.0 490.1 454.8 389.0 355.0
Investment Earnings 47.9 22.5 17.3 16.3 2,815.9 2,991.2 3,113.6 3,090.1
Subtotal $ 2,256.3 $ 1,532.7 $ 1,354.6 $ 2,413.5 $ 5,349.8 $ 4,529.1 $ 4,663.4 $ 4,731.6
Restricted
Oil Revenue (1) $ 670.5 $ 517.8 $ 823.8 $ 508.1 $ 575.8 $ 621.5 $ 368.4 $ 396.9
Non-Oil Revenue 491.2 647.5 656.3 697.4 631.2 558.6 600.0 635.9
Investment Earnings (3) 2,603.4 556.0 6,832.2 5,616.4 1,188.0 (1,208.5) 941.8 1,220.0
Federal Revenue 2,512.7 2,640.1 3,198.2 3,124.6 3,434.5 4,173.0 5,068.1 4,056.5
Subtotal 6,277.8 4,361.4 11,510.5 9,446.5 5,829.5 4,144.6 6,978.3 6,309.3
Total $ 8,534.1 $ 5,894.1 $ 12,865.1 $ 12,360.0 $ 11,179.3 $ 8,673.7 $ 11,641.7 $ 11,040.9
Totals may not foot due to rounding.
(1) “Restricted Oil Revenue” includes oil revenue for the State’s share of rents, royalties, and bonuses from the NPR–A, shared by the federal government.
(2) Forecasts for fiscal years 2021 and 2022 include projections for the transfers from the Permanent Fund Earnings Reserve to the General Fund for unrestricted General Fund expenditures, including the Permanent Fund Dividend, based on SB 26. All values for fiscal years 2021 and 2022 are based on projections as of the release of the Spring 2021 Revenue Forecast and are subject to change.
(3) A portion of the Restricted investment earnings starting in fiscal year 2019 consist of Permanent Fund unrealized gains and realized gains, less the transfers to the General Fund classified as unrestricted revenue pursuant to SB 26.
Source: 2015 through 2020 Fall Revenue Sources Books and Spring 2021 Revenue Forecast, Tax Division.
Government Budgets and Appropriations
The Legislature is responsible for enacting the laws of the State, including laws that impose State taxes, and for appropriating money to operate the government. The State is limited by federal law, the State Constitution and statutes, and by policy in how it manages its funds and, as in other states, no funds, regardless of source, may be spent without a valid appropriation from the Legislature. The Legislature has a 90-day statutory time limit, and a constitutional time limit of 120 days with an allowance for up to an additional 10 days, to approve a budget. If the Legislature fails to approve a budget, or if other limited
purpose legislation needs to be considered, the Governor or Legislature may call a special session to consider such matters. See “General Appropriations” below.
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Budgets. The State’s fiscal year begins on July 1 and ends on the following June 30, and the Legislature meets in regular session beginning on the fourth Monday of January in each year. The
Governor is required by AS 37.07.020(a) to prepare: (1) a statutorily conforming budget for the succeeding fiscal year, including capital, operating, and mental health budgets, setting forth all proposed expenditures (including expenditures of federal and other funds not generated by the State) and
anticipated income of all departments, offices, and agencies of the State; (2) a general appropriation bill to authorize proposed expenditures; and (3) in the case of proposed new or additional revenues, one or more bills containing recommendations for such new or additional revenues. In accordance with
AS 37.07.020(b), the Governor is also required to prepare a six-year capital budget covering the succeeding six fiscal years and a 10-year fiscal plan. To assist the Governor in preparing budgets, proposed appropriation bills, and fiscal plans, the Tax Division prepares forecasts of annual revenues in December and March or April of each year. See “State Revenues” above and “General Appropriations,” Table 4, “Government Funds,” and “Revenue Forecasts” below.
The State Constitution prohibits the withdrawal from the treasury of nearly all funds, regardless of source, without an appropriation. As a consequence, the Governor’s proposed budget and the Legislature’s appropriation bills include federal and other funds as well as funds from the State and, by
practice, funds that may be available for withdrawal without an appropriation. The State has customarily restricted certain revenue sources each fiscal year by practice. Such revenue is nonetheless available for appropriation.
General Appropriations. The Governor is required by State law to submit the three budgets—an operating budget, a mental health budget, and a capital budget—by December 15 and to introduce the budgets and appropriation bills formally to the Legislature in January by the fourth day of the regular
Legislative session. These three budgets then to go the House Finance Committee and are voted upon by the House of Representatives. The three budgets then go to the Senate Finance Committee, are voted upon by the full Senate, and may go to a conference committee to work out differences between the House and
Senate versions (and then be submitted to both houses for final votes). Bills passed by both houses are delivered to the Governor for signature. The Governor may veto one or more of the appropriations made by the Legislature in an appropriations bill (a “line-item veto”) or may sign the bill or permit the bill to
become law without a signature or veto. The Legislature may override a veto by the Governor (by a vote of three-fourths of the members of each house of the Legislature in the case of appropriation bills and by a vote of two-thirds of the members of each house in the case of other bills). Either the Governor or the Legislature may initiate supplemental appropriations during the fiscal year to deal with new or changed revenue receipts, to correct errors, or for any other reason. An appropriation is an authorization to spend, not a requirement to spend. Enacted budget appropriations may be expended beginning July 1.
The Governor is permitted to prioritize or restrict expenditures, to redirect funds within an operating appropriation to fund core services, and to expend unanticipated federal funds or program
receipts. Historically, Alaskan Governors have placed restrictions on authorized operating and capital expenditures during years in which actual revenues were less than forecast and budgeted. Such expenditure restrictions have included deferring capital expenditures, State employment hiring and
compensation freezes, lay-offs and furloughs, and restrictions on non-core operating expenses. As described below, unrestricted General Fund revenue began declining after the end of fiscal year 2012, increased in fiscal years 2018 and 2019, decreased in fiscal year 2020, and is projected to increase over
the remaining forecast period from fiscal years 2021 through 2030. See Tables 4 and 5 below. Operating and capital expenditures have generally declined over the same time-period through, among other actions, use of administrative restrictions on spending. See “Public Debt and Other Obligations of the State”
below.
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Additional options for the State to manage budget funding include reducing State expenditures, transferring spending authority among line items, providing additional incentives to develop petroleum or
mining resources, reinstituting a State personal income tax, or imposing other broad-based statewide taxes, such as a sales tax. Most of these options, including the imposition of personal income taxes or other taxes, would require action by the Legislature.
Governor Michael J. Dunleavy was elected in November 2018 and took office in December 2018. The Governor has declared that additional adjustments to the State budget are needed to allow for a full statutory Permanent Fund Dividend distribution to State residents. For fiscal year 2021 the statutory
Permanent Fund Dividend calculation would have resulted in approximately $2.0 billion being appropriated for this purpose. The Legislature appropriated approximately $680 million for the fiscal year 2021 Permanent Fund Dividend.
The State’s enacted budget for fiscal year 2021 diminished spending from fiscal year 2020 from $10.62 billion to $10.03 billion, a reduction of approximately $588 million, of which approximately $389 million is reduced State fund spending.
In January 2019, Governor Dunleavy introduced three constitutional amendments: one to add the requirement for a statutory Permanent Fund Dividend distribution from the Permanent Fund, one to add a
requirement for voter approval for new or increased taxes, and one to place a cap on annual growth in State expenditures and prioritize the deposit of any fiscal year’s unappropriated State General Fund surplus to the Permanent Fund. These proposals will be considered independently, and to be
implemented, must receive a two-thirds vote of approval from both the House of Representatives and the Senate followed by approval in a statewide election.
Appropriations for Debt and Appropriations for Subject-to-Appropriation Obligations. The
Governor’s appropriations bills include separate subsections for appropriations for State debt and other subject-to-appropriation obligations and specify the sources of funds to pay such obligations. For the State’s outstanding voter-approved general obligation bonds and bond anticipation notes and for revenue
anticipation notes to which the State’s full faith and credit are pledged, money is appropriated from the General Fund and, if necessary, to the General Fund from other funds, including the Permanent Fund, to the State Bond Committee to make all required payments of principal, interest, and redemption premium.
For these full faith and credit obligations, the State legally is required to raise taxes if State revenues are not sufficient to make the required payments.
The Governor’s appropriation bills also include separate subsections for appropriations for subject-to-appropriation obligations, such as outstanding capital leases and lease-purchase financings authorized by law, and for State appropriations to replenish debt service reserves in the event of a deficiency. Such appropriations are made from the General Fund or from appropriations transferring to the General Fund money available in other funds such as the CBRF, the Power Cost Equalization Fund, unencumbered funds of the State’s public corporations, and the Permanent Fund Earnings Reserve.
Appropriation Limits. The State Constitution does not limit expenditures but does provide for an appropriation limit and reserves one-third of the amount within the limit for capital projects and loan appropriations. Because State appropriations have never approached the limit, the reservation for capital
projects and loan appropriations has not been a constraint. The appropriation limit does not include appropriations for Permanent Fund Dividends described below, appropriations of revenue bond proceeds, appropriations to pay general obligation bonds, or appropriations of funds received in trust from a non-
State source for a specific purpose, including revenues of a public enterprise or public corporation of the State that issues revenue bonds. In general, under the State Constitution, appropriations that do not qualify for an exception may not exceed $2.5 billion by more than the cumulative change, derived from
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federal indices, in population and inflation since July 1, 1981. For fiscal year 2020, the Office of Management and Budget estimated the limit to be approximately $10.6 billion. The enacted fiscal year
2021 budget, with proposed supplementals, projects approximately $4.1 billion in unrestricted General Fund revenue net of the appropriated dividend distribution.
As shown in Table 4, unrestricted General Fund revenue increased to $2.41 billion in fiscal year
2018 and increased to $2.63 billion in 2019 (each not including any Permanent Fund transfer). The General Fund revenue was approximately $5.35 billion in fiscal year 2019 inclusive of the $2.72 billion Permanent Fund transfer. In fiscal year 2019, the State began appropriating amounts from the Permanent
Fund Earnings Reserve to the General Fund as unrestricted General Fund revenue, which significantly diminishes the percentage of unrestricted revenue that petroleum-related revenue represents. The enacted fiscal year 2021 budget includes approximately $3.1 billion in transfers from the Permanent Fund Earnings Reserve to the General Fund as unrestricted revenue. This shift of classification of revenue of the Permanent Fund from restricted to unrestricted was incorporated into the State’s revenue projections in Table 4.
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Table 4
State of Alaska Total Unrestricted General Fund Revenue, ANS West Coast Oil Price, and ANS Oil Production Fiscal Years Ended June 30, 2010 – 2020 and Forecast for Fiscal Years Ending June 30, 2021 – 2030
Fiscal Year
Total Unrestricted General Fund Revenue
($ millions)
ANS West Coast Oil Price
($/barrel)
ANS Oil Production (thousands of barrels
per day)
2010 $5,513 $ 74.90 642.6
2011 7,673 94.49 599.9
2012 9,485 112.65 579.4
2013 6,929 107.57 531.6
2014 5,390 107.57 530.4
2015 2,257 72.58 501.0
2016 1,533 43.18 514.7
2017 1,355 49.43 526.4
2018 2,414 63.61 518.5
2019 5,350 69.46 496.9
2020 4,529 52.12 471.8
Projected (1)
2021 4,663 53.05 482.0
2022 4,732 61.00 459.7
2023 5,128 62.00 476.6
2024 5,374 63.00 502.4
2025 5,559 65.00 511.6
2026 5,665 66.00 515.1
2027 5,803 67.00 526.3
2028 5,972 68.00 541.1
2029 6,148 70.00 555.5
2030 6,360 71.00 565.5
(1) The values for fiscal years 2021 through 2030 use the projections included in the Spring 2021 Revenue Forecast, and are subject to change. Fiscal year 2019 includes $2.7 billion in transfers from the Permanent Fund Earnings Reserve to the General Fund as unrestricted revenue. The forecast period includes projections for the transfers from the Permanent Fund Earnings Reserve to the General Fund for unrestricted General Fund expenditures, including the Permanent Fund Dividend, based on SB 26.
Source: 2010 through 2020 Fall Revenue Sources Books and Spring 2021 Revenue Forecast, Tax Division.
The State has historically provided fiscal stability by forward funding or endowing programs, including the method used by the State to fund K-12 education. The State’s constitutionally based obligation for K-12 education has been one of the largest single recurring budget line items in the State’s budget. See “Public Debt and Other Obligations of the State – State-Supported Debt – State-Supported Municipal Debt Eligible for State Reimbursement” below.
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The enacted fiscal year 2021 budget, with proposed supplementals, projects approximately $4.1 billion in unrestricted General Fund revenue net of the permanent fund dividend distribution, and
approximately $4.6 billion in total unrestricted General Fund operating and capital budget appropriations. The enacted fiscal year 2021 budget includes approximately $3.1 billion in transfers from the Permanent Fund Earnings Reserve to the General Fund as unrestricted revenue. Of the $3.1 billion in transfers for
fiscal year 2021, approximately $0.7 billion has been appropriated for the Permanent Fund Dividend transfers, and approximately $2.4 billion has been appropriated for governmental use. In fiscal year 2021, including the use of Permanent Fund earnings authorized in SB 26, the deficit is projected to be
approximately $549.2 million (Source: Office of Management and Budget, FY2021 Management Plan plus Proposed Supplementals, revised March 15, 2021).
Fiscal year 2021 will be the sixth consecutive fiscal year that unrestricted General Fund capital budget appropriations have been under $200 million, compared to $608 million in fiscal year 2015. The State’s fiscal year 2021 unrestricted General Fund capital budget is approximately $112.1 million, with a total capital budget of approximately $1.3 billion (Source: Office of Management and Budget, FY2021 Management Plan plus Proposed Supplementals, revised March 15, 2021).
Government Funds
Because the State is dependent upon taxes, royalties, fees, and other revenues that can be volatile, the State has developed a framework of constitutionally and statutorily restricted revenue that is held in a variety of reserve funds to provide long-term and short-term options to address cash flow mismatches and
budgetary deficits. The State Constitution provides that with three exceptions, the proceeds of State taxes or licenses “shall not be dedicated to any special purpose.” The three exceptions are when required by the federal government for State participation in federal programs, any dedication existing before statehood,
and when provided by the State Constitution, such as restricted for savings in the Permanent Fund or the CBRF.
Current State funding options available on a statutory basis include General Fund unrestricted
revenue (which pursuant to SB 26 includes annual transfers from the Permanent Fund Earnings Reserve), use of the earnings or the principal balance of the SBRF, borrowing restricted earnings revenue or principal balance from the CBRF, use of the statutorily restricted oil revenue currently flowing to the
Permanent Fund, and use of the unrestricted earnings revenue of the Permanent Fund. To balance revenues and expenditures in a time of financial stress, each of these funds can be drawn upon, following various protocols. The CBRF may be accessed with a majority vote of the Legislature following a year-over-year total decline in total revenue available for appropriation, or in any year by a three-quarters vote of both houses of the Legislature. A majority vote of the Legislature is needed to appropriate from the SBRF and from the Permanent Fund Earnings Reserve.
The General Fund. Unrestricted State revenue is annually deposited in the General Fund, which serves as the State’s primary operating fund and accounts for most of the State’s unrestricted financial
resources. The State has, however, created more than approximately 55 subfunds and “cash pools” within the General Fund to account for funds allocated to particular purposes or reserves, including the CBRF, the SBRF, an Alaska Capital Income Fund, and a debt retirement fund. In terms of long-term and short-
term financial flexibility, the CBRF and the SBRF (subfunds within the General Fund) have been of particular importance to the State.
The Constitutional Budget Reserve Fund. The State Constitution requires that oil and gas and
mineral dispute-related revenue be deposited in the CBRF. The State Constitution provides that other than money required to be deposited in the Permanent Fund and the Public School Trust Fund, all money received by the State after July 1, 1990 as a result of the termination, through settlement or otherwise, of
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an administrative proceeding or of litigation involving mineral lease bonuses, rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments or bonuses, or involving taxes imposed on
mineral income, production, or property, are required to be deposited in the CBRF. Money in the CBRF may be appropriated (i) for any public purpose, upon the affirmative vote of three-fourths of each house of the Legislature; or (ii) by majority vote if the amount available to the State for appropriation for a fiscal
year is less than the amount appropriated for the previous fiscal year; however, the amount appropriated may not exceed the amount necessary, when added to other funds available for appropriation, to provide for total appropriations equal to the amount of appropriations made in the previous calendar year for the
previous fiscal year. The State Constitution also provides that until the amount appropriated from the CBRF is repaid, excess money in the General Fund at the end of each fiscal year must be deposited in the CBRF.
The State historically has borrowed from the CBRF as part of its cash management plan to address timing mismatches between revenues and disbursements within a fiscal year and also to balance the budget when necessary at the end of the fiscal year. Prior to draws in fiscal years 2015, 2016, 2017, 2018, 2019, and 2020, the Legislature last appropriated funds from the CBRF in fiscal year 2005. All borrowing from the CBRF was completely repaid in fiscal year 2010 and no borrowing activity from the
CBRF occurred during fiscal years 2011, 2012, 2013, or 2014.
The fiscal year 2015 capital budget approved by the Legislature included a $3 billion transfer from the CBRF to the Public Employees Retirement System (“PERS”) and Teachers Retirement System
(“TRS”). PERS received $1 billion and TRS received $2 billion. This transfer resulted in a liability of the General Fund. Additional amounts were appropriated from the CBRF to the General Fund during fiscal years 2016, 2017, 2018, 2019, and 2020, to fund shortfalls between State revenue and General Fund
appropriations. The total net amount appropriated from the CBRF since fiscal year 2015 as of June 30, 2020 was approximately $10.6 billion.
During prior tax years 1997 through 2017, amounts paid to the State of Alaska as a result of
Federal Regulatory Commission (“FERC”) disputes were erroneously deposited into the CBRF. As determined by the Alaska Attorney General, a FERC case is not an administrative proceeding or litigation involving production tax or royalty for the purposes of the CBRF fund amendment. The amount due to be
repaid to the CBRF from the General Fund has been reduced by these amounts.
The State’s enacted fiscal year 2021 unrestricted General Fund budget, with proposed supplementals, contains appropriations from the CBRF in an amount necessary to balance revenue and General Fund appropriations during the fiscal year estimated at approximately $549.2 million (Source: Office of Management and Budget, Management Plan plus Proposed Supplementals, revised March 15, 2021).
The unaudited asset balance in the CBRF as of March 31, 2021, was approximately $1.1 billion. The asset balance in the CBRF as of June 30, 2020, was approximately $1.9 billion, including earnings of
approximately $62.8 million. General Fund asset balances listed as of June 30 may include borrowings from the CBRF for future fiscal year operating requirements. As of June 30, 2018, the asset balance was approximately $2.4 billion, with earnings of approximately $47.2 million; as of June 30, 2017, the asset
balance was approximately $3.9 billion, with earnings of approximately $94.2 million; and as of June 30, 2016, the asset balance was approximately $7.3 billion, with earnings of approximately $138.3 million.
The Statutory Budget Reserve Fund. The SBRF has existed in the State’s accounting structure
since 1986. When funded, the SBRF is available for use for legal purposes by majority vote of the Legislature and with approval by the Governor. If the unrestricted amount available for appropriation in the fiscal year was insufficient to cover General Fund appropriations, the amount necessary to balance
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revenue and General Fund appropriations or to prevent a cash deficiency in the General Fund was appropriated from the SBRF to the General Fund. For fiscal year 2015, this resulted in a year-end transfer
from the SBRF to the General Fund of approximately $2.5 billion. As of June 30, 2015, the SBRF held approximately $288 million. Article IX, Section 17(d) of the Alaska Constitution provides that the amount of money in the General Fund available for appropriation at the end of each succeeding fiscal
year is to be deposited in the CBRF until the amount appropriated from the CBRF is repaid. For fiscal year 2016, this resulted in a year-end sweep from the SBRF to the General Fund for transfer to the CBRF in the amount of $288 million. The available fund balance of the SBRF, as of June 30, 2020, was zero.
Any earnings on the SBRF are considered unrestricted investment revenue and flow to the General Fund.
The Alaska Permanent Fund. The Permanent Fund was established by a voter-approved constitutional amendment that took effect in February 1977. The amendment provides that “at least twenty-five percent of all mineral lease rentals, royalties, royalty sale proceeds, federal mineral revenue sharing payments and bonuses received by the State shall be placed in a permanent fund, the principal of which shall be used only for those income-producing investments specifically designated by law as eligible for permanent fund investments” and that “all income from the permanent fund shall be deposited in the General Fund unless otherwise provided by law.”
