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Tab_5LBJIIJ u i[e i :Ii7 1 XI) I] I 1 Ii1 K] CERTIFICATE ALASKA MUNICIPAL BOND BANK $80,435,000 GENERAL OBLIGATION AND REFUNDING BONDS 2016 SERIES THREE ri I] $29,400,000 GENERAL OBLIGATION AND REFUNDING BONDS 2016 SERIES FOUR I, DEVEN J. MITCHELL, Executive Director of the Alaska Municipal Bond Bank (the "Bank"), HEREBY CERTIFY that the document attached is a true, complete and correct copy of an excerpt of the unofficial minutes of a meeting of the Board of Directors of the Bank duly called and held on September 6, 2016. Notice of the meeting was duly given by posting, on the State of Alaska website "Online Public Notices" on August 26, 2016. IN WITNESS WHEREOF, I have hereunto set my hand this 3rd day of November 2016. 333 Willoughby Avenue, 11th floor Tel (907) 465-2388 P.O. Box 110405 FAX (907) 465-2902 Juneau, Alaska 99811-0405 E-mail: ambba@revenue.stata.ak.us UNOFFICIAL EXCERPT of MINUTES for the BOARD OF DIRECTORS MEETING ALASKA MUNICIPAL BOND BANK AUTHORITY September 6, 2016 I. CALL TO ORDER Mark Pfeffer called the meeting to order at 2:03 PM, Alaska Daylight Time. Members participated at the AIDEA Building, 813 W Northern Lights Blvd., Anchorage, AK 99503, and by telephone. II. ROLL CALL Mark Pfeffer Greg Gursey Michael Lamb Luke Welles Pam Leary OTHERS IN ATTENDANCE: - Deven Mitchell, Executive Director, Alaska Municipal Bond Bank - Ryan Williams, Finance Director, Alaska Municipal Bond Bank - Chip Pierce, Financial Advisor, Western Financial Group - Susan Barry, Bond Counsel - AMBBA, Orrick, Herrington & Sutcliffe, LLP - Leslie Krusen, Bond Counsel - AMBBA, Orrick, Herrington & Sutcliffe, LLP - Bob Bartholomew, Finance Director, City & Borough of Juneau - Tom Yang, Managing Director, RBC Capital Markets - Laura Janke, Director, RBC Capital Markets - Eric Whaley, Director, BAML, Pierce, Fenner & Smith, Inc. UNOFFICIAL EXCERPT of AMBBA Minutes Meeting: September 6, 2016 Page 2 III. PUBLIC MEETING NOTICE A copy of the Online Public Notice concerning the date, location, and purpose of the meeting was reviewed for the record. The public notice was officially published on August 26, 2016 on the official Alaska Online Public Notice website. IV. APPROVAL OF AGENDA The agenda was reviewed by the board. The agenda was approved unanimously as written without objection. V. MINUTES of the May 5, 2016 Board of Directors Meeting The May 5, 2016 minutes of the AMBBA Board of Directors was reviewed by the board and approved as written without objection. VI. GENERAL BUISNESS City & Borough of Juneau - Loan Application and Analysis Mr. Pierce provided a general description of the application credit review for the City and Borough of Juneau's (CBJ) request for approximately $22,000,000 to refund prior CBJ general obligation bonds authorized by voters in 2006 and to fund approximately $3,000,000 of new money projects authorized by voters in 2012 for a variety of CBJ capital improvements. CBJ's 2006 GO bonds will be currently refunded with the Bond Bank loan. The 2006 bonds were part of a larger bond authorization approved by voters for the design, site preparation and construction of Thunder Mountain High School in the Dimond Park area. The proposed term of the loan is 5 years for the refunding, and 10 years for the new money capital bonds, with estimated maximum annual debt service of $4.3 million. With total FY2016 debt service of approximately $22 million, and most recent State-shared revenues of $66.9 million, the debt service coverage is approximately 3.05 times. Estimated present value savings to result from the loan is $1.4 million. Mr. Pierce mentioned that the Bond Bank has received the no litigation letter. These are both general obligation loans of CBJ with property tax revenue pledged (and full faith and taxing authority of CBJ). Mr. Pierce depicted a three year history of General Fund revenues, and in 2015, 41.9% was derived from ad valorem property taxes, 29.9% sales taxes, 20.3% intergovernmental revenues, and 4.3% charges for services. Sales tax revenues UNOFFICIAL EXCERPT of AMBBA Minutes Meeting: September 6, 2016 Page 3 are reported in CBJ's CAFR under the Sales Tax Special Revenue Fund, and the bulk of those revenues were transferred to the General Fund via interfund transfer, in 2014, and this was further described by Mr. Pierce with ending fund balances of the General and Sales Tax Funds from 2013 through 2015. In 2011 the Mayor of CBJ formed a task force to discuss reserves, resulting in a recommendation