Tab_38New Issue Ratings: See "RATINa5"
Book-Entry Only
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 2016 Series Three and Four Bonds is excluded from gross income for federal income
tax purposes under Section 108 of the Internal Revenue Code of 1986, except that no opinion is expressed as to the status of
interest on any 2016 Series Four Bond for any period that such 2016 Series Four Bond is held by a "substantial user" of the
facilities financed or refinanced by the 2016 Series Four Bonds or by a "related person" within the meaning of Section 147(a)
of the Internal Revenue Code of 1986. Bond Counsel observes, however, that interest on the 2016 Series Four Bonds is a specific
preference item for purposes of the federal individual and corporate alternative minimum taxes. In the further opinion of
Bond Counsel, interest on the 2016 Series Three Bonds is not a specific preference itemfor purposes of the federal individual
or corporate alternative minimum taxes, although Bond Counsel observes that such interest is included in adjusted current
earnings when calculating corporate alternative minimum taxable income. Bond Counsel also is of the opinion based upon
existing laws of the State ofAlaska that interest on the 2016 Series Three and Four Bonds is exempt from taxation by the State
except for transfer, inheritance and estate taxes. See "TAX MArrrI?.s."
ALASKA MUNICIPAL BOND BANK
$80,435,000 General Obligation and Refunding Bonds, 2016 Series Three
$29,400,000 General Obligation and Refunding Bonds, 2016 Series Four (AMT)
Dated: Date of Delivery Due: December 1, as shown on inside cover pages
The Alaska Municipal Bond Bank (the "Bond Bank") is issuing $80,435,000 aggregate principal amount of its General Obligation
and Refunding Bonds, 2016 Series Three (the "2016 Series Three Bonds"), and $29,400,000 aggregate principal amount of its General
Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds," and together with the 2016 Series Three Bonds,
the "2016 Series Three and Four Bonds"). The 2016 Series Three and Four 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 2016 Series Three and Four Bonds. Individual purchases of the 2016 Series Three and Four Bonds of
each Series will be made in principal amounts of $5,000 or integral multiples thereof within a maturity. Purchasers of the 2016
Series Three and Four Bonds will not receive certificates representing their beneficial ownership interests in the 2016 Series Three
and Four Bonds. Interest on the 2016 Series Three and Four Bonds will accrue from the date of delivery of the 2016 Series Three
and Four Bonds, or from the most recent interest payment date to which interest has been paid, and is payable on each June 1 and
December 1, commencing December 1, 2016.
The Bank of New York Mellon Trust Company, NA., of San Francisco, California, as the Trustee and Paying Agent for the
2016 Series Three and Four Bonds, will make principal and interest payments to DTC. 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.
The 2016 Series Three and Four Bonds are subject to redemption prior to their stated maturity dates.
The scheduled payment of principal of and interest on the 2016 Series Three and Four Bonds so designated on the inside cover
pages of this Official Statement is to be insured by a municipal bond insurance policy to be issued by National Public Finance
Guarantee Corporation, as described herein.
The 2016 Series Three and Four 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 (the "2005 General Bond Resolution"). The 2016 Series Three and
Four 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 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four Bonds are the 36th and 37th Series of Bonds issued under
the 2005 General Bond Resolution.
The 2016 Series Three and Four Bonds are payable solely from the sources provided in the 2005 General Bond
Resolution and the Series Resolution described herein. The 2016 Series Three and Four Bonds do not constitute a
debt or other liability of the State of Alaska, and the 2016 Series Three and Four 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
2016 Series Three and Four Bonds. Neither the faith and credit nor the taxing power of the State of Alaska is pledged
for the payment of the 2016 Series Three and Four Bonds. The Bond Bank has no taxing power.
The 2016 Series Three and Four 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 counsel and for the Underwriters by their special counsel, Foster Pepper PLLC, Seattle, Washington. It
is expected that the 2016 Series Three and Four Bonds in definitive form will be issued and available for delivery through the
facilities of DTC in New York, New York, on or about November 3, 2016.
RBC Capital Markets
BofA Merrill Lynch
Goldman, Sachs & Co.