In 1980, legislation was enacted that provided for the management of the Permanent Fund by the APFC, a public corporation within the DOR managed by a board of trustees. The same legislation modified the contribution rate to the Permanent Fund from 25 percent (the minimum constitutionally
mandated contribution) to 50 percent of all mineral lease rentals, royalties, royalty sale proceeds, net profit shares, federal mineral revenue sharing payments, and bonuses received by the State from mineral leases issued after December 1, 1979 or, in the case of bonuses, after May 1, 1980. The statutory
contribution rate was changed back to 25 percent by legislation as of July 1, 2003 but then returned to 50 percent as of October 1, 2008. In fiscal year 2018 and 2019, only the constitutionally required 25 percent of royalties were deposited into the Permanent Fund. For fiscal year 2020, State oil and
mineral revenues deposited in the Permanent Fund were $319 million, compared to $385 million in fiscal year 2019, $353 million in fiscal year 2018, $365 million in fiscal year 2017, and $284 million in fiscal year 2016. In addition to these constitutionally and statutorily mandated transfers to the Permanent Fund,
the Legislature has made special appropriations from the General Fund to the Permanent Fund several times, totaling in the aggregate approximately $4.2 billion as of June 30, 2020.
The Permanent Fund tracks earnings on a basis compliant with statements pronounced by the Governmental Accounting Standards Board (“GASB”) in the compilation of the financial statements of the Permanent Fund. Fund balance consists of two parts: (1) principal, which is non-spendable, and (2) earnings reserve, which is spendable with an appropriation by the Legislature. By statute, only realized gains are deposited in the earnings reserve. Unrealized gains and losses associated with principal remain allocated to principal. Because realized gains deposited in the earnings reserve are invested
alongside the principal, however, the unrealized gains and losses associated with the earnings reserve are spendable with an appropriation of the Legislature.
Pursuant to legislation enacted in 1982, annual appropriations are made from the Permanent Fund
Earnings Reserve, first for dividends to qualified Alaska residents and then for inflation proofing. Between 1982 and 2019, $25.7 billion of dividends were paid to Alaska residents and $17.2 billion of Permanent Fund income has been added to principal for inflation proofing; for fiscal year 2015, the
inflation proofing transfer was $624 million, up from the fiscal year 2014 amount of $546 million. For fiscal years 2016, 2017, and 2018, there were no appropriations and therefore no transfers from the earnings reserve to principal for inflation proofing. The amount calculated under statute for fiscal year
2019 inflation proofing, $989 million, provided for in the enacted fiscal year 2019 operating budget, was appropriated from the earnings reserve to the principal of the Permanent Fund to offset the effect of
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inflation on the principal for fiscal year 2019. The State’s fiscal year 2020 budget included an appropriation of approximately $4.8 billion from the earnings reserve to the principal of the Permanent
Fund. The 2018 dividend paid in fiscal year 2019 was $1,606 per qualified resident, and the 2019 dividend to be paid in fiscal year 2020 is $992 per qualified resident.
If any income remains after these transfers (except the portion transferred to the Alaska Capital
Income Fund as described below), it remains in the Permanent Fund Earnings Reserve as undistributed income. The Legislature may appropriate funds from the earnings reserve at any time for any other lawful purpose. The principal portion of the Permanent Fund was approximately $59.1 billion as of March 31,
2021, unaudited, up from approximately $52.4 billion as of June 30, 2020, and $47.8 billion as of June 30, 2019. The earnings reserve, approximately $17.2 billion as of March 31, 2021, unaudited, (this amount included approximately $3.1 billion committed as a transfer to the unrestricted General Fund pursuant to SB 26), and may be appropriated by a majority vote of the Legislature.
During fiscal years 1990 through 1999, the Permanent Fund received dedicated State revenues from settlements of a number of North Slope royalty cases (known collectively as State v. Amerada
Hess). The total of the settlements and retained income thereon, as of June 30, 2020, was approximately $424.4 million. Earnings on the settlements are excluded from the dividend calculation and are not
subject to inflation proofing in accordance with State law, and beginning in 2005, the settlement earnings have been appropriated to the Alaska Capital Income Fund, a subfund within the General Fund. The Alaska Capital Income Fund realized earnings on settlement principal of approximately $20.5 million as
of June 30, 2020, down from approximately $22.3 million as of June 30, 2019.
As previously discussed, SB 26 created a percent of market value to provide a sustainable draw on the Permanent Fund Earnings Reserve for transfer to the General Fund as unrestricted revenue.
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Table 5
State of Alaska Available Funds and Recurring and Discretionary General Fund Expenditures Fiscal Years Ended June 30, 2010 – 2020
Fiscal Year
General Purpose Unrestricted Revenue ($ mil)
Recurring & Discretionary General Fund Expenditures ($ mil)
Unrestricted Revenue Surplus/ (Deficit) ($ mil)
Ending SBRF Reserves Available Balance ($ mil)
Ending CBRF Reserves Available Balance ($ mil) (1)
Permanent Fund Earnings Reserve Balance ($ mil) Oil Price ($/barrel)
ANS Oil Production (thousands of barrels per day)
2010 $5,515 $4,995 $ 520 $1,000 $8,664 $1,210 $ 74.90 642.6
2011 7,673 6,355 1,318 1,248 10,330 2,308 94.49 599.9
2012 9,485 7,252 2,233 2,683 10,642 2,081 112.65 579.3
2013 6,929 7,455 (526) 4,711 (2) 11,564 4,054 107.57 531.6
2014 5,394 7,314 (1,920) 2,791 (2) 12,780 6,211 107.57 531.1
2015 2,257 4,760 (2,503) (3) 288 (2) 10,101 7,162 72.58 501.5
2016 1,533 5,213 (3,680) (3) – (2) 7,331 8,570 43.18 514.9
2017 1,354 4,498 (3,144) (3) – (2) 3,896 12,816 49.43 526.5
2018 2,414 4,489 (2,075) (3) – (2) 2,360 18,864 (4) 63.61 518.5
2019 5,350 (5) 4,889 461 (3) – (2) 1,832 18,481 (4) 69.46 496.9
2020 4,529 (5) 4,805 (276) (3) – (2) 1,983 12,894 (4) 52.12 471.8
(1) The CBRF available balance represents the historical asset values.
(2) Includes available balance through net transfer from the SBRF to the General Fund reconciled at the release of the State CAFR for fiscal years 2013 through 2020.
(3) The SBRF was used to balance the fiscal year 2015 deficit, with $288 million remaining as of June 30, 2015. Article IX, Section 17(d) of the Alaska Constitution provides that the amount of money in the General Fund available for appropriation at the end of each succeeding fiscal year is to be deposited in the CBRF until the amount appropriated is repaid. The available fund balance of the SBRF as of June 30, 2020, was zero.
(4) Includes amount committed for the fiscal year 2019-2021 General Fund transfers, pursuant to SB 26, as well as appropriation commitments for inflation proofing.
(5) Includes Permanent Fund Earnings Reserve transfer prior to dividend payments during fiscal year 2019 and 2020 of approximately $1.02 billion and $1.07 billion, respectively.
Source: State of Alaska Department of Revenue.
Revenue Forecasts
The State regularly prepares revenue forecasts for planning and budgetary purposes. Of necessity,
such forecasts include assumptions about events that are not within the State’s control. The forecast oil production volumes include only production expected from projects currently under development or evaluation. The forecast does not include any revenues that could be received if a natural gas pipeline is constructed. In making its forecasts, the State makes assumptions about, among other things, the demand for oil and national and international economic factors and assumes that the Legislature will not amend current laws to change materially the sources and uses of State revenue and that no major calamities such as earthquakes or catastrophic damage to TAPS will occur. Portions of TAPS are located in areas that have experienced and may in the future again experience major earthquakes. Actual revenues and
expenditures will vary, perhaps materially, from year to year, particularly if any one or more of the assumptions upon which the State’s forecasts are based proves to be incorrect or if other unexpected events occur. The State’s most recent forecast is set forth in the Spring 2021 Revenue Forecast. The State
will next update its forecast in the Fall 2021 Revenue Sources Book, updating the prior forecasts, which is anticipated to be released in December 2021. The State has provided certain estimates for fiscal year 2021 and 2022 based on information available as of the Spring 2021 Revenue Forecast, as well as certain
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preliminary unaudited results for fiscal year 2021, and certain audited results for fiscal year 2020 for the CBRF and the APFC. See “Government Funds” above for a description of some of the actions the State
can take when revenues prove to be lower than expected.
The State has customarily restricted certain revenue sources each fiscal year by practice. Such revenue is nonetheless available for appropriation. Table 6 provides a summary of the State’s most recent
forecast for revenues subject to appropriation in fiscal years 2021 through 2026.
Table 6
State of Alaska Revenues Subject to Appropriation Forecast Summary for Fiscal Years 2021 through 2026 (1) (millions)
2021 2022 2023 2024 2025 2026
Petroleum Revenue
Unrestricted General Fund $ 1,160.8 $ 1,286.5 $ 1,407.2 $ 1,551.8 $ 1,667.8 $ 1,708.4
Royalties to Alaska Permanent Fund beyond 25% dedication (2) 57.0 55.4 56.5 69.2 88.3 102.3
Tax and Royalty Settlements to CBRF 40.0 45.0 15.0 15.0 10.0 10.0
Subtotal Petroleum Revenue $ 1,257.8 $ 1,386.9 $ 1,478.7 $ 1,636.1 $ 1,766.1 $ 1,820.7
Non-Petroleum Revenue
Unrestricted General Fund $ 389.0 $ 355.0 $ 485.4 $ 497.3 $ 512.4 $ 523.1
Designated General Fund 398.3 427.7 428.7 429.9 431.8 433.6
Royalties to Alaska Permanent Fund beyond 25% dedication (2) 3.5 3.4 3.4 3.5 3.5 3.6
Tax and Royalty Settlements to CBRF – – – – – –
Subtotal Non-Petroleum Revenue $ 790.8 $ 786.1 $ 917.5 $ 930.6 $ 947.7 $ 960.2
Investment Revenue
Unrestricted General Fund $ 3,113.6 $ 3,090.1 $ 3,235.4 $ 3,325.0 $ 3,378.7 $ 3,433.3
Designated General Fund 42.7 45.1 45.7 46.3 46.9 47.5
Constitutional Budget Reserve Fund 2.0 5.5 10.4 15.7 21.1 27.0
Subtotal Investment Revenue $ 3,158.3 $ 3,140.7 $ 3,291.5 $ 3,387.0 $ 3,446.7 $ 3,507.8
Total Revenue Subject to Appropriation $ 5,206.9 $ 5,313.7 $ 5,587.7 $ 5,953.7 $ 6,160.5 $ 6,288.7
(1) This table presents only the largest known categories of current year funds subject to appropriation. A comprehensive review of all accounts in the State accounting system would likely reveal additional revenues subject to appropriation beyond those identified here.
(2) Estimated based on deposit in Permanent Fund minus 25 percent of total royalties. In fiscal years 2018 and 2019, only the constitutionally required 25 percent of royalties were deposited into the Permanent Fund.
Source: Spring 2021 Revenue Forecast, Tax Division.
Public Debt and Other Obligations of the State
State debt includes general obligation bonds and revenue anticipation notes, and State-supported debt includes lease-purchase financings and revenue bonds. The State also provides guarantees and other support for certain debt and operates the SDRP and the Transportation and Infrastructure Debt Service
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Reimbursement Program (the “TIDSRP”). Other than the Veterans’ Mortgage Program, these programs do not constitute indebtedness of the State but do provide, annually on a subject-to-appropriation basis,
financial support for certain bonds of local governments and obligations of State agencies.
Outstanding State Debt. State debt includes general obligation bonds and revenue anticipation notes. The State Constitution provides that general obligation bonds must be authorized by law and be
ratified by the voters and permits authorization of general obligation bonds only for capital improvements. The amount and timing of a bond sale must be approved by the State Bond Committee. For both general obligation bonds and revenue anticipation notes, the full faith, credit, and resources of the State are pledged to the payment of principal and interest. If future State revenues are insufficient to make the required principal and interest payments, the State is legally required to raise taxes to provide sufficient funds for this purpose. Approximately $624.9 million of general obligation bonds were outstanding as of June 30, 2020. See “Summary of Outstanding Debt” and Tables 7 and 8 below.
In November 2012, voters approved $453,499,200 in general obligation bonds for the purpose of design and construction of State transportation projects. As of June 30, 2020, the State had obtained $343,150,958 in funding under the $453,499,200 authorization, leaving $110,348,242 of unissued authority. The State utilized the remaining authority in the first quarter of fiscal year 2021.
The following other debt and debt programs of the State were outstanding as of June 30, 2020, except as otherwise noted.
State Guaranteed Debt. The only purpose for which State guaranteed debt may be issued is for
payment of principal and interest on revenue bonds issued for the Veterans Mortgage Program by the Alaska Housing Finance Corporation (“AHFC”) for the purpose of purchasing mortgage loans made for residences of qualifying veterans. These bonds are also general obligation bonds of the State, and they
must be authorized by law, ratified by the voters, and approved by the State Bond Committee. In November 2010, voters approved $600 million of State guaranteed veterans’ mortgage bonds, and the total unissued authorization was $584.6 million as of June 30, 2020. As of June 30, 2020, approximately
$94.3 million of State guaranteed debt was outstanding.
State-Supported Debt. State-supported debt is debt for which the ultimate source of payment is, or may include, appropriations from the General Fund. The State does not pledge its full faith and credit
to State-supported debt, but another public issuer may have pledged its full faith and credit to it. State-supported debt is not considered “debt” under the State Constitution, because the State’s payments on this debt are subject to annual appropriation by the Legislature, recourse is limited to the financed property, and does not create a long-term obligation of the State binding future legislatures. See the next paragraph for a description of the Forrer case and its constitutional analysis of State debt obligations. Voter approval of such debt is not required. State-supported debt includes lease-purchase financing obligations (structured as certificates of participation (“COPs”)) and capital leases the State has entered into with respect to the Linny Pacillo Parking Garage (with AHFC) and the Goose Creek Correctional Center (with
the Matanuska-Susitna Borough). Approximately $203.2 million of State-supported debt was outstanding as of June 30, 2020.
On September 4, 2020, the Alaska Supreme Court (the “Supreme Court”) issued a decision in
Eric Forrer v. State of Alaska (“Forrer”) related to the Alaska Tax Credit Certificate Bond Corporation (“ATCCBC”) that clarified the circumstances under which financial obligations of the State constitute debt within the meaning of Article IX Section 8 (State Debt) and Article IX Section 11 (Exceptions) of
the State constitution. While the decision reaffirmed prior Supreme Court decisions allowing the use of State Supported Debt for lease-purchase of real property arrangements and clarified the scope of the revenue bond exception in Article IX Section 11 of the State constitution, it specifically disallowed the
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structure contemplated for the Alaska Tax Credit Certificate Bond Corporation which is described further below. Due to the similarity of structure it is expected that the decision also rendered the Pension
Obligation Bond Corporation, described below, and the Toll Bridge Revenue Bonds for the Knik Arm Bridge, also described below, unconstitutional. On September 28, 2020, the State of Alaska Department of Law filed a Petition for Rehearing with the Supreme Court in an attempt to obtain clarity on the scope
of the Supreme Court’s intent in their decision. Certain broad references in the Forrer may be read to effect the constitutionality of certain debt service reserve or other debt service funding structures by the State in connection with current or future State agency or local government programs with legal structures
that, while fundamentally different from the ATCCBC in both public purpose and bond structure, share certain statutory frameworks with the ATCCBC. The Supreme Court declined the Petition for Rehearing without any further ruling on the merits of the case. Bonds issued pursuant to the 2005 Master Resolution are not affected by Forrer because they meet the requirements to constitute valid revenue debt contained in Article IX Section 11 of the State constitution and as interpreted by Forrer.
State-Supported Unfunded Actuarially Assumed Liability (UAAL). In 2008, Senate Bill 125 became law, requiring that the State fund any actuarially determined employer contribution rate above 22 percent for the Public Employees’ Retirement System (“PERS”) or 12.56 percent for the Teachers’
Retirement System (“TRS”) out of the General Fund, to the extent the actuarially determined employer contribution rate exceeds payment of (i) the employer normal cost and (ii) required employer contributions for retiree major medical insurance, health reimbursement arrangement plans, and
occupational death and disability benefits. This change was designed to address stress municipal employers were experiencing due to high actuarially determined percentage of payroll amounts to pay for actuarially assumed unfunded liabilities of the retirement systems. In 2015, GASB Statement No. 68
(“GASB 68”) was enacted, updating reporting and disclosure requirements related to pension-related liabilities. One of the key changes was requiring a government that is committed to making payments on a pension system’s unfunded actuarially assumed liability (“UAAL”) on behalf of another entity to record
the liability as a debt of the government making the payment. As a result of GASB 68, $5.8 billion of long-term debt was reflected in the State’s CAFR for fiscal year 2015 for a total of $6.0 billion of UAAL.
This liability will be paid through fiscal year 2039 with annual payments determined based on a
variety of actuarial assumptions, and the evolving experience as it occurs. Both the current balance of liabilities as well as the magnitude in change in liability from future outcomes highlight the impact that PERS and TRS funding needs have on the State. Effective January 11, 2019, the Alaska Retirement Management Board voted to change the actuarially assumed rate of investment return to 7.38 percent from 8.00 percent, along with several other actuarial assumptions. According to the PERS and TRS CAFR, as of June 30, 2020, if the earnings rate experience is actually 6.38 percent, the one percent reduction in the rate of return on investments increases the net PERS pension and other post-employment benefits (“OPEB”) liability by approximately $2.2 billion and the TRS pension and OPEB liability by
approximately $0.8 billion.
As long as the Senate Bill 125 statutory framework is in place, the State is statutorily obligated to obtain amounts required to meet all actuarially determined employer contribution rates for PERS
employers above 22 percent and TRS employers above 12.56 percent (subject to the exceptions described above). This payment is subject to annual appropriation. The UAAL for PERS and TRS as of June 30, 2019, was approximately $6.2 billion, based on the most recent June 30, 2019, actuarial valuation reports
for PERS and TRS.
State-Supported Municipal Debt Eligible for State Reimbursement. The State administers two programs that reimburse municipalities for municipal debt: the SDRP and the TIDSRP. These programs
provide for State reimbursement of annual debt service on general obligation bonds of municipalities for the SDRP and a combination of general obligation and revenue bonds of authorized participants in the
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TIDSRP. The State may choose not to fund these programs in part or whole. In fiscal year 2017, the SDRP was funded at 75 percent of the authorized amount and the SDRP was funded at 100 percent of the
authorized amount for fiscal year 2018 and fiscal year 2019. The State’s fiscal year 2020 budget reduced funding by 50 percent of the authorized SDRP amount, and the enacted fiscal year 2021 budget reduced amounts by 100%.
DEED administers the SDRP, which was created by law in 1970. The SDRP allows municipalities to apply, and if structured correctly, be eligible for reimbursement on up to 100 percent of the debt service on general obligation bonds issued for school construction. All municipal bonds are
required to be authorized as general obligation bonds of the municipality, providing the ultimate source of payment commitment. The SDRP has been partially funded in a number of years. Access to the SDRP was restricted during the 1990s due to State budgetary pressure. Beginning in the early 2000s, and through 2014, the program was generally available for any qualified municipal project at reimbursement rates of 60 to 70 percent of debt service. In 2015, the Legislature passed a moratorium on the SDRP and eliminated DEED’s authority to issue agreements to reimburse debt from school bonds that voters approved after January 1, 2015, and before July 1, 2020. In addition, in June 2016, the Governor signed the fiscal year 2017 budgets transmitted by the Legislature and exercised his line-item veto authority to
reduce fiscal year 2017 appropriations by approximately $1.29 billion, including a 25 percent reduction in the SDRP. The SDRP was funded at 100 percent of the authorized amount for fiscal years 2018 and 2019. The State’s fiscal year 2020 budget reduced funding by 50 percent of the authorized SDRP amount, and
the enacted fiscal year 2021 budget reduced funding by 100 percent. As of June 30, 2020, State-supported SDRP debt was $625.1 million. The Governor’s proposed fiscal year 2022 budget restores funding of approximately 50 percent of the SDRP amount.
The Department of Transportation and Public Facilities and the Alaska Energy Authority administer TIDSRP. The program currently includes University of Alaska revenue bonds, seven municipalities’ general obligation bonds, and two electric associations’ revenue bonds. There are no
additional authorized participants in TIDSRP and no efforts have been made to add to the program since creation in 2002. The State’s enacted budgets for fiscal years 2020 and 2021 eliminate all funding for the TIDSRP. As of June 30, 2020, State-supported TIDSRP debt was approximately $19.6 million.
The Governor indicated that funding from the CARES Act would be made available to municipalities to pay for COVID-19 impacts and mute the impact of these reductions. The Governor proposed distribution of, and the Legislature approved, $562.5 million of CARES Act funding to municipalities in the State.
Tax Credit Certificate Bonds. In 2018, AS 37.18.010 was enacted creating the Alaska Tax Credit Certificate Bond Corporation (the “ATCCBC”) for the purpose of selling bonds for up to $1 billion to provide for the purchase of certain State tax credits. The ATCCBC bonds would have been considered State-supported debt as they would be secured by agreements entered into by other State agencies that are
subject to annual appropriation. A legal challenge on the State Constitutionality of the ATCCBC was filed and delayed the potential for bond issuance. In Forrer, the Supreme Court determined that the ATCCBC structure did not comply with the State Constitution.