that 2 months of general governmental operation revenues be set aside each year. Mr. Pierce also presented a breakdown of ending General Fund balances by restricted, non-spendable, assigned, emergency response, and unassigned, with total balance of $27.5 million as of fiscal year-end 2015. Additionally, on October 2, 2012 CBJ voters approved a five year 1% sales tax to fund $10 million of bond debt payments, $5 million to replenish the general government budget reserves, and to fund various capital projects throughout the Borough. The tax will be in effect through September 30, 2018. CBJ will have approximately $5.9 million of authorization remaining after the $3 million for capital improvements from the 2012 authorization, and CBJ expects to use the remaining authorization for airport terminal improvements. Mr. Pierce presented total revenues of CBJ subject to intercept compared to FY2016 debt service, with coverage of approximately 3.05 times. Mr. Pierce mentioned that FY2017 State-aid data and updated debt service is currently being compiled where information is available, and that CBJ has approximately $4 million in reduced state funding in FY2017. Mr. Pfeffer questioned how the $4 million reduction, when added to potential additional decreases in revenues subject to intercept would affect CBJ's debt coverage ratio moving into future fiscal years. Mr. Mitchell noted that the FY17 decrease would still potentially leave the coverage ratio above 2.5 times, and still a significant credit strength of the Bond Bank, especially taking into the consideration the savings that CBJ is achieving through these proposed refundings. Mr. Pierce stated that based on the assessment, the security offered by CBJ, as set forth in the CBJ's loan application and supplemental materials, provides sufficient security to justify approval of the application. Mr. Welles made a motion to approve the loan application from CBJ for approximately $22,000,000, and Mr. Lamb seconded the motion. Mr. Williams conducted a roll call vote, and the motion passed unanimously with five yes votes. RESOLUTION NO. 2016-05 - GO and Refunding Bonds, 2016 Series Three and 2016 Series Four of the Bond Bank Ms. Barry, Bond Bank Bond Counsel with Orrick, introduced resolution 2016-05, a series resolution authorizing the issuance of general obligation and refunding UNOFFICIAL EXCERPT of AMBBA Minutes Meeting: September 6, 2016 Page 4 bonds, 2016 Series Three and 2016 Series Four, of AMBBA, in an amount not to exceed $95 million for the Series Three, and in an amount not to exceed $36 million for the Series Four bonds. Ms. Barry mentioned that the 2016 Series Three and Four bonds include a significant refunding component, and all or a portion of the following outstanding bonds that the Chairman or the Executive Director designates to be refunded pursuant to Section 304 shall be considered: the 2006 Series Two, 2007 Series One, 2007 Series Two, 2007 Series Three, 2007 Series Five, 2008 Series One, 2008 Series Two, and 2009 Series One. Ms. Barry noted that the 2016 Series Three and Four bonds of each series shall be sold to one or more underwriters by negotiated sale pursuant to the terms of one or more Bond Purchase Agreements, and the aggregate principal amount shall not exceed $131 million, and the true interest cost shall not exceed four percent and the debt service savings requirement of 3% of their principal amount shall be met. Mr. Pierce mentioned that there was also a copy of the preliminary refunding numbers from a point in time, and a draft POS was included in the packet. Mr. Mitchell noted that the schedule shows a pricing in mid-October, and closing at the beginning of November. Ms. Barry reiterated that the Chairman and Executive director are authorized to designate which of the bonds shall be refunded during pricing given market conditions at that time. Mr. Welles made a motion to approve Resolution 2016-05, and Mr. Lamb seconded the motion. Mr. Williams conducted a roll call vote and the motion passed unanimously with five yes votes. WFG Post Sale Summary for the Series 2016A (2016 Master Resolution) Mr. Pierce presented a summary for the most recent pricing on May 24, 2016 - $44,135,000 General Obligation Bonds, Series 2016A, the first series to be issued under the 2016 Master Resolution. The Series 2016A bonds were sold by negotiated sale to the Bank of America Merrill Lynch. The Bond Bank received a resulting TIC on the transaction of 2.2861%, average life of 4.853 years, and an underwriter cost of $3.54 