(Co-Manager for the 2016 Series Three Bonds)
(Co-Manager for the 2016 Series Four Bonds)
October 18, 2016.
5 rc' IuJI (Si I R SJI J YI i
$80,435,000 General Obligation and Refunding Bonds, 2016 Series Three
Due Principal Interest CUSIP No.
(December 1) Amount Rate Yield 01179R*
2016 $ 460,000 2.00% 0.90% SM6
2017 7,150,000 2.00 1.08 SN4
2018 9,110,000 4.00 1.30 SP9
2019 8,220,000 4.00 1.44 SQ7
2020 9,105,000 4.00 1.57 SR5
2021 8,230,000 4.00 1.69 SS3
2022 4,490,000 5.00 1.82 ST1
2023 4,885,000 5.00 2.04 SU8
2024 4,450,000 5.00 2.22 SV6
2025 4,735,000 5.00 2.38 SW4
2026 5,005,000 5.00 2.51 SX2
2027 4,855,000 5.00 2.75 SYO
2028 2,755,000 5.00 2.76 (l) SZ7
2029 (2) 675,000 3.00 3.13 TAI
2030 (2) 700,000 3.125 3.25 TB9
2031 (2) 720,000 3,125 3.32 TC7
$1,535,000 3.25% Term Bonds due December 1, 2033 2) Yield 3.44% CUSIP No. 01 179R TD5*
$3,355,000 3.375% Term Bonds due December 1, 2037 (2) Yield 3.59% CUSIP No. 01 179R TB3*
(1) Priced to the par call date of December 1, 2026.
(2) The scheduled payment of principal and interest is to be insured by a municipal bond insurance policy
to be issued by National Public Finance Guarantee Corporation. See "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS - Bond Insurance," "BOND INSURANCE" and "RATINGS."
* CUSIP is a registered trademark of the American Bankers Association. CUSIP numbers herein (Copyright
2016, CUSIP Global Services) are provided by CUSIP Global Services ("CGS"). CGS is managed on behalf of
the American Bankers Association by S&P Capital IQ. These CUSIP numbers 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 convenience of reference only. CUSIP numbers are subject to change. Neither the Bond Bank nor
the Underwriters nor their agents or advisors takes any responsibility for the accuracy of such CUSIP numbers.
$29,400,000 General Obligation and Refunding Bonds, 2016 Series Four (AMT)
Due Principal
(December 1) Amount
Interest CUSIP No.
Rate Yield 01179R*
2016 $ 610,000 2.00% 0.99% TFO
2017 950,000 3.00 1.23 TG8
2018 990,000 5.00 1.42 TH6
2019 1,045,000 5.00 1.64 TJ2
2020 1,090,000 5.00 1.82 TK9
2021 1,145,000 5.00 1.98 TL7
2022 1,205,000 5.00 2.14 TM5
2023 1,260,000 5.00 2.36 TN3
2024 1,325,000 5.00 2.52 TP8
2025 1,390,000 5.00 2.68 TQ6
2026 1,460,000 5.00 2.81 TR4
2027 1,535,000 5.00 2.95 (l) TS2
2028 1,615,000 5.00 3.08 (1) TTO
2029 1,690,000 5.00 3.16 (1) TU7
2030 1,780,000 5.00 3.25 (1) TV5
2031 1,865,000 5.00 3.32 (1) TW3
2032 1,960,000 5.00 3.38 (l) TX1
2033 2,055,000 5.00 TY9
2034 (2) 2,165,000 5.00 3.49 TZ6
2035 (2) 2,265,000 5.00 3.53 UA9
(1) Priced to the par call date of December 1, 2026.
(2) The scheduled payment of principal and interest is to be insured by a municipal bond insurance policy
to be issued by National Public Finance Guarantee Corporation. See "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS - Bond Insurance," "BOND INSURANCE" and "RATINGS."