Pension Obligation Bonds. Through the Alaska Pension Obligation Bond Corporation (the “Corporation”), a public corporation created in 2008 within the DOR, the State initially authorized the issuance of up to $5.0 billion of bonds and/or entry into contracts with governmental employers to finance
the payment by governmental employers of their shares of the unfunded accrued actuarial liabilities of the State retirement systems. The State is required by SB 125, enacted in 2008, to make supplemental contributions to the State retirement system defined benefit plans to reduce the plans’ unfunded accrued
actuarial liabilities. In 2016, the Board of Directors of the Corporation authorized the Corporation to issue
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up to $3.5 billion of pension obligation bonds to finance for the State a portion of its statutorily required contributions to PERS and TRS. In 2018, the Legislature reduced the authorization to $1.5 billion. As of
June 30, 2020, no bonds have been sold by the POBC. As previously discussed, because of the similarity of the POBC debt structure to the proposed ATCCBC structure, debt issued by the POBC would likely constitute impermissible State debt as a result of the Supreme Court’s decision in Forrer.
State-Supported Toll Revenue Bonds. In 2014, the Legislature authorized funding of the proposed Knik Arm Crossing with a combination of (i) up to $300 million of State-supported toll revenue bonds subordinated to a Transportation Infrastructure Finance and Innovation Act (“TIFIA”) loan, (ii) a
maximized loan under TIFIA of not less than $300 million and estimated to be approximately $350 million, and (iii) up to $300 million of appropriations of additional Federal Highway Administration funds to the project. The State expected to pay debt service on the State toll revenue bonds using a combination of annual State appropriations and toll collections that exceeded the TIFIA loan payment. As of June 30, 2020, no bonds have been sold with this authority. As previously discussed, the Toll Bridge Revenue Bond structure is likely not permitted by the State Constitution as a result of the Supreme Court’s decision in Forrer.
State Discretionary Debt Service Reserve Funding. Certain State agencies or authorities are
permitted to issue revenue bonds that are secured, in part, by a debt service reserve fund that is benefited by a discretionary replenishment provision that requires the applicable State agency or authority to report any deficiencies to the debt service reserve fund, and permits, but does not legally obligate, the
Legislature to appropriate, on an annual basis, to the particular State agency or authority the amount necessary to replenish the debt service reserve fund up to its funding requirement (generally the maximum amount of debt service required in any year). Such State agency or authority debt is payable in
the first instance by revenues generated from loan repayments or by the respective projects financed from bond proceeds. Among those State agencies that have the ability to issue such debt are: Alaska Aerospace Development Corporation (“AADC”), which has not issued any debt; Alaska Energy Authority (“AEA”);
AHFC; Alaska Industrial Development and Export Authority (“AIDEA”); Alaska Municipal Bond Bank Authority (“AMBBA”); and Alaska Student Loan Corporation (“ASLC”). Approximately $1,133.8 million of such State agency or authority revenue bond debt was outstanding as of June 30,
2020.
State and University Revenue Debt. This type of debt is issued by the State or by the University of Alaska but is secured only by revenues derived from projects financed from bond proceeds. Revenue debt is not a general obligation of the State or of the University and does not require voter approval. Such debt is authorized by law and issued by the State Bond Committee or the University of Alaska for projects approved by the Commissioner of Transportation and Public Facilities or by the University of Alaska. This type of debt includes Sportfish Revenue Bonds, International Airport System Revenue Bonds, various University Revenue Bonds, Notes, and Contracts, Clean Water and Drinking Water Fund
Bonds, and Toll Facilities Revenue Bonds. As of June 30, 2020, there was $608.5 million of State and University revenue debt outstanding, consisting of $273.3 million of University of Alaska Revenue Bonds, Notes, and Contracts, $1.8 million of Sportfish Revenue Bonds, and $333.4 million of Alaska
International Airport System Revenue Bonds.
State Agency Debt. State agency debt is secured by revenues generated from the use of bond proceeds or the assets financed by bond proceeds or otherwise of assets of the agency issuing the bonds.
This debt is not a general obligation of the State nor does the State provide security for the debt in any other manner, i.e., by appropriations or guarantees As of June 30, 2020, there was $489.4 million aggregate principal amount of State agency debt outstanding, consisting of $115.4 million of AHFC
obligations, $9.7 million of Bond Bank Coastal Energy Impact Program Bonds payable to the National
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Oceanic and Atmospheric Administration, $64.5 million of Alaska Railroad Notes, and $299.8 million of obligations of the Northern Tobacco Securitization Corporation.
State Agency Collateralized or Insured Debt. As security for State agency collateralized or insured debt, the particular State agency pledges mortgage loans or other securities as primary security which, in turn, may be 100 percent insured or guaranteed by another party with a superior credit standing.
This upgrades the credit rating on the debt and lowers the interest cost and makes it less likely that the State will assume responsibility for the debt. As of June 30, 2020, the total principal amount outstanding of State agency collateralized or insured debt was approximately $2,459.7 million, consisting of
approximately $2,405.1 million issued by AHFC and $54.6 million issued by AIDEA.
Summary of Outstanding Debt. Table 7 lists, by type, the outstanding State-related debt as of June 30, 2020, except as otherwise noted.
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Table 7
State of Alaska Debt and State-Related Debt by Type as of June 30, 2020
($ millions)
Principal outstanding Interest to maturity
Total debt service to maturity
State Debt
State of Alaska General Obligation Bonds $ 624.9 $ 245.8 $ 870.7
State Guaranteed Debt
Alaska Housing Finance Corporation State Guaranteed Bonds (Veterans’ Mortgage Program) 94.3 45.3 139.6
State Supported Debt
Certificates of Participation 20.6 5.4 26.0
Lease Revenue Bonds with State Credit Pledge and Payment 182.6 64.1 246.7
Total State Supported Debt 203.2 69.5 272.7
State Supported Municipal Debt
State Reimbursement of Municipal School Debt Service 625.1 164.0 789.1
State Reimbursement of Capital Projects 19.6 4.2 23.8
Total State Supported Municipal Debt 644.7 168.2 812.9
Pension System Unfunded Actuarial Accrued Liability (UAAL) (3)
Public Employees’ Retirement System UAAL 4,803.7 N/A 4,803.7
Teachers’ Retirement System UAAL 1,395.2 N/A 1,395.2
Total UAAL 6,198.9 N/A 6,198.9
State Debt Service Reserve Funding Debt
Alaska Municipal Bond Bank:
2005, 2010, & 2016 General Resolution General Obligation Bonds 1,034.2 489.5 1,523.7
Alaska Energy Authority:
Power Revenue Bonds #1 through #8 63.7 32.7 96.4
Alaska Student Loan Corporation
Education Loan Backed Notes 35.9 0.7 36.6
Total State Debt Service Reserve Funding Debt 1,133.8 522.9 1,656.7
State Revenue Debt
Sportfish Revenue Bonds 1.8 0.2 2.0
International Airport System Revenue Bonds 333.4 133.2 466.6
University of Alaska Debt
University of Alaska Revenue Bonds 258.6 132.1 390.7
University Lease Liability and Notes Payable 14.4 3.2 17.6
Installment Contracts 0.3 0.0 0.3
Total University of Alaska Debt 273.3 135.3 408.6
Total State Revenue and University Debt 608.5 268.7 877.2
[Table 7 continues on next page]
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Principal outstanding Interest to maturity
Total debt service to maturity
State Agency Debt
Alaska Housing Finance Corporation:
Commercial Paper $ 115.4 N/A $ 115.4
Alaska Municipal Bond Bank Coastal Energy Loan Bonds 9.7 $ 2.0 11.7
Alaska Railroad 64.5 4.9 69.4
Northern Tobacco Securitization Corporation
2006 Tobacco Settlement Asset-Backed Bonds (1) 299.8 372.5 672.3
Total State Agency Debt 489.4 379.4 868.8
State Agency Collateralized or Insured Debt
Alaska Housing Finance Corporation:
Collateralized Home Mortgage Revenue Bonds & Mortgage Revenue Bonds:
2002 Through 2011 (First Time Homebuyer Program) 569.1 247.1 816.2
General Mortgage Revenue Bonds II -2012 & 2016 460.2 202.4 662.6
Government Purpose Bonds 1997 & 2001 84.2 16.7 100.9
State Capital Project Bonds, 2002-2011 (2) 19.9 1.2 21.1
State Capital Project Bonds, II 2012-2019 (2) 1,271.7 315.5 1,587.2
Alaska Industrial Development and Export Authority:
Revolving Fund Bonds 39.7 11.1 50.8
Power Revenue Bonds, 2015 Series (Snettisham Hydro Project) 54.6 21.9 76.5
Total State Agency Collateralized or Insured Debt 2,459.7 804.8 3,264.5
Total State and State Agency Debt 12,457.4
Municipal Debt
School G.O. Debt 933.3 N/A N/A
Other G.O. Debt (4) 1,447.1 N/A N/A
Revenue Debt (4) 1,014.0 N/A N/A
Total Municipal Debt 3,394.4
Debt Reported in More than One Category
Less: State Reimbursable Municipal Debt and Capital Leases (202.2)
Less: State Reimbursable Municipal School G.O. Debt (625.1)
Less: Alaska Municipal Bond Bank debt included in University debt (82.9)
Less: Alaska Municipal Bond Bank debt included in Municipal debt (850.6)
Total Deductions Due to Reporting in More than One Category (1,760.8)
Total Alaska Public Debt $14,091.0
(1) “Interest to Maturity” and “Total Debt Service to Maturity” includes accreted interest due at maturity of $125.2 million.
(2) Does not include defeased bonds.
(3) From most recent June 30, 2019 actuarial valuation.
(4) Other G.O. Debt and Revenue Debt sourced directly from municipal CAFRs and Alaska Taxable information available as of January 31, 2021.
Source: 2020 – 2021 Alaska Public Debt Book, State of Alaska.
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General Fund Supported Obligations. General Fund support is pledged and required for only a portion of the total outstanding public debt. General obligation bonds are unconditionally supported, and
COPs and capital leases are subject-to-appropriation commitments with associated obligations. The SDRP and TIDSRP provide discretionary annual payments to municipal issuers for qualified bonds of the municipalities that are eligible by statute to participate in the programs. Table 8 sets forth existing debt
service on outstanding State-supported debt the State has provided from the General Fund for these outstanding obligations and the forecast support required to retire the outstanding obligations into the future. With the State’s fiscal year 2021 budget, the “Capital Project & School Debt Reimbursements”
column was reduced to zero.
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Table 8
State of Alaska Payments on General Fund Paid Debt as of June 30, 2020 ($ millions)
Fiscal Year State G.O.* Lease / Purchase Capital Leases (1)
School Debt Reimburse- ment (2) Capital Project Reimbursement
Statutory Debt Payment to PERS/TRS (3) Total Debt Service
2020 77.8 2.9 19.7 97.6 4.5 300.2 502.6
2021 77.0 2.9 19.5 92.7 3.6 338.6 534.2
2022 66.5 2.9 19.5 81.4 3.6 313.7 487.7
2023 66.4 2.9 19.5 82.4 3.6 321.5 496.3
2024 66.2 2.9 19.5 66.8 3.6 329.5 488.5
2025 61.3 2.9 19.5 57.1 3.6 335.1 479.4
2026 61.1 2.9 19.5 47.0 2.8 341.4 474.7
2027 60.6 2.9 20.9 42.4 2.6 348.5 477.9
2028 59.7 2.9 20.9 39.7 2.2 357.0 482.4
2029 58.8 2.9 17.6 34.9 0.9 365.6 480.8
2030 58.1 – 17.6 32.2 0.9 376.2 485.0
2031 45.8 – 17.6 29.9 0.4 386.5 480.2
2032 45.4 – 17.6 26.7 – 397.5 487.1
2033 45.0 – 17.6 20.5 – 408.3 491.4
2034 44.5 – – 18.1 – 420.4 483.0
2035 20.9 – – 13.0 – 433.0 466.9
2036 20.9 – – 5.6 – 446.4 472.9
2037 0.5 – – 0.5 – 460.8 461.8
2038 12.2 – – 0.3 – 475.8 488.3
2039 – – – 0.3 – 490.8 491.2
2040 – – – – – 0.4 0.4
(1) A prison and a parking garage have been financed with capital leases.
(2) Payments in fiscal years 2020 through 2039 are based on actual bond repayment schedules on file with DEED as of June 30,
2020.
(3) Based on PERS and TRS Actuarial Valuation Reports as of June 30, 2019.
(*) State G.O. debt service is net of federal subsidies on interest expense through 2038.
Source: 2020 – 2021 Alaska Public Debt Book, State of Alaska.
Payment History. The State has never defaulted on its general obligation bond obligations nor has it ever failed to appropriate funds for any State-supported outstanding securitized lease obligations.
State Debt Capacity. The State has historically used the ratio of debt service to revenue as a guideline for determining debt capacity of the State. This policy was established due to the State’s relatively small population and high per capita revenue due to oil resource-generated revenue. Historically the State’s policy has been that debt service should not exceed five percent of unrestricted revenue when
considering only general obligation bonds and COPs that are State-supported. More recently, the State has included more discretionary General Fund supported obligations and programs, including the SDRP, TIDSRP, and certain capital leases. With the more inclusive funding, the State’s policy allows the annual
payments on these items to range up to seven percent of unrestricted revenue.
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Table 9
State of Alaska Debt Service on Outstanding Obligations to Unrestricted Revenues Fiscal Years Ended June 30, 1996 – 2020 Forecast for Fiscal Years Ending June 30, 2021 – 2030
Fiscal Year
Unrestricted Revenues
($ millions)
State G.O. Debt Service (%)
State Supported Debt Service (%)
Total State Debt Service (%)
School Debt Reimburse- ments
(%)
Statutory Payment to PERS/TRS (%)
Total Payments to Revenues (%)
1996 $2,133.3 1.0% 0.5% 1.4% 3.7% – 5.2%
1997 2,494.9 0.7 0.4 1.0 2.5 – 3.5
1998 1,825.5 0.8 0.6 1.3 3.4 – 4.7 1999 1,348.4 0.7 1.1 1.8 4.6 – 6.3
2000 2,081.7 0.1 0.9 1.0 3.1 – 4.1 2001 2,281.9 0.0 0.7 0.7 2.3 – 3.0
2002 1,660.3 0.0 1.3 1.3 3.3 – 4.5
2003 1,947.6 0.0 1.1 1.1 2.7 – 3.7
2004 2,345.6 0.8 0.9 1.7 2.6 – 4.3
2005 3,188.8 1.5 0.7 2.2 2.2 – 4.4
2006 4,200.4 1.1 0.6 1.7 1.9 – 3.6
2007 5,158.6 0.9 0.5 1.4 1.7 – 3.1
2008 10,728.2 0.4 0.3 0.6 0.8 – 1.4
2009 5,838.0 0.8 0.6 1.3 1.6 – 2.9 2010 5,512.7 0.9 0.8 1.7 1.7 – 3.4 2011 7,673.0 0.7 0.6 1.3 1.3 – 2.6 2012 9,485.2 0.8 0.4 1.3 1.1 – 2.3
2013 6,928.5 1.1 0.6 1.7 1.6 – 3.3
2014 5,390.0 1.4 0.7 2.1 2.0 – 4.1
2015 2,256.0 3.3 1.6 4.9 5.2 – 10.1
2016 1,533.0 4.0 2.3 6.3 7.6 – 13.9
2017 1,355.0 6.1 2.3 8.3 6.7 – 15.0
2018 2,413.5 3.7 1.1 4.8 4.6 – 9.5
2019 5,354.6 1.7 0.4 2.1 2.0 – 4.2 2020 4,537.0 1.7 0.5 2.2 2.2 – 4.5 projected 2021 4,331.8 1.8 0.5 2.3 2.2 7.8 12.3 2022 4,271.9 1.6 0.5 2.1 2.0 7.3 11.4 2023 4,638.5 1.4 0.5 1.9 1.9 6.9 10.7
2024 4,859.7 1.4 0.5 1.8 1.4 6.8 10.1
2025 4,964.7 1.2 0.5 1.7 1.2 6.7 9.7
2026 5,023.1 1.2 0.4 1.7 1.0 6.8 9.5
2027 5,102.7 1.2 0.5 1.7 0.9 6.8 9.4
2028 5,220.3 1.1 0.5 1.6 0.8 6.8 9.2
2029 5,365.6 1.1 0.4 1.5 0.7 6.8 9.0
2030 5,475.0 1.1 0.3 1.4 0.6 6.9 8.9
Source: 2020 – 2021 Alaska Public Debt Book, State of Alaska.
APPENDIX G
PROPOSED FORM OF CONTINUING DISCLOSURE CERTIFICATE
The Alaska Municipal Bond Bank (the “Issuer”) executes and delivers this Continuing Disclosure Certificate (the “Disclosure Certificate”) in connection with the issuance of $29,775,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series One (Tax-Exempt),
$200,975,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series Two (Taxable) and $5,725,000 Alaska Municipal Bond Bank General Obligation Refunding Bonds, 2021 Series Three (AMT Forward Delivery) (together, the “Bonds”). The Bonds are being issued under the General Bond Resolution of the Issuer entitled “A Resolution Creating And Establishing An Issue Of Bonds Of The Alaska Municipal Bond Bank; Providing For The Issuance From Time To Time Of Said Bonds; Providing For The Payment Of Principal Of And Interest On Said Bonds; And Providing For The Rights Of The Holders Thereof,” adopted July 13, 2005, as amended on August 19, 2009 (the “General Bond Resolution”), and Series Resolution No. 2021-01, adopted on April 15, 2021 (the “Series Resolution” and together with the General Bond Resolution, the “Resolutions”). The Issuer covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. The Issuer is executing and delivering this
Disclosure Certificate for the benefit of the Beneficial Owners of the Bonds, and to assist the Participating Underwriter in complying with Securities and Exchange Commission (“SEC”) Rule 15c2-12(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Resolutions, which
apply to any capitalized term used in this Disclosure Certificate unless otherwise defined in this Section, the following capitalized terms shall have the following meanings:
“Annual Report” means any Annual Report provided by the Issuer pursuant to, and as described
in, Section 3 of this Disclosure Certificate.
“Financial Obligation” shall mean, for purposes of the Listed Events set out in Section 5(a)(10) and Section 5(b)(8), a (i) debt obligation; (ii) derivative instrument entered into in connection with, or
pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) guarantee of (i) or (ii). The term “Financial Obligation” shall not include municipal securities (as defined in the Securities Exchange Act of 1934, as amended) as to which a final official statement (as defined in the
Rule) has been provided to the MSRB consistent with the Rule.
“Fiscal Year” means the fiscal year of the Issuer (currently the 12-month period ending June 30), as such fiscal year may be changed from time to time as required by State law.
“MSRB” means the Municipal Securities Rulemaking Board or any other entity designated or authorized by the SEC to receive reports pursuant to the Rule. Until otherwise designated by the MSRB or the SEC, filings with the MSRB are to be made through the Electronic Municipal Market Access (“EMMA”) website of the MSRB, currently located at http://emma.msrb.org.
“Official Statement” means the final official statement dated May 26, 2021, relating to the Bonds.
“Participating Underwriter” means the original underwriter of the Bonds required to comply with the Rule in connection with the offering of the Bonds.
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“Rule” means Rule 15c2-12(b)(5) adopted by the SEC under the Securities Exchange Act of 1934, as amended from time to time.
Section 3. Provision of Annual Reports and Financial Statements. Commencing with its Annual Report for Fiscal Year ending June 30, 2021, the Issuer will provide to the MSRB, in a format as prescribed by the Rule:
(a) Not later than 210 days after the end of each Fiscal Year, an Annual Report for the Fiscal Year. The Annual Report shall contain or incorporate by reference: (i) annual audited financial statements of the Issuer; (ii) a statement of authorized, issued and outstanding bonded debt of the Issuer; (iii) the
Reserve Fund balance; and (iv) financial and operating data of Governmental Units that had an amount of bonds equal to or greater than twenty percent (20%) of all outstanding bonds under the General Bond Resolution of the type included in the Official Statement, if any, as of the end of the prior Fiscal Year. Any or all of these items may be included by specific reference to documents available to the public or the internet website of the MSRB or filed with the SEC. The Issuer shall clearly identify each such other document so incorporated by reference. The Annual Report may be submitted as a single document or as separate documents comprising a package, provided that audited financial statements may be submitted separately from the remainder of the Annual Report.
(b) Not later than 120 days after the end of each Fiscal Year, the Issuer will notify each Governmental Unit, that had, as of the end of such Fiscal Year, an amount of bonds equal to or greater than twenty percent (20%) of all outstanding bonds under the General Bond Resolution, of its continuing
disclosure undertaking responsibility. A list of such Governmental Units for the prior Fiscal Year will be included in the Annual Report. The Issuer undertakes no responsibility and shall incur no liability whatsoever to any person, including any holder or beneficial owner of the Bonds, in respect of any
obligations or reports, notices or disclosures provided or required to be provided by such Governmental Unit under its continuing disclosure agreement.
Section 4. Notice of Failure to Provide Information. The Issuer shall provide in a timely
manner to the MSRB notice of any failure to satisfy the requirements of Section 3 of this Disclosure Certificate.
Section 5. Reporting of Significant Events. (a) The Issuer shall file with the MSRB a notice
of any of the following events with respect to the Bonds, within ten (10) business days of the occurrence of such event:
(1) Principal and interest payment delinquencies.