per $1,000. Mr. Pierce noted underwriter compensation remains at very low levels, and after a run up during the summer of 2013, interest rates have traded in a relatively narrow range. The tone leading up to the sale wasn't particularly good, with concerns over rate hikes by the Federal Reserve, especially inside of 10 years, dominated the market. At the conclusion of the order period, there were orders for approximately $23 million of the $44.1 million in par. The BAML underwriting team recommended yield adjustments that ranged from 3 basis points to 10 basis points, and with those adjustments UNOFFICIAL EXCERPT of AMBBA Minutes Meeting: September 6, 2016 Page 5 BAML would underwrite the issue, including the two-thirds of which was unsubscribed. With advice from Mr. Pierce, BAML lowered adjustments by 1 basis points for 2023 and 2024 and they still underwrote the remaining maturities. The proceeds of the Series 2016A bond sale was provided to the Tanana Chiefs Conference to def ease 2011 revenue bonds for substantial savings. The 2011 bonds carried interest rates that ranged from 7.00% to 7.75%. As a result of the Bond Bank's bond issue, the TCCC achieved present value savings of over $45 million. FY2016 Returns & Discussion Mr. Williams presented a summary of where the Bond Bank stood in the audit process. It was noted that the Bond Bank is expected to see a decrease in net position year over year, resulting from subdued investment returns on reserves and the custodian, as well as expenses associated with payment of interest on reserve obligations. Mr. Williams depicted fund performance from the investment advisor that included portfolio market values and returns through 6/30/16 for each reserve and custodian fund. Mr. Williams noted that the new 2016 Master resolution, recently used to issue bonds related to the Regional Health Organization program, has a single surety policy satisfying the reserve requirement, and other statistics of the new reserve will be analyzed and presented to the Board once available. A schedule of authorized borrower concentration for each Master Resolution program was presented in the report. Executive Director's Report Mr. Mitchell reported on the following items that were not covered in the September 6, 2016 Agenda: Travel Memos (included inboard packet) - The State's travel policy remains in place and for each in-state trip we need to obtain the Commissioner of Revenue's approval, and for out of state trips both the Commissioner and the Governor's office. I've attached three travel memos for activity since the last meeting. The June 29 memo travel was denied, the August 2 memo travel was approved, and the August 16 travel memo has not yet been fully considered. The restrictions do limit the ability of Ryan and me to fully meet the mission of the Bond Bank due to less contact with Alaska's communities. UNOFFICIAL EXCERPT of AMBBA Minutes Meeting: September 6, 2016 Page 6 Finance Director Williams involvement with the AGFOA has continued to build. He has become a well-recognized part of the organizations leadership and is currently considering becoming the President Elect. On July 28, 2016 I signed a Bond Bank consent letter for the City of King Cove to issue parity revenue bonds for purchase by the Alaska Energy Authority for the continued funding of the Waterfall Creek hydroelectric project. To further facilitate the City's efforts to obtain funding from the Alaska Energy Authority lalso signed a certificate of consent for the Alaska Energy Authority. On the morning of September 7 Ryan and I will be travelling with Fitch Rating analysts Marcy Block and Doug Offerman to Bethel to tour the town and Yukon Kuskokwim Health Consortium facilities. We will return to Anchorage on the afternoon of the 7th and meet with the manager of the Anchorage Airport to discuss their operation. On September 8 we plan to meet with AIDEA staff and the Municipality of Anchorage staff in the morning and then take them on a short excursion to Girdwood. Ryan and I have responded to multiple requests for information on the Bond Bank or to provide current interest rates and projected amortization schedules. Based on these interactions, and pending the outcome of the fall election we anticipate the need for another bond issue for municipal funding in the first several months of 2017. VII. PUBLIC COMMENTS There were none. VIII. BOARD COMMENTS There were none. IX. ADJOURNMENT Mr. Pfeffer adjourned the meeting without objection at 3:06 p.m. ADT. Mark Pfeffer, Chairman