CUSIP is a registered trademark of the American Bankers Association. CUSIP numbers herein (Copyright
2016, CUSIP Global Services) are provided by CUSIP Global Services ("CGS"). CGS is managed on behalf of
the American Bankers Association by S&P Capital IQ. These CUSIP numbers 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 convenience of reference only. CUSIP numbers are subject to change. Neither the Bond Bank nor
the Underwriters nor their agents or advisors takes any responsibility for the accuracy of such CUSIP numbers.
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 2016 Series Three and Four 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 2016 Series Three and
Four 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 University 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 2016 Series Three and Four 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, their
respective 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 2016 Series Three and Four Bonds have not been registered under the Securities Act of 1933, as
amended, and the Bond Resolution has not been qualified under the Trust Indenture Act of 1939, as amended, in
reliance upon exemptions contained in such acts. The 2016 Series Three and Four 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 included in the continuing disclosure
undertaking of the Bond Bank, the Bond Bank does not plan to issue any updates or revisions to those forward-
looking statements. See "CONTINUING DISCLOSURE UNDERTAKINGS."
WNi rf'' IUhI ( U J. U i]I II I i
333 Willoughby Avenue, 11th Floor
P.O. Box 110405
Juneau, Alaska 99811-0405
(907) 465-2388
www.treasury.dor.alaska.gov/ambba/
Board of Directors
Mark Pfeffer Chair
Luke Welles Vice Chair
Gregory Gursey Member
Chris Hiadick Member
(Michael Lamb First Delegate to Chris Hiadick)
Randall Hoffoeck Member
(Pamela Leary First Delegate to Randall Hoffbeck)
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
Western Financial Group, LLC
Portland, Oregon
TABLE OF CONTENTS
INTRODUCTION .1
General .1
Alaska Municipal Bond Bank....................................2
PURPOSE OF THE 2016 SERIES THREE AND FOUR
BONDS........................................................................ 3
Purpose of the 2016 Series Three Bonds ...................3
Purpose of the 2016 Series Four Bonds .....................3
RefundingPlan ..........................................................3
SOURCES AND USES OF FUNDS ........................................7
DESCRIPTION OF THE 2016 SERIES THREE AND
FOURBONDS ..............................................................7
General Description...................................................7
2016 Series Three and Four Bonds............................7
Optional Redemption .................................. ............... 8
Mandatory Sinking Fund Redemption ...... ................. 8
Notice and Effect of Redemption ..............................9
Selection of 2016 Series Three and Four Bonds
for Redemption......................................................9
SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS........................................................................9
General......................................................................9
Pledge Effected by the 2005 General Bond
Resolution...........................................................11
Municipal Bonds......................................................11
2005 General Bond Resolution Reserve Fund.........12
State Payments to Governmental Units ...................14
Pledge of the State ...................................................14
Bond Insurance........................................................14
BOND INSURANCE .........................................................15
Financial Guaranty Insurance Policy.......................15
National Public Finance Guarantee Corporation .....16
Regulation.............................. ............ ...................... 16
Financial Strength Ratings of National....................16
Recent Litigation .....................................................16
National Financial Information................................17
Incorporation of Certain Documents by
Reference............................................................17
ALASKA MUNICIPAL BOND BANK.................................18
Organization............................................................18
Board of Directors ...................................................18
Management............................................................19
BONDS OUTSTANDING...................................................20
2005 General Bond Resolution................................20
2010 Master Bond Resolution .................................20
2016 Master Bond Resolution .................................20
Coastal Energy Impact Program..............................20
Direct Loans ............................................................21
Loans by the State of Alaska ...................................21
DEBTCAPACITY .......... .................................................. 22
DEBT SERVICE REQUIREMENTS .....................................23
Future Financing Plans ............................................24
Debt Payment Record..............................................24
SUMMARY OF THE 2005 GENERAL BOND
RESOLUTION.............................................................24
2005 General Bond Resolution Constitutes