(2) Unscheduled draws on debt service reserves reflecting financial difficulties.
(3) Unscheduled draws on credit enhancements reflecting financial difficulties.
(4) Substitution of credit or liquidity providers, or their failure to perform.
(5) Adverse tax opinions or the issuance by the Internal Revenue Service (“IRS”) of proposed or final determination of taxability or of a Notice of Proposed Issue (IRS Form 5701-TEB).
(6) Defeasances.
(7) Rating changes.
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(8) Tender offers.
(9) Bankruptcy, insolvency, receivership or similar event of the Issuer.*
(10) Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a Financial Obligation of the Issuer, any of which reflect financial difficulties.
(b) The Issuer shall file with the MSRB a notice of any of the following events with respect
to the Bonds, within ten (10) business days of the occurrence of such event, if material:
(1) Unless described in Section 5(a)(5), other notices or determinations by the IRS with respect to the tax status of the Bonds or other events affecting the tax status of the Bonds.
(2) Nonpayment-related defaults.
(3) Modifications to rights of holders of the Bonds.
(4) Bond calls.
(5) Release, substitution or sale of property securing repayment of the Bonds.
(6) The consummation of a merger, consolidation, or acquisition involving the Issuer or the sale of all or substantially all of the assets of the Issuer, other than in the ordinary course of business the entry into a definitive agreement to undertake such an action, or a termination of a definitive agreement relating to any such actions, other than pursuant to its terms.
(7) Appointment of a successor or additional trustee or the change in name of the trustee for the Bonds.
(8) Incurrence of a Financial Obligation of the Issuer, or agreement to covenants, events of
default, remedies, priority rights, or other similar terms of a Financial Obligation of the Issuer, any of which affect holders of the Bonds.
Section 6. Termination of Reporting Obligation. The Issuer’s obligations under this
Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or payment in full of all of the Bonds.
Section 7. Amendment; Waiver. Notwithstanding any other provision of this Disclosure
Certificate, the Issuer may amend this Disclosure Certificate, provided that the amendment meets each of the following conditions:
* Note: for the purposes of the event identified in subparagraph 5(a)(9), the event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the Issuer in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the Issuer, or if such jurisdiction has been assumed by leaving the existing governmental body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the Issuer.
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(a) The amendment is made in connection with a change in circumstances that arises from a change in legal requirements, change in law, or change in the identity, nature or status of the Issuer;
(b) This Disclosure Certificate, as amended, would have complied with the requirements of the Rule as of the date hereof, after taking into account any amendments or interpretations of the Rule, as well as any changes in circumstances;
(c) The Issuer obtains an opinion of counsel unaffiliated with the Issuer that the amendment does not materially impair the interests of the Beneficial Owners of the Bonds; and
(d) The Issuer notifies and provides the MSRB with copies of the opinions and amendments.
Any such amendment may be adopted without the consent of any Beneficial Owner of any of the Bonds, notwithstanding any other provision of this Disclosure Certificate or the Resolutions.
The first Annual Report containing amended operating data or financial information pursuant to an amendment of this Disclosure Certificate shall explain, in narrative form, the reasons for the amendment and its effect on the type of operating data and financial information being provided.
Section 8. Filing. Any filing required under the terms of this Disclosure Certificate may be made solely by transmitting such filing to the Electronic Municipal Market Access as provided at http://www.emma.msrb.org, or in such other manner as may be permitted from time to time by the
Securities Exchange Commission.
Section 9. Default. In the event of a failure of the Issuer to comply with any provision of this Disclosure Certificate, any Beneficial Owner may take such actions as may be necessary and
appropriate, including an action to compel specific performance, to cause the Issuer to comply with its obligations under this Disclosure Certificate. No failure to comply with any provision of this Disclosure Certificate shall be deemed an Event of Default under the Resolutions, and the sole remedy under this
Disclosure Certificate in the event of any failure of the Issuer to comply with this Disclosure Certificate shall be an action to compel specific performance.
Section 10. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit of the
Issuer, the Trustee, the Participating Underwriter and the Beneficial Owners from time to time of the Bonds, and shall create no rights in any other person or entity.
DATED this 16th day of June, 2021.
ALASKA MUNICIPAL BOND BANK
DEVEN J. MITCHELL Executive Director
APPENDIX H
DTC AND ITS BOOK-ENTRY SYSTEM
1. The Depository Trust Company (“DTC”), New York, NY, will act as securities depository for the 2021 Series One, Two and Three Bonds. The 2021 Series One, Two and Three Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership
nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered certificate will be issued for each maturity of the 2021 Series One, Two and Three Bonds in the aggregate principal amount of such maturity, and will be deposited with DTC.
2. DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants
of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non-U.S. securities brokers
and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing
Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or
maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a rating from Standard & Poor’s of AA+. The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can
be found at www.dtcc.com.
3. Purchases of 2021 Series One, Two and Three Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the 2021 Series One, Two and Three Bonds on DTC’s records. The ownership interest of each actual purchaser of each 2021 Series One, Two and Three Bond (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect
Participants records. Beneficial Owners will not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant
through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the 2021 Series One, Two and Three Bonds are to be accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive
certificates representing their ownership interests in 2021 Series One, Two and Three Bonds, except in the event that use of the book-entry system for the 2021 Series One, Two and Three Bonds is discontinued.
4. To facilitate subsequent transfers, all 2021 Series One, Two and Three Bonds deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of 2021
Series One, Two and Three Bonds with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the
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actual Beneficial Owners of the 2021 Series One, Two and Three Bonds; DTC’s records reflect only the identity of the Direct Participants to whose accounts such 2021 Series One, Two and Three Bonds are
credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
5. Conveyance of notices and other communications by DTC to Direct Participants, by
Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of 2021 Series One, Two and
Three Bonds may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the 2021 Series One, Two and Three Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2021 Series One, Two and Three Bond documents. For example, Beneficial Owners of 2021 Series One, Two and Three Bonds may wish to ascertain that the nominee holding the 2021 Series One, Two and Three Bonds for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
6. Redemption notices shall be sent to DTC. If less than all of the 2021 Series One, Two and Three Bonds within a maturity are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each Direct Participant in such maturity to be redeemed.
7. Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote with
respect to 2021 Series One, Two and Three Bonds unless authorized by a Direct Participant in accordance with DTC’s MMI Procedures. Under its usual procedures, DTC mails an Omnibus Proxy to the Bond Bank as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or
voting rights to those Direct Participants to whose accounts 2021 Series One, Two and Three Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).
8. Payments on the 2021 Series One, Two and Three Bonds will be made to Cede & Co., or
such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Bond Bank or the Trustee, on payable date in accordance with their respective holdings shown
on DTC’s records. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC, the Bond Bank or the Trustee, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest payments on the Bonds to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Bond Bank or the Trustee, disbursement of such payments to Direct Participants will be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners will be the responsibility of Direct
and Indirect Participants.
9. DTC may discontinue providing its services as depository with respect to the 2021 Series One, Two and Three Bonds at any time by giving reasonable notice to the Bond Bank or the Trustee.
Under such circumstances, in the event that a successor depository is not obtained, 2021 Series One, Two and Three Bond certificates are required to be printed and delivered.
10. The Bond Bank may decide to discontinue use of the system of book-entry-only transfers
through DTC (or a successor securities depository). In that event, 2021 Series One, Two and Three Bond certificates will be printed and delivered to DTC.
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11. The information in this appendix concerning DTC and DTC’s book-entry system has been obtained from sources that the Bond Bank believes to be reliable, but the Bond Bank takes no
responsibility for the accuracy thereof.
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APPENDIX I
GLOBAL CLEARANCE PROCEDURES
REFERENCES IN THIS SECTION TO THE “ISSUER” MEAN THE ALASKA MUNICIPAL BOND BANK AND REFERENCES TO “BONDS” OR “SECURITIES” MEAN THE 2021 SERIES TWO BONDS OFFERED HEREBY. NEITHER THE ISSUER NOR THE UNDERWRITERS ASSUME ANY RESPONSIBILITY FOR THE CONTENTS OF THIS SECTION.
Euroclear and Clearstream
Euroclear and Clearstream each hold securities for their customers and facilitate the clearance and
settlement of securities transactions by electronic book-entry transfer between their respective account holders. Euroclear and Clearstream provide various services including safekeeping, administration, clearance and settlement of internationally traded securities and securities lending and borrowing. Euroclear and Clearstream also deal with domestic securities markets in several countries through established depositary and custodial relationships. Euroclear and Clearstream have established an electronic bridge between their two systems across which their respective participants may settle trades with each other.
Euroclear and Clearstream customers are worldwide financial institutions, including underwriters,
securities brokers and dealers, banks, trust companies and clearing corporations. Indirect access to Euroclear and Clearstream is available to other institutions that clear through or maintain a custodial relationship with an account holder of either system, either directly or indirectly.
Clearing and Settlement Procedures
General. The 2021 Series Two Bonds sold in offshore transactions will be initially issued to investors through the book-entry facilities of DTC, or Clearstream and Euroclear in Europe if the
investors are participants in those systems, or indirectly through organizations that are participants in the systems. For any of such 2021 Series Two Bonds, the record holder will be DTC’s nominee. Clearstream and Euroclear will hold omnibus positions on behalf of their participants through customers’ securities
accounts in Clearstream’s and Euroclear’s names on the books of their respective depositories.
The depositories, in turn, will hold positions in customers’ securities accounts in the depositories’ names on the books of DTC. Because of time zone differences, the securities account of a Clearstream or
Euroclear participant as a result of a transaction with a participant, other than a depository holding on behalf of Clearstream or Euroclear, will be credited during the securities settlement processing day, which must be a business day for Clearstream or Euroclear, as the case may be, immediately following the DTC settlement date. These credits or any transactions in the securities settled during the processing will be reported to the relevant Euroclear participant or Clearstream participant on that business day. Cash received in Clearstream or Euroclear as a result of sales of securities by or through a Clearstream participant or Euroclear participant to a DTC Participant, other than the depository for Clearstream or Euroclear, will be received with value on the DTC settlement date but will be available in the relevant
Clearstream or Euroclear cash account only as of the business day following settlement in DTC.
Transfers between participants will occur in accordance with DTC rules. Transfers between Clearstream participants or Euroclear participants will occur in accordance with their respective rules and
operating procedures. Cross-market transfers between persons holding directly or indirectly through DTC, on the one hand, and directly or indirectly through Clearstream participants or Euroclear participants, on the other, will be effected in DTC in accordance with DTC rules on behalf of the relevant European
international clearing system by the relevant depositories; however, cross-market transactions will require
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delivery of instructions to the relevant European international clearing system by the counterparty in the system in accordance with its rules and procedures and within its established deadlines in European time.
The relevant European international clearing system will, if the transaction meets its settlement requirements, deliver instructions to its depository to take action to effect final settlement on its behalf by delivering or receiving securities in DTC, and making or receiving payment in accordance with normal
procedures for same day funds settlement applicable to DTC. Clearstream participants or Euroclear participants may not deliver instructions directly to the depositories.
The Issuer will not impose any fees in respect of holding the 2021 Series Two Bonds; however,
holders of book-entry interests in the 2021 Series Two Bonds may incur fees normally payable in respect of the maintenance and operation of accounts in the Clearing Systems.
Initial Settlement. Interests in the 2021 Series Two Bonds will be in uncertificated book-entry form. Purchasers electing to hold book-entry interests in the 2021 Series Two Bonds through Euroclear and Clearstream accounts will follow the settlement procedures applicable to conventional Eurobonds. Book-entry interests in the 2021 Series Two Bonds will be credited to Euroclear and Clearstream participants’ securities clearance accounts on the business day following the date of delivery of the 2021 Series Two Bonds against payment (value as on the date of delivery of the 2021 Series Two Bonds). DTC
participants acting on behalf of purchasers electing to hold book-entry interests in the 2021 Series Two Bonds through DTC will follow the delivery practices applicable to securities eligible for DTC’s Same Day Funds Settlement system. DTC participants’ securities accounts will be credited with book-entry
interests in the 2021 Series Two Bonds following confirmation of receipt of payment to the Issuer on the date of delivery of the 2021 Series Two Bonds.
Secondary Market Trading. Secondary market trades in the 2021 Series Two Bonds will be
settled by transfer of title to book-entry interests in the Clearing Systems. Title to such book-entry interests will pass by registration of the transfer within the records of Euroclear, Clearstream or DTC, as the case may be, in accordance with their respective procedures. Book-entry interests in the 2021 Series
Two Bonds may be transferred within Euroclear and within Clearstream and between Euroclear and Clearstream in accordance with procedures established for these purposes by Euroclear and Clearstream. Book-entry interests in the 2021 Series Two Bonds may be transferred within DTC in accordance with
procedures established for this purpose by DTC. Transfer of book-entry interests in the 2021 Series Two Bonds between Euroclear or Clearstream and DTC may be effected in accordance with procedures established for this purpose by Euroclear, Clearstream and DTC.
Special Timing Considerations. Investors should be aware that investors will only be able to make and receive deliveries, payments and other communications involving the 2021 Series Two Bonds through Euroclear or Clearstream on days when those systems are open for business. In addition, because of time-zone differences, there may be complications with completing transactions involving Clearstream and/or Euroclear on the same business day as in the United States. U.S. investors who wish to transfer
their interests in the 2021 Series Two Bonds, or to receive or make a payment or delivery of 2021 Series Two Bonds, on a particular day, may find that the transactions will not be performed until the next business day in Luxembourg if Clearstream is used, or Brussels if Euroclear is used.
Clearing Information. It is expected that the 2021 Series Two Bonds will be accepted for clearance through the facilities of Euroclear and Clearstream. The international securities identification number, common code and CUSIP number for the 2021 Series Two Bonds are set out on the inside cover
page of this Official Statement.
None of Euroclear, Clearstream or DTC is under any obligation to perform or continue to perform the procedures referred to above, and such procedures may be discontinued at any time.
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Neither the Issuer nor any of its agents will have any responsibility for the performance by Euroclear, Clearstream or DTC or their respective direct or indirect participants or account holders of
their respective obligations under the rules and procedures governing their operations or the arrangements referred to above.
Limitations
For so long as the 2021 Series Two Bonds are registered in the name of DTC or its nominee, Cede & Co., the Issuer and the Paying Agent/Registrar will recognize only DTC or its nominee, Cede & Co., as the registered owner of the 2021 Series Two Bonds for all purposes, including payments, notices
and voting. So long as Cede & Co. is the registered owner of the 2021 Series Two Bonds, references in this Official Statement to registered owners of the 2021 Series Two Bonds shall mean Cede & Co. and shall not mean the beneficial owners of the 2021 Series Two Bonds.
Because DTC is treated as the owner of the 2021 Series Two Bonds for substantially all purposes under the Resolution, beneficial owners may have a restricted ability to influence in a timely fashion remedial action or the giving or withholding of requested consents or other directions. In addition, because the identity of beneficial owners is unknown to the Issuer, the Paying Agent/Registrar or DTC, it may be difficult to transmit information of potential interest to beneficial owners in an effective and
timely manner. Beneficial owners should make appropriate arrangements with their broker or dealer regarding distribution of information regarding the 2021 Series Two Bonds that may be transmitted by or through DTC.
Under the Resolution, payments made by the Paying Agent/Registrar to DTC or its nominee shall satisfy the obligations of the Issuer under the 2021 Series Two Bonds to the extent of the payments so made.
Neither the Issuer nor the Paying Agent/Registrar have any responsibility or obligation with respect to:
• the accuracy of the records of DTC, its nominee or any Direct Participant or Indirect Participant with respect to any beneficial ownership interest in any 2021 Series Two Bonds;
• the delivery to any Direct Participant or Indirect Participant or any other person, other than a registered owner as shown in the bond register kept by the Paying Agent/Registrar, of any notice with respect to any Bond including, without limitation, any notice of redemption with respect to any Bond;
• the payment to any Direct Participant or Indirect Participant or any other person, other
than a registered owner as shown in the bond register kept by the Paying Agent/Registrar, of any amount with respect to the principal of, premium, if any, or interest on, any Bond; or
• any consent given by DTC or its nominee as registered owner.
Prior to any discontinuation of the book-entry-only system hereinabove described, the Issuer and
the Paying Agent/Registrar may treat Cede & Co. (or such other nominee of DTC) as, and deem Cede & Co. (or such other nominee) to be, the absolute registered owner of the 2021 Series Two Bonds for all purposes whatsoever, including, without limitation:
• the payment of principal of, premium, if any, and interest on the 2021 Series Two Bonds;
I-4
• giving notices of redemption and other matters with respect to the 2021 Series Two Bonds;
• registering transfers with respect to the 2021 Series Two Bonds; and
• the selection of 2021 Series Two Bonds for redemption.
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TAX EXEMPTION AND NONARBITRAGE CERTIFICATE
CONCERNING
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
OF
KODIAK ISLAND BOROUGH, ALASKA
I, Dora Cross, on behalf of the Kodiak Island Borough, Alaska (the "Borough"),
certify as follows:
1. General.
1.1 Responsible Officer. I am the Finance Director of the Borough and, as
such, am an officer of the Borough responsible for issuing the Borough’s $1,215,000
principal amount Solid Waste Disposal Facility Refunding Revenue Bond, 2021 (the
"Bond"), dated, delivered, and paid for on the same date as the date of this certificate
(the "issue date").
1.2 Purpose of Certificate. This certificate is executed to establish the facts,
estimates, and circumstances in existence on the issue date and the bona fide
reasonable expectations of the Borough on the issue date as to future events in
connection with the Bond for the purposes of the applicable provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), and applicable Treasury Regulations
under sections 103, 141, and 148 through 150 of the Code.
1.3 Reasonable Basis for Expectations. To the best of my knowledge,
information, and belief, this certificate accurately summarizes the facts, estimates, and
circumstances in existence on the issue date, and the expectations of the Borough on
the issue date as to future events in connection with the Bond are reasonable.
1.4 Defined Terms. Capitalized words used but not otherwise defined in this
certificate have the meanings set forth in Resolution No. FY2020-30 adopted by the
Borough Assembly on May 5, 2020 (the "Bond Resolution").
2. Purpose of Issuinq the Bond.
2.1 Governmental Purpose. The Borough is a local government unit of the
State of Alaska. The Bond is being issued by the Borough to the Alaska Municipal Bond
Bank (the "Bond Bank") to evidence the obligation of the Borough to repay a loan made
by the Bond Bank to the Borough from the portion of the proceeds of the Bond Bank’s
General Obligation and Refunding Bonds, 2021 Series One (Tax-Exempt), allocable to
the Bond (the "Bond Bank Bonds"). The Bond Bank is lending the proceeds of the Bond
Bank Bonds to the Borough pursuant to a loan agreement, as amended (the "Loan
Agreement"). Pursuant to Treasury Regulations section 1.150-1(d)(2)(ii)(B), the
Borough is treated as the obligor on the Bond Bank Bonds. The Bond is being issued
for the purpose of providing the funds necessary to refund the prepayable installments
of the Borough’s Solid Waste Disposal Facility Revenue Bond, 2011 (the "Refunding"),
FG:54307410.1
and to pay the costs of issuance and sale of the Bond, all as provided by the Bond
Resolution. The proceeds of the Solid Waste Disposal Facility Revenue Bond, 2011 (the
prior issue") were used to pay a portion of the cost of design, engineering, and capital
improvements to the Borough’s solid waste disposal facility (the "Refinanced
Improvements") and to pay the costs of issuance and sale of the prior issue.
2.2 No Impermissible Private Business Use. No more than 10% ($140,599) of
the proceeds of the Bond (or of a corresponding portion of the Refinanced
Improvements) will be used for any private business use. No more than 5% ($70,299) of
the proceeds of the Bond (or of a corresponding portion of the Refinanced
Improvements) will be used either for any private business use that is unrelated to the
governmental purpose of the Bond or for any private business use that is related to a
governmental purpose of the Bond but exceeds the amount of proceeds of the Bond
that are expected to be used for that governmental purpose. No more than 5% of the
proceeds of the Bond will be used directly or indirectly to make or finance loans to any
person other than a governmental unit, except a loan, if any, which enables the
borrower to finance a governmental tax or assessment of general application for a
specific essential governmental function, or which constitutes a nonpurpose investment
within the meaning of section 148 of the Code.
3. Source and Disbursement of Proceeds.
3.1 Purchaser and Purchase Price of the Bond. The Borough has entered
into the Loan Agreement with the Bond Bank to secure payment of the sum of
$1,215,000 (the "Loan Amount"). Pursuant to the Loan Agreement, the Bond Bank will
issue the Bond Bank Bonds at a price equal to the Loan Amount plus original issue
premium on the Bond Bank Bonds of $190,993.90, less underwriters’ discount on the
Bond Bank Bonds of $3,637.32.
3.2 Funds Into Which Proceeds From the Issuance and Sale of the Bond Will
Be Deposited. The sale proceeds to be derived by the Borough from the issuance and
sale of the Bond will be deposited with The Bank of New York Mellon Trust Company,
N.A., as escrow agent (the "Escrow Agent") and used to establish a refunding escrow to
carry out the Refunding and to pay the administrative cost of the Refunding and the
costs of issuing, selling, and delivering the Bond.
4. The Refunding.
4.1 Use of Proceeds. Of the $1,384,626.00 of sale proceeds of the Bond
deposited in the refunding escrow, $1,384,625.00 will be used on the issue date to
acquire United States Treasury Certificates of Indebtedness, Notes, and Bonds--State
and Local Government Series (the "Acquired Obligations"), which will be held by the
Escrow Agent in the refunding escrow established to accomplish the Refunding. Of the
sale proceeds of the Bond that are not deposited in the refunding escrow, $2,691.74 will
be used by the Borough to pay the costs of issuance of the Bond Bank Bonds, $15,000
will be used by the Borough to pay the costs of issuance of the Bond, and excess
proceeds of $38.84 (which is an amount less than 1% of the sale proceeds of the Bond)
FG:54307410,1 2
will be deposited in the Debt Service Subaccount of the Borough’s Solid Waste Disposal
Revenue Bond Account (the "Bond Fund") and used to pay interest on the Bond on its
first interest payment date.
4.2 Purpose and Effect of the Refunding. The purpose of the Refunding is to
accomplish an interest cost savings to the Borough of $128,531.25 with a net present
value of $127,058.98, as represented by the difference between debt service on the
Bond and debt service on the prior issue discounted to the issue date using the yield on
the Bond as the discount rate.
5. Payment of Bond.
5.1 Debt Service Structure. The Bond is a revenue bond of the Borough.
Principal of the Bond is payable annually in installments on December 1 of each year
from 2022 to 2026, inclusive. Interest on the Bond is payable semiannually on each
June 1 and December 1, commencing on December 1, 2021. The Bond is not subject to
prepayment prior to maturity.
5.2 Source of Payment. The Bond is payable from revenues deposited in the
Debt Service Subaccount of the Bond Fund. Those funds deposited in the Debt Service
Subaccount will be used within 13 months of their deposit in that subaccount for
payment of principal of or interest on the Bond. The deposits into the Debt Service
Subaccount relating to the Bond will be used primarily to achieve a proper matching of
revenue of the Borough and debt service on the Bond within each bond year. It is
expected that the money in the Debt Service Subaccount relating to the Bond will be
depleted at least once a year (on each December 1), except for a reasonable carryover
amount not expected to exceed the greater of one year’s earnings on that subaccount
or 1/12 of the annual debt service on the Bond.
5.3 Reserve for the Parity Bonds.
(a) Source of Reserve. The Bond Resolution requires the Borough to
maintain a reserve for the Parity Bonds in an amount equal to the least of (i) 10% of the
initial principal amount of all outstanding Parity Bonds; (ii) 125% of the average Annual
Debt Service Requirement for all outstanding Parity Bonds; and (iii)the maximum
Annual Debt Service Requirement on all outstanding Parity Bonds (the "Reserve
Subaccount Requirement"). The Reserve Subaccount Requirement for the Parity Bonds
is an amount equal to $276,750.00 (maximum Annual Debt Service). No proceeds of
the Bond will be deposited in the Reserve Subaccount of the Bond Fund.
(b) Allocation of Reserve. For the purposes of section 148(d)(1) of the
Code and Treasury Regulations section 1.148-6(e), the Reserve Subaccount serves as
a common reserve fund for the Bond and other outstanding Parity Bonds. On the issue
date, the cash and investments held in the Reserve Subaccount will consist of
$305,000.00 of non-bond proceeds contributed by the Borough on the date of issuance
of the prior issue. The total amount of the Reserve Account is allocated among the
Bond and other outstanding Parity Bonds secured by the Reserve Subaccount by
FG:54307410.1 3
(i) allocating proceeds (including transferred proceeds, if any) of any issue exclusively to
the issue that financed or refinanced those amounts, and (ii)allocating replacement
proceeds held in the Reserve Subaccount (i.e., revenues, amounts that cease to be
proceeds of any issue because of the retirement of the issue that financed those
amounts other than in a refunding, and other non-bond proceed amounts) among all the
outstanding issues secured by the Reserve Account in accordance with the relative
outstanding principal amount of each issue, except, however, that reasonable
adjustments are made to account for proceeds allocated to an issue under the "one-
issue-at-a-time" allocation rule by not allocating replacement proceeds to an issue to the
extent that the reserve requirement for that issue is met or exceeded with proceeds of
that issue. Based upon that allocation method, the total amount of the Reserve
Subaccount is allocated among the Bond and the other outstanding Parity Bonds
secured thereby as follows:
Outstanding
Issue
2011 Bond
2021 Bond
Totals
Outstanding
Principal
Amount
Proceeds
(one-issue-
at-a-time rule)
Replacement
Proceeds
(Relative
Outstanding
Principal
Amount)
$ 235,000 - $ 49,431
1,215,000 - 255,569
$1,450,000 - $305,000
5.4 2005 General Resolution Reserve Fund. The Bond Bank has established
the 2005 General Resolution Reserve Fund (the "Bond Bank Reserve Fund") as a
common reserve fund securing all bonds, including the Bond Bank Bonds, issued under
the 2005 General Resolution of the Bond Bank (together, the "Bond Bank GO Bonds").
The Bond Bank Reserve Fund is funded at an amount equal to the least of
(a) maximum annual debt service on the Bond Bank GO Bonds, (b) 125% of average
annual debt service on the Bond Bank GO Bonds, (c) 10% of the initial principal amount
of each series of Bond Bank GO Bonds, or (d) such lower amount as may be required
by law. No proceeds of the Bond will be used to fund the Bond Bank Reserve Fund.
5.5 Absence of Other Sinkinq Funds. Except for the Debt Service Subaccount
and the Reserve Subaccount, the Borough has not created or established and does not
expect to create or establish any reserve fund, sinking fund, or other similar fund which
is reasonably expected to be used directly or indirectly to pay debt service on the Bond
or any pledged fund with respect to which there is reasonable assurance that money will
be available in that fund to pay debt service on the Bond even if the Borough were to
encounter financial difficulties; however, amounts in the Bond Bank Reserve Fund are
reasonably expected to be used to pay debt service on the Bond Bank Bonds in the
event the Borough fails to pay debt service on the Bond.
FG:54307410.1 4
6. Restrictions on Investing Proceeds of the Bond in Higher Yieldinq Investments.
6.1 Calculation of Yield on Bond. Pursuant to Treasury Regulations
section 1.148-4(a), the yield on the Bond is deemed to be equal to the yield on the Bond
Bank Bonds. The yield on the Bond Bank Bonds has been calculated as the yield that
when used in computing the present worth of all payments of principal of and interest on
the Bond Bank Bonds, produces an amount equal to the issue price of the Bond Bank
Bonds. As reflected in Section 3 of the Bond Purchase Contract dated May 26, 2021,
between the Bond Bank and the underwriters named therein (the "Underwriters")
relating to the Bond Bank Bonds, the "issue price" of the Bond Bank Bonds is being
determined under the general rule of Treasury Regulations section 1.148-1(f)(2)(i)
based upon the first price (including original issue premium or discount) at which a
substantial amount (at least 10%) of each maturity of the Bond Bank Bonds has been
sold to the public. Based upon the issue price certificate provided by the representative
of the Underwriters to the Bond Bank, including Schedule 1 attached thereto showing
the prices at which at least 10% of the Bond Bank Bonds has been sold to the public,
attached hereto as Exhibit A, the yield on the Bond Bank Bonds has been calculated to
be 1.295859%. In determining this yield, no adjustments were made for underwriters’
discount or other costs of issuance of the Bond Bank Bonds.
6.2 Restrictions on Investment of Proceeds of Bond in Higher Yieldinq
Investments.
(c) Proceeds in Refundinq Escrow. The proceeds of the Bond Bank
Bonds loaned to the Borough pursuant to the Loan Agreement and used to carry out the
Refunding will be fully spent for the redemption of the prior issue not later than the date
that is 90 days after the issue date, and those proceeds may be invested in higher
yielding investments for a temporary period (not exceeding 90 days) from the issue date
to the date that the prior issue is redeemed.
(d) Proceeds Used for Costs of Issuance. Proceeds of the Bond to be
used to pay costs of issuance of the Bond Bank Bonds or the Bond are expected to be
spent for that purpose on the issue date and not invested.
(e) Debt Service Subaccount. Proceeds of the Bond representing the
excess amount deposited in the Debt Service Subaccount and other amounts treated as
replacement proceeds of the Bond because they are held in the Debt Service
Subaccount may be invested in higher yielding investments for a temporary period not
exceeding 13 months after the date of their deposit in the Debt Service Subaccount.
(f) Reserve Subaccount. The Borough has contractually agreed with
the Bond Bank that amounts deposited in the Reserve Subaccount will be invested in
obligations the yield on which is not in excess of the yield on the Bond Bank Bonds.
(g) Investment Earnings. Investment proceeds of the Bond (other than
investment earnings on Acquired Obligations in the refunding escrow) for which no
FG:54307410.1 5
other temporary period is available may be invested in higher yielding investments for a
temporary period of one year from the date of receipt of those investment earnings.
(h) Restricted Yield Investments. Proceeds (and amounts treated as
replacement proceeds) of the Bond that may not be invested in higher yielding
investments will be invested only in (i) obligations purchased at fair market value in
bona fide, arm’s-length transactions in an established market for those obligations and
having yields not materially higher than the yield on the Bond when calculated using the
same frequency interval of compounding interest as used for the Bond, (ii) obligations
the interest on which is excluded from gross income under section 103 of the Code that
are not private activity bonds under section 141 of the Code (or obligations treated as
tax-exempt obligations under section 103 of the Code, e.g., obligations issued by
certain qualified regulated investment companies that invest, to the extent practicable,
all of their assets in tax-exempt governmental bonds and meet certain other conditions),
and Demand Deposit Securities issued by the United States Treasury pursuant to the
State and Local Government Series program, or (iii)other United States Treasury
Obligations--State and Local Government Series having yields not materially higher
than the yield on the Bond.
Compliance With Arbitraqe Rebate Requirement or Conditions for Exception
From Arbitraqe Rebate Requirement.
7.1 General Arbitrage Rebate Compliance. The Bond Bank Bonds are subject
to the rebate requirement imposed by section 148(f) of the Code. Proceeds of the Bond
Bank Bonds used pursuant to the Loan Agreement to acquire the Bond from the
Borough are not treated as spent until those proceeds are used to carry out the
Refunding, and those proceeds continue to be treated as proceeds of the Bond Bank
Bonds until spent for that purpose. The Borough, on behalf of the Bond Bank, in the
manner and to the extent required by section 148(f) of the Code, will calculate and
rebate to the United States any investment earnings on gross proceeds of the Bond
Bank Bonds, plus any income attributable to such excess earnings. Investment earnings
on amounts held in the Bond Fund will not be taken into account for this purpose (at any
time, even if the amount earned is $100,000 or more in a bond year, because the Bond
Bank Bonds bear interest at fixed rates (i.e., rates that do not vary during the term of the
Bond Bank Bonds) and have an average maturity of at least 5 years. If the Borough for
any reason fails to comply with the rebate requirement to the extent applicable to the
Bond Bank Bonds, the Borough, to the extent permitted and required by
section 148(f)(7) of the Code, will pay any penalty that may be necessary to preserve
the tax exemption for interest on the Bond Bank Bonds.
8. Bond Meets Other Arbitrage Requirements.
8.1 No Other Governmental Obligations Part of This Issue. There are no
other obligations of the Borough that are being sold at substantially the same time (less
than 15 days apart) as the Bond pursuant to the same plan of financing and that are
reasonably expected to be paid from substantially the same source of funds.
FG:54307410.1 6
8.2 No Replacement of Funds Invested in Hiqher Yieldinq Investments. No
portion of the proceeds of the Bond will be used directly or indirectly to replace funds of
the Borough invested in higher yielding investments.
8.3 No Abusive Arbitraqe Device. The primary, bona fide governmental
purpose of issuing the Bond is to finance the costs of the Refunding. No action is being
taken or will be taken in connection with the issuance of the Bond that has the effect of
(a) enabling the Borough to exploit the difference between tax-exempt and taxable
interest rates to obtain a material financial advantage by investing any portion of the
gross proceeds of the Bond over any period of time, and (b) overburdening the tax-
exempt bond market as a result of issuing the Bond in a greater principal amount,
issuing the Bond earlier, or allowing the Bond to remain outstanding longer than is
otherwise reasonably necessary to finance the costs of the Refunding.
8.4 No Intent to Earn Impermissible Arbitrage Profit. The Borough will not
take any intentional action to earn any impermissible arbitrage profit from the
investment of gross proceeds of the Bond.
9. Bond Meets Other Requirements for Tax Exemption.
9.1
form.
Bond Issued in Re.qistered Form. The Bond is issued only in registered
9.2 No Federal Guaranty. Except as otherwise permitted by the Code,
payment of the principal of or interest on the Bond is not guaranteed in whole or in part
by the United States or any agency or instrumentality thereof.
9.3 Information Return to Be Filed. The Borough will cause a Form 8038-G
Information Return respecting the Bond to be timely filed with the Internal Revenue
Service.
9.4 Bond Not Hed,qe Bond. On the date of issue of the prior issue, the
Borough reasonably expected that (a) at least 85% of the spendable proceeds of the
prior issue would be used to carry out the governmental purposes of the prior issue
within the 3-year period beginning on its date of issue, and (b) not more than 50% of the
proceeds of the prior issue would be invested in nonpurpose investments having a
substantially guaranteed yield for 4 years or more.
9.5 Post-Issuance Compliance Procedures. The Borough adopts and will
implement in respect of the Bond the "Post-Issuance Compliance Procedures for Tax-
Exempt Bonds" attached hereto as Exhibit B to facilitate compliance by the Borough
with the applicable requirements of the Code that must be satisfied after the issue date
to maintain the tax exemption for interest on the Bond after the issue date.
[Signature page follows]
FG:54307410.! 7
10. Bond Tax-Exempt and Not Arbitra.qe Bond.
The Borough expects that bond counsel to the Borough will rely upon the
foregoing facts, estimates, and circumstances in existence on the issue date and the
reasonable expectations of the Borough as to future events respecting the Bond to
enable them to conclude that it is not expected that proceeds of the Bond will be used in
any manner that would cause the Bond to be an arbitrage bond and to provide their
opinion that the Bond is a governmental obligation the interest on which is excluded
from gross income for federal income tax purposes under section 103 of the Code.
Dated: June 16, 2021.
KODIAK ISLAND BOROUGH, ALASKA
Dora Cross, Finance Director
FG:54307410.1 8
EXHIBIT A
ISSUE PRICE CERTIFICATE
$29,775,000
Alaska Municipal Bond Bank
General Obligation and Refunding Bonds
2021 Series One
The undersigned, on behalf of BofA Securities, Inc. (the "Representative"), on behalf of
itself and RBC Capital Markets, LLC and Jefferies LLC (together, the "Underwriting Group"),
hereby certifies as set forth below with respect to the sale and issuance of the above-captioned
obligations (the "2021 Series One Bonds").
1. Sale of the General Rule Maturities. As of the date of this Certificate, for each
Maturity of the General Rule Maturities, the first price at which at least 10% of such Maturity
was sold to the Public is the respective price listed in Schedule A.
2. In#ial Offering Price of the Hold-the-Offering-Price-Maturities.
(a) The Underwriting Group offered the Hold-the-Offering-Price Maturities to the
Public for purchase at the respective initial offering prices listed in Schedule A (the "Initial
Offering Prices") on or before the Sale Date. A copy of the pricing wire or equivalent
communication for the 2021 Series One Bonds is attached to this Certificate as Schedule B.
(b) As set forth in the Purchase Agreement, the members of the Underwriting Group have
each agreed in writing that, (i) for each Maturity of the Hold-the-Offering-Price Maturities, it
would neither offer nor sell any of the 2021 Series One Bonds of such Maturity to any person at
a price that is higher than the Initial Offering Price for such Maturity during the Holding Period
for such Maturity (the "hold-the-offering-price rule"), and (ii) any selling group agreement shall
contain the agreement of each dealer who is a member of the selling group, and any third-party
distribution agreement shall contain the agreement of each broker-dealer who is a party to the
third-party distribution agreement, to comply with the hold-the-offering-price rule. Pursuant to
such agreement, no Underwriter (as defined below) has offered or sold any Maturity of the Hold-
the-Offering-Price Maturities at a price that is higher than the respective Initial Offering Price for
that Maturity of the 2021 Series One Bonds during the Holding Period for such Maturity.
Defined Terms.
(a) Bond Bank means the Alaska Municipal Bond Bank Authority.
(b) General Rule Maturities means those Maturities of the 2021 Series One Bonds
listed in Schedule A hereto as the "General Rule Maturities."
(c) Hold-the-Offering-Price Maturities means those Maturities of the 2021 Series
One Bonds listed in Schedule A hereto as the "Hold-the-Offering-Price Maturities."
A-1
4t54-7634-8975
(d) Holding Period means, with respect to a Hold-the-Offering-Price Maturity, the
period starting on the Sale Date and ending on the earlier of(i) the close of the fifth business day
after the Sale Date (June 3, 2021), or (ii) the date on which the Underwriters have sold at least
10% of such Hold-the-Offering-Price Maturity to the Public at prices that are no higher than the
Initial Offering Price for such Hold-the-Offering-Price Maturity.
(e) Maturity means 2021 Series One Bonds with the same credit and payment terms.
The 2021 Series One Bonds with different maturity dates, or the 2021 Series One Bonds with the
same maturity date but different stated interest rates, are treated as separate Maturities.
(f) Public means any person (including an individual, trust, estate, partnership,
association, company, or corporation) other than the Underwriter or a Related Party (as such
terms are defined below) to the Underwriter.
(g) A purchaser of any of the 2021 Series One Bonds is a Related Party to the
Underwriter if the Underwriter and the purchaser are subject, directly or indirectly, to (i) more
than 50% common ownership of the voting power or the total value of their stock, if both entities
are corporations (including direct ownership by one corporation of another), (ii) more than 50%
common ownership of their capital interests or profits interests, if both entities are partnerships
(including direct ownership by one partnership of another), or (iii) more than 50% common
ownership of the value of the outstanding stock of the corporation or the capital interests or profit
interests of the partnership, as applicable, if one entity is a corporation and the other entity is a
partnership (including direct ownership of the applicable stock or interests by one entity of the
other).
(h) Sale Date means the first day on which there is a binding contract in writing for
the sale of a Maturity of the 2021 Series One Bonds. The Sale Date of the 2021 Series One
Bonds is May 26, 2021.
(i) Underwriter means (i) any person that agrees pursuant to a written contract with
the Bond Bank (or with the lead underwriter to form an underwriting syndicate) to participate in
the initial sale of the 2021 Series One Bonds to the Public, and (ii) any person that agrees
pursuant to a written contract directly or indirectly with a person described in clause (i) of this
paragraph to participate in the initial sale of the 2021 Series One Bonds to the Public (including a
member of a selling group or a party to a retail distribution agreement participating in the initial
sale of the 2021 Series One Bonds to the Public).
The representations set forth in this certificate are limited to factual matters only.
Nothing in this certificate represents the Representative’s interpretation of any laws, including
specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations thereunder. The undersigned understands that the foregoing information
will be relied upon by the Bond Bank with respect to certain of the representations set forth in
the Tax Certificate with respect to the 2021 Series One Bonds, dated the date of the Closing,
executed and delivered by the Bond Bank, and with respect to compliance with the federal
income tax rules affecting the 2021 Series One Bonds, and by Orrick, Herrington & Sutcliffe
LLP, Bond Counsel, in connection with rendering its opinion that the interest on the 2021 Series
One Bonds is excluded fi’om gross income for federal income tax purposes, the preparation of the
A-2
4154-7634-8975
Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to
the Bond Bank from time to time relating to the 2021 Series One Bonds.
[SIGNATURE PAGE FOLLOWS]
A-3
4154-7634-8975
BofA SECURITIES, INC.,
as Representative
By:
Eric Whaley,
Dated: June 16, 2021
4154-7634-8975
A-4
Schedule A
ALASKA MUNICIPAL BOND BANK AUTHORITY
GENERAL OBLIGATION AND REFUNDING BONDS
2021 SERIES ONE (TAX-EXEMPT)
Maturity Date Principal
(December 1) Amount Interest Rate Yield
2021(2/ $ 600,000 5.000% 0.150%
2022 5,190,000 5.000 0.180
2023 4,495,000 5.000 0.270
2024 1,315,000 5.000 0.430
2025 1,385,000 5.000 0.590
2026 1,460,000 5.000 0.710
2027 1,240,000 5.000 0.890
2028 1,310,000 5.000 1.030
2029 1,380,000 5.000 1.150
2030 1,450,000 5.000 1.250
2031 635,000 5.000 1.340
2032(2) 665,000 5.000 1.400
2033 705,000 5.000 1.440
2034 740,000 5.000 1.480
2035(2) 775,000 4.000 1.650
2036 710,000 4.000 1.700
2037(2) 535,000 4.000 1.730
2038 555,000 4.000 1.760
2039 575,000 4.000 1.800
2040 600,000 4.000 1.840
2041 625,000 4.000 1.880
2045(3) 2,830,000 5.000 1.850
(1) Priced to the par call date of December 1, 2031.
(2) Hold-the-Offering-Price Maturity.
(3) Term Bonds.
Price
102.221
107.016
111.581
115.670
119.376
122.928
125.739
128.429
130.945
133.353
135.604
134.909(~)
134.448o)
133.988(~)
122.487(~
121.951(~)
121.630(~/
121.311(1)
120.886(~
120.463(~)
120.042(~)
129.827(~
4154-7634-8975
Schedule B
Pricing Wire or Equivalent Communication
4154-7634-8975
5/26/2021
Wires
Wire Details
Rec’d Date/Tinqe (PST)
05/26/21
Ipreo
Actions: View Deal Inbox v [~ ~ ~ ~
Sender ST Wire Type/Title Master Message # Deal Type
09:48 AM BofA Securities, NY NY VERBAL AWARD Neg
RE: $ 29,775,000*
ALASKA MUNICIPAL BOND BANK
GENERAL OBLIGATION AND REFUNDING BONDS
2021 SERIES ONE (TAX-EXEMPT)
WE HAVE RECEIVED THE VERBAL AWARD.
REPRICING IS AS FOLLOWS:
MOODY’S: A1 (Stable)
FITCH:
S&P: A+ (Stable)
KROLL:
DATED:06/16/2021 FIRST COUPON:t2/01/2021
DUE: 12/01
MATURITY AMOUNT* COUPON
12/01/2021 600M 5.00%
(Approx.
12/01/2022 5,190M 5.000
(Approx.
12/01/2023 4,495M 5.00%
(Approx.
12/01/2024 1,315M 5.00%
(Approx.
12/01/2025 1,385M 5.00%
(Approx.
12/01/2026 1,460M 5.00%
(Approx.
12/01/2027 1,240M 5.00%
(Approx.
12/01/2028 1,310M 5.00%
(Approx.
12/01/2029 1,380M 5.00%
(Approx.
12/01/2030 1,450M 5.00%
(Approx.
12/01/2031 635M 5.00%
(Approx.
12/01/2032 665M 5.00%
(Approx. $
12/01/2033 705M 5.00%
(Approx. $
12/01/2034 740M 5.00%
(Approx. $
12/01/2035 775M 4.00%
(Approx. $
12/01/2036 71OM 4.08%
(Approx. $
12/01/2037 535M 4.00%
ADD’L
TAKEDOWN
PRICE ( Pts ) SPREAD TO MMD
0.15 0.15 +6
$ Price 102.221)
0.18 O.iS +9
$ Price 107.016)
0.27 0.275 +II
$ Price 111.581)
0.43 0.275 +14
$ Price 115.670)
0.59 0.275 +16
$ Price 119.376)
0.71 0.275 +18
$ Price 122.928)
0.89 0.275 +21
$ Price 125.739)
1.03 0.275 +23
$ Price 128.429)
1.15 0.325 +25
$ Price 130.945)
1.25 0.325 +27
$ Price 133.353)
1.34 0.325 +30
$ Price 135.604)
1.40 0.325 +32
Price PTC 12/01/2031 134.909)
1.44 0.325 +33
Price PTC 12/01/2031 134.448)
1.48 0.325 +35
Price PTC 12/01/2031 133.988)
1.65 0.325 +50
Price PTC 12/01/2031 122.487)
1.70 3/8 +52
Price PTC 12/01/2031 121.951)
1.73 3/8 +52
https://www.newissuehome.i-deal .com/VVires/a sp/wire_detail .asp?hidProdCode=LT&hidWireld= 1452908759&hidMode=D 1/3
5/26/2021
12/01/2838
12/81/2839
12/81/2848
12/81/2041
12/81/2045
CALL FEATURES:
Ipreo
(Approx. $ Price PTC 12/01/2031 121.630)
555M 4.80% 1.76 3/8 +52
(Approx. $ Price PTC 12/01/2831 121.311)
575M 4.00% 1.80 3/8 +52
(Approx. $ Price PTC 12/01/2031 120.886)
600M 4.00% 1.84 3/8 +52
(Approx. ~ Price PTC 12/01/2031 120.463)
625M 4.00% 1.88 3/8 +52
(Approx. $ Price PTC 12/01/2031 120.042)
2,830M 5.00% 1.85 3/8 +36
(Approx. $ Price PTC 12/01/2031 129.827)
Optional call in 12/01/2031 @ 100.00
Sinking Fund Schedule
2045 Term Bond
12/01/2042 655M
12/01/2043 690M
12/01/2044 725M
12/01/2045 760M
* - APPROXIMATE SUB3ECT TO CHAN6E
PRIORITY OF ORDERS AS FOLLOWS:
1. Alaska Retail (Individual and Professional)
2. National Retail (Individual and Professional)
3. Net Designated
4. Member
The Bond Bank intends to make bonds available to retail and institutional investors. The
Bond Bank reserves the rlght to 11mit the retail allotments on each maturity to 50% of the
aggregate par value of each maturlty at the flnal prlce.
DEFINITION OF RETAIL:
A "Retail Order" is defined as an order directly placed by an individual or an investment
advlsor or bank trust department acting on behalf of an individual, with a maximum of
$1,eeo, eee per account, unless otherwise approved by the senlor manager in conjunction
wlth the lssuer. Reta11 orders do not lnclude orders from bank portfolios, insurance
companies, bond funds or municipalities. Zip code and category selection are required on
all retall orders at the time the order is entered.
PRIORITY POLICY:
All managers must be designated.
No firm may receive more than 60.00% of any designation.
The co-senior, RBC Capltal Markets, must be designated a mlnimum of 20% of each
designation.
The Senior Manager requests the identification of all prlorlty orders at the tlme the
https:~www~newissuehome~i-dea~comA~Vires~asp~wire-detai~asp?hid~rodcode=LT&hidWire~d=14529~8759&hidMode=D 213
5/26/2021 Ipreo
orders are entered.
UNDERWRITERS
BofA Securities
RBC Capital Markets
3efferies LLC
PARTICIPATIONS
60.000%
30.000%
10.800%
ISSUE TOTAL:
The compliance addendum MSRB Rule 6-11 will apply.
The Award is expected on Wednesday, May 26, 2821.
Delivery is expected on Wednesday, June 16, 2821.
This issue is book entry only. This issue is clearing through DTC.
BofA Securities
RBC Capital Markets
3e~feries LLC
By: BofA Securities New York, NY
Email Address Date Sent
29,775,888
https://www.newissuehome.i-deal.comANires/asp/wire_detail.asp?hid ProdCode=LT&hidWireld= 1452908759&hidMode=D 3/3
Exhibit B - Post Issuance Compliance Procedures
POST-ISSUANCE COMPLIANCE PROCEDURES
FOR TAX-EXEMPT BONDS
Kodiak Island Borough, Alaska (the "Borough") issues governmental tax-exempt bonds subject
to ongoing compliance obligations that must be met to preserve the tax-exempt status of the
bonds. In addition to loss of tax-exemption, adverse consequences can result from failure to
comply with Internal Revenue Service (IRS) restrictions relating to arbitrage, timing and use of
bond proceeds, and other aspects of a bond issue. However, issuers that discover noncompliance
as a result of the adoption and adherence to a written post-issuance compliance policy are
eligible for significantly more favorable treatment when remediating the noncompliance through
the IRS’s Voluntary Closing Agreement Program. Accordingly, the Borough has adopted these
procedures to assist in identifying and correcting noncompliance in a timely manner.
Responsibility for Maintaining Compliance
The Assembly of Borough has the overall, final responsibility for monitoring whether the
Borough is in compliance with post-issuance federal tax requirements for its tax-exempt bonds.
However, the Assembly has delegated to the Finance Director the primary operating
responsibility for implementing and monitoring compliance with this policy document. The
Finance Director should consult with bond counsel when there are questions or concerns about
the application of applicable federal law to a tax-exempt bond financing or a post-issuance tax
compliance issue.
Expenditures of Tax-Exempt Bond Proceeds
For each project financed in whole or part with tax-exempt bond proceeds, the Finance Director
will monitor the expenditure of both tax-exempt bond proceeds and funds that are not proceeds
of tax-exempt bonds and will track allocations of tax-exempt bond proceeds and funds that are
not proceeds of tax-exempt bonds to project expenditures. For expenditures of tax-exempt bond
proceeds, the Finance Director will record the date, purpose, property financed and vendor
associated with each expenditure of bond proceeds and identify which expenditures are for the
purpose of reimbursing the Borough for prior expenditures.
Use of Property Financed with Tax-Exempt Bond Proceeds
For each issue of tax-exempt bonds, the Finance Director will monitor the use of property
financed with tax-exempt bond proceeds for the term of the bond issue and for the term of any
bonds issued to refund the original issue or issued to refund an issue that refunded the original
issue. The Finance Director will monitor such use no less frequently than once a year.
Arbitrage Yield Restriction and Rebate
For each issue of tax-exempt bonds, the Finance Director will monitor the interest earned on
investment of tax-exempt bond proceeds on an annual basis and will cause arbitrage rebate
calculations to be made as required by applicable federal law. If necessary, the Finance Director
also will cause the appropriate federal arbitrage tax returns to be prepared and timely filed with
the IRS together with any rebate amount owed.
1
513528431
Identification of Potential Violations
If at any time during the term of an issue of tax-exempt bonds, the Borough discovers that a
violation of federal tax requirements applicable to that issue may have occurred, the Finance
Director will consult with bond counsel to determine whether any such violation actually has
occurred and, if so, take prompt action to accomplish an available remedial action under
applicable IRS regulations or enter into a closing agreement with the IRS under the Voluntary
Closing Agreement Program described under Notice 2008-31 or other future published guidance.
Record Retention
Records relating to tax-exempt bonds must be maintained as required by the State Auditor’s
Office. However, notwithstanding the record retention requirements set forth by the State
Auditor’s Office, records relating to tax-exempt bonds must be maintained for the term of the
bond issue plus three years, or, in the case of an issue refunded by one or more subsequent bond
issues, for the combined term of the issues plus three years.
Training
It is the policy of Borough that the Finance Director and his or her staff, as well as the principal
operating officials of those departments of the Borough for which property is financed with
tax-exempt bonds should be provided with education and training on federal tax requirements
applicable to tax-exempt bonds. The Borough therefore will enable and encourage those
personnel to attend and participate in educational and training programs offered by, among
others, bond counsel, the Washington Municipal Treasurers Association and the Washington
Finance Officers Association with regard to the federal tax requirements applicable to
tax-exempt bonds.
2
51352843.1
Fo 8038-GI
(Rev. September 2018) I
|
Department of the Treasury ~
Internal Revenue Service ~
JJ/I’.F~il Reporting Authority
1 Issuer’s name
Kodiak Island Borough, Alaska
3a Name of person (other than issuer) with whom the IRS may communicate about this return (see instructions)
Information Return for Tax-Exempt Governmental Bonds I
¯ Under Internal Revenue Code section 149(e)
!
OMB No. 1545-0720
¯ See separate Instructions. Caution: If the issue price is under $100,O00, use Form 8038-GC.
¯ Go to www.irs;gov/FS038 G for Instructions and the la~est information,
If Amended Return, check here ¯ []
2 Issuer’s emptoyer identification number (EIN)
92-0030845
3b Telephone number of other person shown on 3.
4 Number and street (or P.O. box if mail is not delivered to street address) t Room/suite I 710 Mill Bay Road
6 City, town, or post office, state, end ZIP code
Kodiak, AK 99615
8 Name of issue
Solid Waste Disposal Facility Refunding Revenue Bond, 2021
10a Name and title of officer or other employee of the issuer whom the IRS may call for more inforrnat[on (see
instructions)
Dora Cross, Finance Director
|¢P:Ti|I| Type ’of Issue (enter the issue price). See the instructions and attach schedule.
11 Education ..............................
12 Health and hospital .........................
13 Transportation .............................
14 Public safety ...........................
15 Environment (including sewage bonds) ....................
16 Housing ........................
17 Utilities ........................
18 Other. Describe ¯
19 If bonds are TANs or RANs, check only box 19a .........
If bonds are BANs, check only box 19b ¯
20 If bonds are in the form of a lease or installment sale, check box .......
5 Reportnumber(ForlRS Use Only)
13 IFil
7 Date of issue
0611612021
9 CUSIP number
None
10b Telephone number of officer or other
employee shown on 10a
(90/) 486-9323
11
12
13
14
15
16
17
18
1,405,994
Description of ]onds. Complete for the entire issue for which this form Is being ~ed.
(c) Stated redemption average matudty
=1 t 12 01/2026 1,40 ,99, _ ._ 3.63 ~ ~-~ ~eds-~B-~~-~ Issue (including underwriters’ discount)
22 Proceeds used for accrued interest .....................
Issue.price of entire issue (enter amount from line 21, colum,n (b))
2423 Proceeds used for bond issuance costs (including underwr ters discount)..
I 24 I
21,3291
25 Proceeds used for credit enhancement ............ ! 25 I
26 Proceeds allocated to reasonably required reserve or replacement fund , 126 I I .......
27 Proceeds used to refund prior tax-exempt bonds. Complete Part V . ¯ ¯ ] 27 | 1,384,6261
28 Proceeds used to refund prior taxable bonds. Complete Part V .... ~ 28 ~
29 Total (add lines 24 through 28) ......................
30 Nonrefunding proceeds of the issue (subtract line 29 from line 23 and enter amount here)
~Desoription of Refunded Bonds. Complete this part only ~or refundin9 bonds.
31 Enter the remaining weighted average maturity of the ~cax-exemp~ bonds t~ be refunded ....
32 Enter the remaining weighted average maturity of the taxable bonds to be refunded .....
33 Enter the last date on which the refunded tax-exempt bonds will be called (MM/DD/YYYY) ¯ 09/1512011
34 Enter the date(s) the refunded bonds were issued I~ (MM/DD/YYYY)
For Paperwork Reduction Act Notice, see separate instructions. Cat. No. 63773S
22
23
129
~ 30
(e) Yield
1.2958
1,405,994
1,405,955
39
3.30 years .....
vears
0910112021
Form 8038~G (Rev. 9-2018)
Form 8038-G (Rev, 9-201
~ Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 14!(b)(5)
36a
Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract _.~:~.,
(GIC) (See instructions) ......................... 36a
Enter the final maturity date of the GtC ¯ (MM/DD/YYYY)
Enter the name of the GIC provider ¯
Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans
b
to other governmental units ........................ 37
Page2
38a If this issue is a loan made from the proceeds of another tax-exempt issue, check box ¯ [] and enter the following information:
b Enter the date of the master pool bond ¯ (MM/DD/YYYY) 0611612021
C Enter the EIN of the issuer of the master pool bond ¯ 92-6001185
d Enter the name of the issuer of the master pool bond I~ Alaska Municipal Bond Bank
89 If the issuer has designated the issue under section 265(b)(3)(B)(i)(lll) (small issuer exception), check box ....
¯ []
40 If the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box ............
¯ []
41a If the issuer has identified a hedge, check here ¯ [] and enter the following information:
b Name of hedge providerl~
c Type of hedge I~
d Term of hedge¯ ¯ []
42 If the issuer has superintegrated the hedge, check box .....................
43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated
according to the requirements under the Code and Regulations (see instructions), check box ......
l~ []
44 If the issuer has established written procedures to monitor the requirements of section 148, check box .....
I~ []
45a If some portion of the proceeds was used to reimburse expenditures, check here ¯ [] and enter the amount
of reimbursement ........ ¯
b Enter the date the official intent was adopted ¯ (MM/DD/YYYY) __--
Signature
and
Consent
Paid
Preparer
Use Only
Under penalties of perjury, I declare that I have examined thls return and accompanying schedules and statements, and to the best of my knowledge
and belief, they are true, correct, and complete. I further declare that ] consent to the IRS’s disclosure of the Issuer’s return information, as necessary to
3recess th s return, to the Pet~s~,n that I have authorized above.
~;(~)~"~i~"\ t,_’.’]~ ~,C~[~,’,~’), 0611612021 ~ DoraCross. Finance Director
~ Signature of~s~uer’s autho~T~ed representative Date Type or prillt name and title
Print/3-ype preparer’s name p . e
!06/16/2021 I self-employed J P0106! 698 ;Marc R. Greenough 91-0876~61 ~ ~rm’s EIN ~ Foster Gamey PC ~ Firm’s name
~rm’s address ~ 1111 Third Avenue, Suite 3000, Seattle, WA 98101 ~ (Z06) 447-4~00
Form 8038-G (~ev. 9-2018)
CERTIFICATE OF MAILING
I, Rachel Giles-Klein, a legal practice assistant at Foster Garvey P.C., in
Washington, certify that on this day I mailed the original IRS Form 8038-G relating to
Seattle,
Kodiak Island Borough, Alaska
$1,215,000
Solid Waste Disposal Facility Refunding Revenue Bond, 2021
Dated Date: June 16, 2021
Closing Date: June 16, 2021
to the Department of the Treasury, Internal Revenue Service, Ogden, Utah 84201, by certified
mail, return receipt requested (No. 9414 7266 9904 2972 2825 95).
DATED: June 21, 2021
~
FG:5434~852.1
Postage
Sent To:
Certified Mail Fee
Return Receipt Fee
(Endorsement Required)
Restricted Delivery Fee (Endorsement Required’~
Total Postage & Fees
Postmark
Here
SEE REVERSE FOR INSTRUCTIONS
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201
PS Form 3800, April 2015
LINE 1,
Return Receipt Article Number
II!fflllllll IIIIIIillllllllllli IIIIII
9590 9266 9904 2972 2,qP5 9fi
2. Certified Mail® Article Number
9414 7266 9904 2972 2B25 95
3. Service Type: CERTIFIED MAIL
4. Restricted Delivery? (Extra Fee) [~Yes
1, Article Addressed to:
Department of the Treasury
Internal Revenue Service Center
Ogden, UT 84201
Signature
X
Rote red by (Printed Nsmb)
D. lii delivery ~ddress different from item 1?
If YES, enter delivery address below:
~ PS Form 3811, Facsip~ile, July 2015
Domestic Return Receipt
:FOSTER GARVEY PC
itll THIRD AVENUE SUITE 3000
SEATTLE WA 98101
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H. CLAY KEENE
cley.keene@keenecurralLcorn
SCOTT A, BRANDT-ERICHSEN
s.brandt-erichsen@keenecurrall.com
GEOFFREY G, CURRALL- 1944-~tOle
KEENE & CURRALL
A PARTNERSHIP OF PROFESSIONAL COMPANIES
ATTORNEYS AT LAW
CURRALL OFFICE BUILDING
S40 WATER STREET, SUITE 30~
KETCHIKAN, ALASKA 99901
AREA CODE (907)
TELEPHONE 2;~ S-4131
FACSIMILE
June 16, 2021
NO LITIGATION CERTIFICATE
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, SCOTT BRANDT-ERICHSEN, certify that I am the duly appointed and acting
Borough Attorney of Kodiak Island Borough, Alaska (the "Borough"), and that I am
authorized to execute and deliver this certificate and further certify on behalf of the
Borough as follows:
of its $1
"Bond").
This certificate is delivered in connection with the issuance by the Borough
,215,000 Solid Waste Disposal Facility Refunding Revenue Bond, 2021 (the
2. No litigation of any nature is now pending or, to my knowledge, threatened,
affecting the corporate existence or boundaries of the Borough or the title of the present
officers to their respective offices; and no authority or proceeding for the issuance of the
Bond has been repealed, revoked, or rescinded.
3. No litigation of any nature is now pending, or, to my knowledge, threatened
seeking to restrain or enjoin the issuance, sale, or delivery of the Bond, or the right of the
Borough to fix and collect revenues pledged or to be pledged to pay the principal of and
interest on the Bond, or the pledge thereof, or in any way contesting or affecting the
validity or enforceability of the Bond or the loan agreement between the Borough and the
Alaska Municipal Bond Bank relating to the Bond, as amended, or contesting the power
of the Borough or its authority with respect to the Bond.
4. No litigation of any nature is now pending, or, to my knowledge, threatened
against the Borough involving any of the property or assets of or under the control of the
Borough, which, individually or in the aggregate, involves the possibility of any judgment
or uninsured liability which may result in any material change in the revenues, properties,
or assets, or in the condition, financial or otherwise, of the Borough.
Scott Brandt-Erichsen, Borough Attorney
SIGNATURE CERTIFICATE
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
ss:
I, ALISE L. RICE, certify as follows:
1. I am the duly appointed, qualified, and acting Borough Clerk of Kodiak
Island Borough, Alaska (the "Borough"), and as such am authorized to execute this
certificate.
2. The Kodiak Island Borough, Alaska $1,215,000 Solid Waste Disposal
Facility Refunding Revenue Bond, 2021 (the "Bond"), was duly signed on behalf of the
Borough by William Roberts, Mayor of the Borough, and duly attested by Alise L. Rice,
Borough Clerk of the Borough.
3. The signatures of the Mayor and the Borough Clerk on the Bond are the
true and genuine signatures of such respective officers.
4. Such officers are the duly elected or appointed, qualified, and acting
officers of the Borough, holding such respective offices and authorized to execute the
Bond.
5. The seal that is impressed upon this Certificate is the duly adopted and
only official seal of the Borough and has been impressed on the Bond.
June 16,2021.
Clerk
~trument was acknowledged before me this /~ day of June, 2021,
h Clerk of Kodiak Island Borough, Alaska.
Notary Public
State of Alaska
Commission Expires Sep 26, 2024
(Signature of Notary)
Notary public for the State of Alaska
My commission expires ~ " ~ ~
FG:54305940. I
No. R-1 $1,215,000
UNITED STATES OF AMERICA
STATE OF ALASKA
KODIAK ISLAND BOROUGH
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
REGISTERED OWNER:
PRINCIPAL AMOUNT:
ALASKA MUNICIPAL BOND BANK
ONE MILLION TWO HUNDRED FIFTEEN THOUSAND
DOLLARS
Principal Interest
Installment Rate
2o 2 2o,ooo 5.ooo/o
....... 2~3 ..... 230,000 5.00
.... 2024 ....... 240,000 5.00 ........ 255,000 5.00 .....
5.00 2026 270,000
For so long as the Alaska Municipal Bond Bank (the "Bond Bank") is the
Registered Owne~, payment of principal and interest shall be made as provided in the
Loan Agreement between the Bond Bank and the Borough, as amended (the "Amended
Loan Agreement"). When and if this Bond is not owned by the Bond Bank, installments
of principal of and interest on this Bond shall be paid by check or draft mailed by first
class mail to the Registered Owner as of the close of business on the 15th day of the
month before each installment payment date; provided, that the final installment of
principal of and interest on this Bond shall be payable upon presentation and surrender
of this Bond by the Registered Owner at the office of the Registrar. Interest will be
computed on the basis of a 360-day year consisting of twelve 30-day months. Both
principal of and interest on this Bond are payable in lawful money of the United States
of America which, on the respective dates of payment thereof, shall be legal tender for
the payment of public and private debts, solely out of the special fund of the Borough
FG 543070411 Page 1 of 3
known as the "Solid Waste Disposal Revenue Bond Account" created by Section 12 of
Resolution No. FY2012-06.
This Bond is the Solid Waste Disposal Facility Refunding Revenue Bond issued
by the Borough, and is authorized for the purpose of refunding certain principal
installments of an outstanding revenue bond of the Borough under Resolution
No. FY2020-30 of the Borough entitled:
A RESOLUTION OF THE KODIAK ISLAND BOROUGH
ASSEMBLY AUTHORIZING THE BOROUGH TO ISSUE A
REFUNDING REVENUE BOND TO REFUND ALL OR A PORTION
OF THE PRINCIPAL INSTALLMENTS OF THE OUTSTANDING
SOLID WASTE DISPOSAL FACILITY REVENUE BOND, 2011, OF
THE BOROUGH AND TO PAY COSTS OF ISSUING THE BOND;
FIXING CERTAIN DETAILS OF SUCH BOND; AUTHORIZING ITS
SALE; AND PROVIDING FOR RELATED MATTERS ...... .....
(the"Resolution") ...... ...... ..........
This Bond is not subject to prepayment. ......
This Bond is transferable as provided i~he .... only upon the Bond
Register of the Borough, and (ii) upon B~nd together with a written
instrument of transfer duly executed by the Regi~tere~ Owner or the duly authorized
attorney of the Registered Owner; ~nd there~Qn new fully registered Bond in the
same aggregate principal amoun~ and maturi~ shall be issued to the transferee in
exchange therefor as proviaSd in tS~ ResQi~tion and upon the payment of charges, if
any, as therein prescrib~ The Bor~5’ ~ay treat and consider the person in whose
name this Bond is re~iSte~ ~s the absolute owner hereof for the purpose of receiving
payment of, oro~ account ~f, t~ principal or redemption price, if any, hereof and
interest due hereon ana for alJ ~Ser purposes whatsoever.
TSis Bond is a special, limited obligation of the Borough giving rise to no charge
against th~ ~orou~h’s’general credit, and is payable solely from, and constitute a claim
of the owne~ h~eof against, only the revenues, funds, and assets of the Borough
pledged under the Resolution. This Bond shall never constitute a debt or indebtedness
of the State of Alaska within the meaning of any provision or limitation of the
Constitution or statutes of the State of Alaska or the Borough, or of any political
subdivision thereof, and shall never constitute nor give rise to a general pecuniary
liability of the State or the Borough or a charge against their general credit or taxing
powers.
No officer, agent, or employee of the Borough, and no officer, official, agent, or
employee of the State of Alaska, nor any person executing this Bond, shall in any event
be subject to any personal liability or accountability by reason of the issuance of this
Bond.
~G S~0~0~,~ Page 2 of 3
IT IS HEREBY CERTIFIED AND RECITED that all conditions, acts or things
required by the constitution or statutes of the State of Alaska to exist, to have happened
or to have been performed precedent to or in the issuance of this Bond exist, have
happened and have been performed, and that this Bond, together with all other
indebtedness of the Borough, is within every debt and other limit prescribed by such
constitution or statutes.
IN WITNESS WHEREOF, THE KODIAK ISLAND BOROUGH, ALASKA, has
caused this Bond to be signed in its name and on its behaff by the manual or facsimile
signature of its Mayor and its corporate seal (or a facsimile thereof) to be impressed or
otherwise reproduced hereon and attested by the manual or facsimile signature of its
Clerk, all as of the 16th day of June, 2021.
KODIAK ISLAND BOROUGH, A~SKA
liam Robe~,
ATTEST:
FG:54307041.1 Page 3 of 3
NO. 2
UNITED STATES OF AMERICA
STATE OF ALASKA
KODIAK ISLAND BOROUGH
SOLID WASTE DISPOSAL FACILITY REVENUE BOND, 2011
$235,000
REGISTERED OWNER: ALASKA MUNICIPAL BOND BANK
PRINCIPAL AMOUNT: TWO HUNDRED THIRTY-FIVE THOUSAND DOLLARS
The Kodiak Island Borough, Alaska (the "Borough"), a mu~!~ipal~~[poration of
the State of Alaska, hereby acknowledges itself to owe and for yal~te~iY~ promises
to pay to the Registered Owner identified above, or its regi~terea~aS~i~’h~i:ifrom the
sources stated herein, the principal amount indicated abov~;i~n ~epte~ber 1, 2021, and
to pay, from the sources stated herein, interest on suc~ pri~!i~ipai~rom tfie date hereof at
the rate of five percent (5.00%) per annum, payable o~;~!i~ept~beE ~i~i~021. ,,
For so long as this Bond is owned by th ska Bond Bank (the Bond
Bank"), payment of principal and i~terest Sbaiiii~ irn~de as provided in the Loan
Agreement, dated as of Septembe~ll ~ 1, ente~ into by and between the Borough
and the Bond Bank ("Loan Agreement"). In the ~ven~ that this Bond is no longer owned
by the Bond Bank, payment 6f pri55ipai of a~d interest on this Bond will be payable at
the office of the Finance Director (th~ tlRegi~trar") upon surrender of this Bond. Interest
shall be computed on the basi~ of a 36~ay year composed of twelve 30-day months.
Both principal ofahd iStere~t on t~hi~ Bond are payable in lawful money of the United
States of America solely out of the special.fund of the Borough known as the "Solid Waste DiS~bsal R~venue Bond Account created by Section 12 of Resolution
No. FY2012-06 (the~Bond Resolution").
This Bond is one of an issue of bonds (the "Bonds") ag re atin the dnci al g g g P P sum of $3,275~000 and is issued pursuant to the Constitution and statutes of the State
of Alaska and the duly adopted resolutions and ordinances of the Borough, including the
Bond Resolution. The definitions contained in the Bond Resolution shall apply to
capitalized terms contained herein. The Bonds are being issued for the purpose of
undertaking certain design, engineering, and capital improvements to the Borough’s
Solid Waste Disposal Facility.
This Bond is not subject to prepayment.
The Borough does hereby pledge and bind itself to set aside out of Pledged
Revenues of the Borough and to pay into the Bond Account the various amounts
required by the Bond Resolution to be paid into and maintained in the Bond Account all
within the times provided in the Bond Resolution.
FG:54307041,1 Page 1 of 2
The pledge of Pledged Revenues contained herein and in the Bond Resolution
may be discharged by making provision, at any time, for the payment of the principal of
and interest on this Bond in the manner provided in the Bond Resolution.
The pledge of amounts to be paid into the Bond Account is hereby declared to be
a lien and charge upon the Pledged Revenues superior to all other charges of any kind
or nature and equal in rank: to the lien and charge thereon for amounts pledged to the
payment of any Future Parity Bonds hereafter issued.
The Borough has further bound itself to maintain the Facility in good condition
and repair, to operate the same in an efficient manner and at a reasonable cost, and to
establish, maintain, and collect Fees for as long as any Parity Bonds are outstanding
that will provide Pledged Revenues in an amount not less than 1.25 the Annual Debt
Service Requirement for such year on all outstanding Parity Bonds.
This Bond is a special, limited obligation of the Borough giving dse to, no charge
against the Borough’s general credit, and is payable solely from; and ~titu~s a claim
of the Registered Owners hereof against, only the revenue~i~funds, and a~ts of the
Borough pledged under the Bond Resolution. This Bond sSall ne~er constitute a debt or
indebtedness of the State of Alaska within the meanidgof any provision or limitation of
the Constitution or statutes of the State of Alaska orilttie. B~rougS, or of any political
subdivision thereof, and shall never constitut~ nor gi~e ~ise=to a general pecuniary
liability of the State or the Borough or a charge against their general credit or taxing
powers. ’
It is hereby certified that all acts,~conditions, and things required by the
Constitution and statutes of the State of Alaska and the ordinances and resolutions of
the Borough to be done precedent to and in the issuance of this Bond have happened,
been done, and performed.’
IN WITNESS WHEREOF I the Kodiak Island Borough, Alaska, has caused this
Bond to be executed with the manual or facsimile signature of its Mayor and to be
countersigned with tSe manual or facsimile signature of its Clerk and the official seal of
the Borough to be impressed or imprinted hereon, as of this first day of March, 2021.
KODIAK ISLAND H, ALASKA
3~ am Roberts, yor
Alis~ L. Rice, Borough Clerk J
FG 54307041,1 Page 2 of 2
PARITY CERTIFICATE
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, DORA CROSS, Finance Director of Kodiak Island Borough (the "Borough"),
certify on behalf of the Borough as follows:
1. This certificate is delivered in connection with the issuance by the Borough
of its $1,215,000 principal amount Solid Waste Disposal Facility Refunding Revenue
Bond, 2021 (the "Bond").
2. Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to those terms in Resolution No. FY2012-06 of the Borough
adopted by the Assembly of the Borough on August 4, 2011 (the "Refunded Bond
Resolution").
3. This certificate is being delivered to demonstrate compliance with certain
of the conditions for the issuance of Future Parity Bonds set forth in the Refunded Bond
Resolution.
4. The Bond is being issued for the purpose of refunding prior to redemption
part of the outstanding Solid Waste Disposal Facility Revenue Bond, 2011 (the
"Refunded Portion").
5. The Borough has covenanted in the resolution authorizing the issuance of
the Bond that it will pay into and maintain in the Reserve Subaccount the amounts
required by Section 13 of the Refunded Bond Resolution to be paid into and maintained
in the Reserve Subaccount in the event Future Parity Bonds are issued.
6. As of the date of this certificate, there is no deficiency in the Debt Service
Subaccount or Reserve Subaccount.
7. As set forth below, the issuance of the Bond does not require a greater
amount to be paid out of Pledged Revenues for principal and interest over the life of the
Bond than is required for principal and interest over the life of the Refunded Portion.
Prior Refunding
Date Debt Service Debt Service Savings
06/30/2022 59,250.00 58,218.75 1,031.25
06/30/2023 298,125.00 275,250.00 22,875.00
06/30/2024 300,500.00 274,000.00 26,500.00
06/30/2025 298,600.00 272,250.00 26,350.00
06/30/2026 302,500.00 274,875.00 27,625.00
06/30/2027 300,900.00 276,750.00 24,150.00
1,559,875.00 1,431,343.75 128,531.25
FG:54305953,1
Dated: June 16, 2021.
Dora Cross, ~’Inance Director
FG:54305953.1
CERTIFICATE OF FINANCE DIRECTOR
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, DORA CROSS, certify as follows:
1. I am the duly appointed, qualified, and acting Finance Director of Kodiak
Island Borough, Alaska (the "Borough"), and as such am authorized to execute this
certificate.
2. Pursuant to Resolution No. FY2020-30 of the Borough, I have approved
the dated date, denomination, principal and interest payment dates, principal amount,
principal amount of each installment, interest rates, optional prepayment terms, and
other details of the Borough’s Solid Waste Disposal Facility Refunding Revenue Bond,
2021 (the "Bond"), as set forth in the Bond and the Amendatory Loan Agreement
relating to the Bond between the Borough and Alaska Municipal Bond Bank, dated as of
June 16, 2021. I further confirm that: (a) no rate of interest on any principal installment
of the Bond exceeds the rate of interest on the corresponding maturity of Alaska
Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series One (Tax-
Exempt); (b) the net present value of the savings to the Borough effected by issuing the
Bond (and a replacement refunded bond) and refunding the refunded principal
installments is at least three percent of the aggregate amount of the refunded principal
installments; and (c) the Bond matures on or before six months after the date on which
the last refunded principal installment is payable.
3. The determination of the foregoing matters is in accordance with
Resolution No. FY2020-30 of the Borough.
Dated: June 16, 2021.
Dora Cross, Finance Director
FG:54305940,1
PAYMENT, DELIVERY, AND APPLICATION OF PROCEEDS CERTIFICATE
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, DORA CROSS, certify as follows:
1. I am the duly appointed, qualified, and acting Finance Director of Kodiak
Island Borough, Alaska (the "Borough"), and as such am authorized to execute this
certificate.
2. On the date hereof, I delivered to the Alaska Municipal Bond
Juneau, Alaska (the "Bond Bank") the $1,215,000 Solid Waste Disposal
Refunding Revenue Bond, 2021 (the "Bond").
Bank,
Facility
3. At or before the time of delivery of the Bond, the Borough received from
the Bond Bank the following amounts as full payment for the Bond.
Principal of Bond
Original issue premium
Total Sources of Funds
$1,215,000.00
190,993.90
$1,405,993.90
4. The Borough will apply the amount received from the Bond Bank as
payment for the Bond in the following manner.
Refunding escrow
Bond Bank costs of issuance
Borough costs of issuance
Underwriters’ discount
Additional proceeds
Total Uses of Funds
$1,384,626.00
2,691.74
15,000.00
3,637.32
38.84
$1,405,993.90
Dated: June 16, 2021.
Dora Cross, Finance Director
I, DEVEN J. MITCHELL, Executive Director of the Alaska Municipal Bond Bank,
Juneau, Alaska, acknowledge receipt from Kodiak Island Borough, Alaska (the
"Borough") of the following bond of the Borough:
$1,215,000 Solid Waste Disposal Facility Refunding Revenue Bond, 2021
Dated: June 16, 2021.
Deven J. Mitchell, Executive Director
Alaska Municipal Bond Bank
FG:54305940 1
PAYMENT, DELIVERY, AND APPLICATION OF PROCEEDS CERTIFICATE
KODIAK ISLAND BOROUGH, ALASKA
$1,215,000
SOLID WASTE DISPOSAL FACILITY REFUNDING REVENUE BOND, 2021
I, DORA CROSS, certify as follows:
1. I am the duly appointed, qualified, and acting Finance Director of Kodiak
Island Borough, Alaska (the "Borough"), and as such am authorized to execute this
certificate.
2. On the date hereof, I delivered to the Alaska Municipal Bond Bank,
Juneau, Alaska (the "Bond Bank") the $1,215,000 Solid Waste Disposal Facility
Refunding Revenue Bond, 2021 (the "Bond").
3. At or before the time of delivery of the Bond, the Borough received from
the Bond Bank the following amounts as full payment for the Bond.
Principal of Bond
Original issue premium
Total Sources of Funds
$1,215,000.00
190,993.9O
$1,405,993.90
4. The Borough will apply the amount
payment for the Bond in the following manner.
Refunding escrow
Bond Bank costs of issuance
Borough costs of issuance
Underwriters’ discount
Additional proceeds
Total Uses of Funds
received from the Bond
$1,384,626.00
2,691.74
15,000.00
3,637.32
38.84
$1,405,993.90
Bank as
Dated: June 16, 2021.
Dora Cross, Finance Director
I, DEVEN J. MITCHELL, Executive Director of the Alaska Municipal Bond Bank,
Juneau, Alaska, acknowledge receipt from Kodiak Island Borough, Alaska (the
"Borough") of the following bond of the Borough:
$1,215,000 Solid Waste Disposal Facility Refunding 2021
Dated: June 16, 2021.
AI
Executive Director
Municipal Bond Bank
FG:54305940. I
SUBORDINATION AGREEMENT
The Alaska Department of Environmental Conservation ("ADEC"), as lender and
administrator of the Alaska Clean Water Fund ("ACWF"), entered into a Loan
Agreement with the Kodiak Island Borough ("Borough") for the Kodiak Island Borough
Landfill Design and Construction Project. The Ldan Agreement, ACWF Loan number
505041, was entered into April 6, 2006 evidencing a loan to the Borough in the principal
amount of $2,612,000 to be repaid over a 15-year term from revenues generated by the
Borough’s landfill.
ADEC hereby agrees to unconditionally subordinate its lien on pledged revenues
to the holders of any Bonds and Parity Bonds issued by the Borough, or to be issued in
the future, pursuant to the Borough’s Resolution FY 2012-06 adopted August 4, 2011.
This Subordination Agreement shall not operate or be construed to amend the Loan
Agreement or to affect DEC’s lien priority except as stated herein.
Dated and effective August 31,2011.
Alaska Department of Environment Conservation
Division of Water
Bill Griff’rth, ~I Director of Water
STATE OF ALASKA
THIRD JUDICIAL DISTRICT
THIS CERTIFIES that on this (~’t" day of ,4.~5:~.¢~\t~- , 2011, before me,
the undersigned Notary Public of the State of Alaska, personally appeared BILL
GRIFFITH, known to me and to me known to be the Acting Director of Water for the
Alaska Department of Environmental Conservation, and acknowledged to me that he
knows the contents of the foregoing document and executed the foregoing document on
behalf of ADEC for the purposes therein set forth.
WITNESS my hand and notadat seat the day and year first hereinabove written.
SUBORDINATION
I:\Docs\4101.6001
\
No[ary PubtiC-"of the State of Alaska
My Commission Expires: _f"~
ACWF ~’
THIS AGREEMENT is amended as of September 2, 2011, by the Alaska
Depmtment of Environmental Conservation (the Department) and the Kodiak
Island Borough (rifle Borough), acting pursuant to Resolution FY2006-16
approved by the Kodiak Island Borough for a toan mount of $2,612,000 and a
loan term of i5 years.
This loan agreement is amended by replacing Section 4.3 and adding a new
section en.titled Section VII - Special Provisions Language,
Section 4.3 ~411 read as follows:
Nection 4.3. The Borough assures the Depm-tment that tt~e Bo<ough has not
pledged revenues for the repayment of its loan that have been previously
pledged or encumbered, unless specifically set fortla in the Borough’s approved
application. The pledged revermes for repayment pf l~he loan and each separate
source of revemae are specifically identified and described in the Borough’s
submitted application.
Additionally, the Borrower agrees to meet the following actions to assure the
Department that sufficient revem.~.es are provided for repayment of the loan:
¯ (a) the Borrower will commit to a series of rate hikes for landfill user fees
that achieves an operating ratio where revenues are greater than expenses, and
a min:innal three (3) month cash reserve cm~ be set.
(b) the Borrower will restrict 1100% of the annual lomn repayment to the
Department groin the unrestricted :reserves in the Borrower’s Enterprise Fund
until part (a) is considered sufficiently satisfied as determined by the
Department,
(c) The borrower ~1! cooperate in annual financial analysis by the
d epan:trnent.
LandfilJ Design and Construction -1- ACWF#505041
Loan Amendment
The Borrower musk also demonstrate to the Department that this restriction for
the full annual loan repayment is in place by the time of. submission of the first
disbursement request under the loan.
Langu.age for the ne~v section wil! read. as follows:
~ecf:i~n ~7, I. As pm’t of the financial capacity review corr~pleted by the
Department on issuing this amendment to the Borrower’s loan based on the
Department accepting a subordinate position on this loan, the following item
was identified as a critical action for improving the Borough’s overall capacity
.for long term operation of the landfill:
The .Borrower will work with their l~orough Assembly to bring the facilities
operating revenues, with depreciation, to an operating ratio where revenues
are greater than expenses.
The above action is not manda£ory for meeting conditions of this loan
agreement. However, the progress on execution of these actions will be closely
reviewed on any loan applications on future ACWF Intended Use Plans with the
Department,
These new Sections shall become part of the original loan agreement (ADEC
Loa_~ Number 505041) and are hereby agreed to by:
Landfill Design and Conatpaction
Loar~ Amendment
-9,- ACWF#50S041
Acing Dh-¢ctor ~
Di%sioE of Water
The foregoing instrument was acknowledged beibre me this __~ ..... day of
By:
The foregoing instrum.ent was acknowledged before me this
My
Landfill Design and ConsWact_ion -3- ACWF#505041
!.x)m~ Amendment
ALASKA CLEAN WATER FUND AGREEMENT
ACWF LOAN #505041
Kodiak .Island Borough
Landfdl Design and Construction
THIS AGREEMENT iS .entered into as of ApHI 6, 2006, by the Alaska
Island Borough (the Borough), acting pu~rsuant to Resolution FY2006-16
¯ .approve.d by the Kodiak Island Borough for a loan .amount of $2,612;000 and a
loan term of 15 y&ara
SECTION I- DEFINITIONS
section 1.1. Exc~pt~vhere the context clea~rly indicates otterwise, terms used
in. this Agreement will have the meaning ascribed to them in this section,
(a) "Approved Application" means the application. ~ut~mitted to the
Department on Ma~ch 30, 2006, together with all attachments and supporting
¯ documentation, as approved by the Department and th~ Borough~
"Finknce Charg~ Rate~ means 1.50 percent per armum.
(c) "Contract period" meals the time period commencing on the date ¯
this agreement.is sighed by the. Borough and.terminating on the date the ¯ ’
Borough repays the loan in fu!L
(d) "Defaulffmeans the Borough has failed to make a loan .repayment
¯ within 90 days of the due date, as determined by the repayment schedKle ..
prepared by the Department immediately following initiation of operation of the
faci.~y.,
(e) . "Eligible Project Costs" include the following costs: demolition,
construction, and engineering for the Project Facility; machinery, furnish’.mgs,
and equipment; surveys, plans, es.fimates, and specifications’,, necessary
insurance; financial and environmental investigations; laboratory testing,
resident engineering and inspection fees; force account; legal expenses; and
any other necessary miscellaneous expenditures, minus the amount of any .
grant applicable to foregoing costs. Eligible pro~e~t costs for this portion of the
project are estimated to be $2,612,000 for this project.
Landf~l Design and Construction.
Loan Agreement
-I- .. ACWF#505041
(i) "Participation Payment" means the amount per year ne6essary to
amortize the loan.
(g) "Project Facility" means the facility to be constructed pursuant to
this Agreement as described generally in the Approved Application dated
March 30, 2006, and described in detail in the project’s facility plan. This ¯
project wil! provide for the ~lesign and construction of a leachate collection and
lreatment system in a new lined landfill cell.
SECTION II I~IGHTS OF ACCESS
S_e~tioJtL2._L__T_he_._Dmpzrtrllent h~ the~cight~t all reasn~ahl~, tirnem_to_em.te~r the
project site, for the purpose of inspecting the facility.
SECTION Ill - ACQUISITION OF PROJECT SITE, CONSTRUCTION OF
PROJECT FACILITY, LOAN DISBURSEMENT, AND PAYMENT OF COSTS
Section 3.1. With the exception of land easements, all real estate and
personal property constituting the Project Facility and the project must belong.
te the Boro.ugh.
~ectlon 3.2, In connection with the construction of the project facility, the
Borough agrees that:
(a) The Borough w~ not begin construction of the Project
Facility until the Deparanent has reviewed and approved the plans and
specifications for. the project. In its approvals the De~ent may specify
.changes or conditions to the plans and specifications. The Department must
approve any subsequent changes to, or deviations from, app.roved plans.
(b) . The Borough will ensure that-contract wages paid for the
construction of the Project Facility conform to the prevailing wage rates .
established for the locality by the Alaska Department of Labor under
AS 36.05.010, and with any applicable federal standards under 42 U.S.C.
300j-9(e).
(c) Any construction contract estimated to equal or exceed
$50,000 will be awarded through a compe.titive bidding process and any
construction contract estimated to be less than $50,000 may be negotiated if
the Department approves the solicitation and negotiation procedures.
La_udfiH Design and Construction
Loan Agreemdnt
-2- ACWF~505041
(d) All construction contracts and contractors’ estimate forms
will be prepared so that materials and equipment may be readily itemized as to
a~lowable project costs and noneligible costs.
(e) Any change in a construction contract that will alter the
contract specifications, time, price or will substantially mo~fy the proposed
treatment process must be submitted to the Department for approval if the
Borough wishes to have the r}~odifications considered loan eligible~
(i) The construction of the Project Facility ~iI1 conform to
applicaMe federal, state, and local laws, ordinances., and regulations.
(g} The Borough ~ill proceed expeditiously and complete the
Project Facility in accordance with the Approved Application, project schedule,
surveys, plans, profiles, dross-sections, specificafiotzs, and amendments.
section 3.3. Tlie Borough agrees .to administer this Ioan in a non-
discriminatory manner. No pezs.on shall be discriminated againstbased on
race,, religion, color, national origin, gendek or disability.
Section 3.4. Wl~en applicable, the Borough willcomply wKh Title I- "
Employment Of the Americans with Disabilities Aht of 1990 (P.L. 10 l-ann) and
in accordance with ~itle I of that Act, sha!l not discriminate agi~nst a qualified
individual with a disability because of the disability of such individual in regard
to job application proc.edures, the. hiring, advancement, or. discharge of
employees, employee compensations job training, and other terms, coaditi0ns,
and privileges of employment.
SectiOn S.S When applicable~ the Borough will comply withTitle II-Public
Services of the Americans with Disabilities Act of 1990 (P.L. 101-336) and in
accordance with. Title II of the Act, no. qualified individual with a disability
.shah, by reason of such disability, be excluded from participation in or be
denied the benefKs of the services, programs, or activities of a public entity, or
be subjected to discrimination by any such entity.
8cotton: 3.6 When applicable, the Borough will c6mply with Tide II,Part 35,
Section 35.151 of the Act "New Construction and Alterations," (a) Designand
construction: Each facility or part of a facility constructed by, on behalf of, or
for the use of a public entity shall be designed and constructed in such manner
that the facility or part ofthe facility is. readily accefisible to and usable by
individuals with disabilities, if the construction was commenced .after January
26, 1992. (b) Alteration: Each facility or part of a facility altered by, on behalf,
of or for the use of a public entity in a manner [hat.affects or could affect the
usability of the facility or part of the facility shall, to the rnaximurn extent
Landfill Design and Construction
Loan Agreement
-3- ACWF#505041
t
feasible, be altered in such manner that the altered portion of the facility is
readily accessible to and usable by individuals with disabilities, if the alteration
was commenced after January 26, 1992. (c) Accessibility standards: Design,
construction or alteration of facilities in conformance with ~e Uniform Federal
Accessibility Standards (UFAS) (Appendix A to 41 CRF part 101-19.6) or with
the Americans with Disabilities Act Accessibility Guidelines for Buildings and
Facilities (ADAAG) (Appendix A to 28 CFR Par~ 36) shall be deemed to comply
with the requirements of this section with respect to those .facilities, except that
the elevator exemption contained at section 4.1.3(5) and section 4.1.5(i)(}) of
ADAAG sha~ not apply.
Section 3.7 When applicable, the Borough will comply with Title III, Part 36,
Section 36.401 of the Act "New Construction." Except as provided in paragraph
(b) and (cI of the Act, discriminatior~ for purposes of this part includes a failure
to desigr~ and construct facilities for first occupancy after January 26, 1993,
that are readily accessible to and usable by individual~ with disabilities.
Section 3,8 When applicable, the Borough will comply with Title III, Part 36;
Section 36.402 of the Act "Alterations" (a) General: Any alteration to a place of
public accommodation or a commercial facility, after January 26, 1992, shall
be made so as to ensure that, to the maximum extent feasible, the altered
portions of the facility are readily accessible to and usable by individuals with
disabilities, .including individuals who use wheelchairs. (b) Alteration: An
alteration is.a change to a place of public accommodation or a commercial
facility that affedts or could affect the usability of the building or facility or any
part thereof.
Section 3.9. The Borough will comply with the minority and women owned
business requirements of the State RevoIving Loan Fund program, and will
require its contractors to also meet these requirements.
Section 3.10. The Borough will require each co.nstruction c~ntyactor to
furnish a performance and payment bond in an amount at least equalto !00
percent of the contract price.
Section 3.11. The Borough will require its contractors and subcontractors to
maintain workers compensation, public liability, property damage, and vehicle
liability insurance. Until the Project Facility is completed by the Borough, the
Borough (or at the option of the Borough, the contractor) will maintain
insurance for the loss of the facility for the benefit of the Department, the
Borough, the prime contractor, and al!~ subcontractors, as their interests in the
Project Facility may appear.
Landfill Design and Construction
Loan Agreement
-4- ACWF#50S041
Section 3.19.. Subject. to the. terms and conditions oft_his Agreement, the
eligible project costs less other funding sources willbe disbursed by the
Department upon submittal and departmental approval of invoices.
Section 3.13. If this project finishes under the estimated cost of Construction,
it will be funded only as necessary to complete the project.
Section 3.14. Upon completion of }he Project Facility, the Borough shall
provide a statement to the Department of the p~oject final costs by category of
expenditure, including but not limited to costs for: administration, design,
construction engineering, construction and equipment.
S]~CTION IV - PARTICIPATION PAYMENTS BY TH]~ BOROUGH
Section 4. I. This.loan is made to the Borough from the Alaska Clean Water
Fund for the maximum amount of $2,612,000. "
Section 4,2, The Borough agrees to repay the principal amount and the
finance charge rate on al! cash draws made to the Borough accord.lug to the
repaymdnt schedule, Which will be prepared by the Department a~d confirmed
by the Borough .following initiation of 9perationof the fa.cflity. The repayment
schedule for the actual amount of loan payments made to the Borough will
provide that:
(a) the Borough will pay a finance charge of 1.50 percent on each
disbursement. Accrual of th’e finance charge will begin one year after the date
of the l-~rst disbursement to the Borough.
(b) the loan amount will be paid back within 15 .years following initiation
of operation of the facility. Repayment of the loan will be made with either
equal annual principal payme.nts pl.us the finance charge or equal am~ual total.
payments including the.finance charge. Other re.payment methods may be
negotiated with the Depaxtmen.t.
(c) the first toan repayment will be due one year following substantial
completion and initiation of ope.ration Of the facility.
Section 4.3. The Borough assures the Department. that the Borough has not
piedge~ revenues for the repayment of its loan that have been previously.
pledged or encumbered, unless specificall~r set forth in the Borough’s approved
application. The plddged revenues for repayment of the loan and each separate
source of revenue are specifically identified and described in the Borough’s
submitted application.
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Sectio~ 4.4. in the event that any of the revenues pledged by the B.oro~gh for
the repayment of its loan are encumbered by a lien of .any prior outstanding
debt, the Borough will furnish the.Department with legal assurance that the
excess of such prior encumbered revenues are legally avadlable for pledging to
the Alaska Clean Water Fund.
Section 4.5. The Borough ~grees that if pledged revenues are insufficient to
meet any loan payment to the Department when dt~e~ the Borough will pay the
deficiency in its loan payment from any legally available funds accruing to or in
the possession of the Borough. Repayment of the loan which is the subject of
this loan agreement shall not be a direct and general obligation of the Borough.
Section 4.6. If a.payment is received by the Department more than 30 days
after it is due, the Borough agrees to pay a late charge of five percent of the
payment. Interest on the unpaid balance will continue to accrue at the finance
charge rate and must b.e paid in addition to the late charge. Payments in
arrears over 90 days, will be referred to the Attorney Generals Office for
coLlect{on.
Section 4:7: The Borough agrees that it will separately account for all monies
received from the Alaska Clean Water Fund and will maintain p?oject accounts
in accordance with generally accepted governmental accounting principles.
Section 4.8. If, prior to completion of the contract period, the Project Facility
is damaged or destroyed, the Borough is liable to the Department for all
amounts due under this Agreement.
~ction 4.9. The provisions of AS 37.15.575 relating to state aid interception
apply to the loa~ made under this agreement. "
SECTION V - MAINTENANCE~ OPERATIONs INSURANCE and AUDIT.
Section 5. i. The Borough agrees to prepare a manual for operation and
maintenance of the facility whicli is approved by the Department prior to
initiation of operation of the facility.
.Sedtion 5.2. The Borough must ensure that a Department approved sewer
use ordinance and a user charge system are adopted prior to initiation of
operatio~ of the facility.
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Section S.8, The Borough shall inidate operation of the Project FacilitV
immediately upon completion of construction and may not discontinue
operation of the Projeht Facility without Departm.ental approval. Within one
year after the initiation of operation, the Borough must cerdfy to the
Department that the facility is perforlning up to design standards. The
Borough must ensure that sufficient qualified operafi.’ng personnel CerthSed by
the State of Alaska will be retained to operate *_he Project Facility. Nothing
contained in this Agreement shall be construed as an obligation or pledge of
the Borough to appropriate or expend general funds and general revenues of
the Borough to operate or maintain the Project Facility.
Section 5.4. The Borough agrees to insure the Project Facility against loss
or damage in an amount at least equal to the loan amount specified in
Section 4.1.
Section 5.5. An insurance policy issued pursuant to Section 5.4 must be
written or endorsed to make losses payable to the Department and the Borough
as their interests may appear. The interests of [he Department are limited to
the unpaid principal balance of the loan and any finance charge and penalties
accrued as of the date such loan may be paid in full as a result of any
insurance payoff, following destruction or darnage to the facility.
Section S.6. In the event the Borough fails to maintain the full insurance
coverage required by this Agreement, the Department may take out the
required policies of insurance and pay the premiums. All amounts so
advanced by the Department wil! become an additional obligation of the
Borough to the Department.
SectiOn 5.7. The Borough agrees to submit a financial report for the Project
Facility for DepartrnentaI approval within one year after initiation of operation.
of the facility. A project audit, performed by the Department, will cover the
entire multi-year project.
Section S.8. Financial assistance received under this loan agreement is ’
considered federal assistance and is to be included when determining the
threshold amount for a Federal single Audit. However, financial assistance
received under this loan agreement is not subject to State Single Audit.
Landf~ll Design and Constr~dtlon -7~ " ACWF#505041
Loan.Agreement
SECTION VI - MISCELLANEOUS PROVISIONS
Section 6.1. Any disbursement or repayment made under this Agreement by
either party to {he other, shall be delivered by registered or certified mail,
postage prepaid, return receipt requested, or delivered personally, and,
(a) if addressed to the Depart~ment, will be sent or delivered personally to:
A~.aska Department o.f Environmental Conservation
Division of Water
Alaska Clean Water Fund - Confidential: Terri Lowell
410 Willoughby Avenue, Suite 303
P.O. Box 111800
Juneau, Alaska 99801
(b) if addressed to the Borough, will besent to or delivered personally to:
Kodiak Island Borough
710 Mill Bay Road
Kodiak, AK 996.15
- Sectio~ 5~2. Departmental approvals, required by this Agreement will not be
unreasonably withheld.
Section 6.3. This Agreement is made subject to and conditional upon the
availability of funds~
Section 5.4. This Agreement is effective as of the date ~et forth abo~e and
continues in full force and effect until the final day of the Contract Period.
Section 6.5. This Agreement is "binding upon the parties specified below, and
to any person, office, or board succeeding either of the parties. This Agreement
may not be assigned by the Borough without written consent of the
Department.
section 6.6. The Depar .tment may cancel all or any part of this agreement if:
(a) Any representation or other statement made by the Borough to the
Department in connection with its application for a loan from the Alaska Clean
Water Fund is incorrhct or incomplete in any material respect;
Landfill Design and Construction
Loan Agreement
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(b) The Borough has violated commitments made by it in its Approved
Application and supporting documents, has not adhered to the regulations of
the/klaska Clean Water Fund (18 AAC 76), has violated any of the terms of this
Loan Agreement; or
(c) The t-mancial position of the Borough h~s, in the opinion of the
Department, suffered a materially adverse change.
Section 6.7. No portion of this loan amount may be used for lobbying or
propaganda purposes as prohibited by 18 U.S.C. Section 1913 or Section
607(a) of Public Law 96-74.
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Loan Agreement
ALASKA DEPARTMENT OF ENVIRONMENTAL CONSERVATION
By:
ACKNOWLEDGEMENT
STATE OF ALASKA
Third Judicial District
The foregoing instrument was acknowledged before me this day of
N~ary PubliC, Sta~ of Alaska
My commission expires: 113 [~0~ log
KODIAK ISLAND BOROUGH
STATE OF ALASKA
Third Judicial District
The foregoing instrument was acknowledged before me this
, 2006
Landfill Design and Construction
Loan Agreement
Not~blic, Sta~ of-Alaska [
My commission egpires: _~//A~/~/D
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GFOster arvey
June 16, 2021
Kodiak Island Borough, Alaska
and
Alaska Municipal Bond Break
Kodiak Island Borough, Alaska
$1,215,000 Solid Waste Disposal Facility Refunding Revenue Bond, 2021
We have served as bond counsel to Kodiak Island Borough, Alaska (the "Borough"), in
connection with the issuance of the above referenced bond (the "Bond"), and in that capacity have
examined such law and such certified proceedings and other documents as we have deemed necessary to
render this opinion. As to matters of fact material to this opinion, we have relied upon representations
contained in the certified proceedings and other certifications of public officials furnished to us, without
undertaking to verify the same by independent investigation.
The Bond is issued by the Borough pursuant to Resolution No. FY2020-30 (the "Bond
Resolution") under and in accordance with the Constitution and laws of the State of Alaska and the
ordinances and resolutions of the Borough.
We express no opinion herein concerning the completeness or accuracy of any official statement,
offering circular, or other sales or disclosure material relating to the issuance of the Bond or the Alaska
Municipal Bond Bank General Obligation and Refunding Bonds, 2021 Series One (Tax-Exempt) (the
"Bond Bank Bonds"), a portion of the proceeds of which are being used to acquire the Bond, or otherwise
used in connection with the Bond or the Bond Bank Bonds.
Under the Internal Revenue Code of 1986, as amended (the "Code"), the Borough is required to
comply with certain requirements after the date of issuance of the Bond in order to maintain the exclusion
of the interest on the Bond from gross income for federal income tax purposes, including, without
limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or
refinanced with Bond proceeds, limitations on investing gross proceeds of the Bond in higher yielding
investments in certain circumstances and the arbitrage rebate requirement to the extent applicable to the
Bond. The Borough has covenanted in the Bond Resolution to comply with those requirements, but if the
Borough fails to comply with those requirements, interest on the Bond could become taxable retroactive
to the date of issuance of the Bond. We have not undertaken and do not undertake to monitor the
Borough’s compliance with such requirements.
Based upon the foregoing, as of the date of initial delivery of the Bond to the purchaser thereof
and full payment therefor, it is our opinion that under existing law:
1. The Borough is a duly organized and legally existing second-class Borough under the
laws of the State of Alaska.
SEATTt,bEG:54307386. ] PORTLAND WASHINGTON, D,C. NEW YORK SPOKANE BEIJING
Kodiak Island Borough, Alaska
Alaska Municipal Bond Bank
June 16, 2021
Page 2
2. The Amendatory Loan Agreement between the Borough and the Alaska Municipal Bond
Bank dated June 16, 2021, and the Amended and Restated Reserve Subaccount Depositary Agreement
between the Borough and The Bank of New York Mellon Trust Company, N.A., dated June 16, 2021,
each relating to the Bond, have each been duly authorized, executed, and delivered by the Borough, and
each is a valid and binding obligation of the Borough, enforceable against the Borough in accordance
with its terms, except only to the extent that enforcement of payment may be limited by bankruptcy,
insolvency, or other laws affecting creditors’ rights and by the application of equitable principles and the
exercise of judicial discretion in appropriate cases.
3. The Bond has been duly authorized and executed by the Borough and is issued in full
compliance with the provisions of the Constitution and laws of the State of Alaska and the ordinances and
resolutions of the Borough relating thereto.
4. The Bond constitutes a special, limited obligation of the Borough payable solely out of
the Pledged Revenues to be paid into the Solid Waste Disposal Revenue Bond Account, except only to
the extent that enforcement of payment may be limited by bankruptcy, insolvency or other laws affecting
creditors’ rights and by the application of equitable principles and the exercise of judicial discretion in
appropriate cases.
5. The Bond is not a general obligation of the Borough.
6. Assuming compliance by the Borough after the date of issuance of the Bond with
applicable requirements of the Code, the interest on the Bond is excluded from gross income for federal
income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax
applicable to individuals; however, interest on the Bond received by certain S corporations may be subject
to tax, and interest on the Bond received by foreign corporations with United States branches may be
subject to a foreign branch profits tax.
7. Interest on the Bond is free from taxation by the State of Alaska except for transfer,
estate, and inheritance taxes.
We express no opinion regarding any other federal or state tax consequences of receipt of interest
on the Bond.
This opinion is given as of the date hereof, and we assume no obligation to revise or supplement
this opinion to reflect any facts or circumstances that may hereafter come to our attention, or any changes
in law that may hereafter occur.
We bring to your attention the fact that the foregoing opinions are expressions of our professional
judgment on the matters expressly addressed and do not constitute guarantees of result. No attorney-client
relationship has existed or exists between our firm and the Alaska Municipal Bond Bank in connection
with the Bond or by virtue of this letter.
Respectfully submitted,
FG:54307386.1