Contract...............................................................24
Obligation of the Bond Bank...................................24
Pledge......................................................................24
Power to Issue Bonds and Make Pledges.................25
General....................................................................25
Waiverof Laws .............................................. .......... 25
Loan Agreement Provisions.....................................25
Modification of Loan Agreement Terms .................26
Enforcement of Municipal Bonds............................26
Funds and Accounts.................................................27
Security for Deposits and Investment of Funds .......28
Payment of Bonds....................................................29
Fees and Charges .....................................................29
Issuance of Additional Obligations..........................29
Defeasance...............................................................29
Supplements and Amendments................................30
Events of Default and Remedies..............................31
ExcessEarnings ....................................................... 32
Modifications to the 2005 General Bond
Resolution...........................................................33
LITIGATION...................................................................33
CERTAIN LEGAL MATTERS............................................33
UNDERWRITING ................ ............................................. 34
MUNICIPAL ADVISOR ................................... ................. 35
FINANCIAL STATEMENTS ............ ............ ....................... 35
TAXMATTERS ..............................................................35
RATINGS.......................................................................37
CONTINUING DISCLOSURE UNDERTAKINGS...................38
Bond Bank Continuing Disclosure Undertaking......38
Governmental Unit Continuing Disclosure
Undertakings.......................................................38
Compliance with Prior Continuing Disclosure
Undertakings .......................................................39
SOURCES OF CERTAIN INFORMATION ............................40
DEFINITIONS.................................................................40
OFFICIAL STATEMENT ...................................................42
Appendix A - Proposed Form of Opinion of Bond Counsel
Appendix B - State Payments to Governmental Units
Appendix C - Governmental Unit Statistics Regarding Participation in the Bond Bank
Appendix D - Summaries of Borrowers Representing Ten Percent or More of Outstanding Principal of Bonds Issued
Under the 2005 General Bond Resolution
Appendix E - Financial Statements of the Bond Bank for the Year Ended June 30, 2016
Appendix F - 2005 General Bond Resolution and 2013 First Supplemental Resolution
Appendix G - State of Alaska
Appendix H - Proposed Forms of Continuing Disclosure Certificates
Appendix I - DTC and its Book-Entry System
Appendix J - Form of Bond Insurance Policy
OFFICIAL STATEMENT
ALASKA MUNICIPAL BOND BANK
$80,435,000 General Obligation and Refunding Bonds, 2016 Series Three
$29,400,000 General Obligation and Refunding Bonds, 2016 Series Four (AMT)
INTRODUCTION
General
This Official Statement is furnished by the Alaska Municipal Bond Bank (the "Bond Bank") in
connection with the sale of $80,435,000 aggregate principal amount of its General Obligation and
Refunding Bonds, 2016 Series Three (the "2016 Series Three Bonds"), and $29,400,000 aggregate
principal amount of its General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series
Four Bonds," and together with the 2016 Series Three Bonds, the "2016 Series Three and Four Bonds").
See "PURPOSE OF THE 2016 SERIES THREE AND FOUR BONDS."
The 2016 Series Three and Four 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 (the "2005 General Bond Resolution," and as supplemented by Series Resolution No. 2016-05,
adopted by the Board on September 6, 2016, the "Bond Resolution"). A copy of the 2005 General Bond
Resolution is included in Appendix F.
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
2016 Series Three and Four Bonds.
The 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four Bonds are the 36th and 37th Series of Bonds
issued under the 2005 General Bond Resolution. See "SECURITY AND SOURCES OF PAYMENT FOR THE
BONDS" and "BONDS OUTSTANDING."
The 2016 Series Three and Four Bonds are payable solely from the sources provided in the
Bond Resolution. The 2016 Series Three and Four Bonds do not constitute a debt or other liability
of the State of Alaska, and the 2016 Series Three and Four 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 2016 Series Three and Four Bonds. Neither the faith and credit nor the
taxing power of the State of Alaska is pledged for the payment of the 2016 Series Three and Four
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 2016 Series Three and Four 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."
On February 19, 2013, the Board adopted a 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 from time to time of
the 2016 Series Three and Four Bonds are deemed to have consented to all of the amendments authorized
in the 2013 First Supplemental Resolution. See "SUMMARY OF THE 2005 GENERAL BOND RESOLUTION -
Modifications to the 2005 General Bond Resolution" and Appendix F - "2005 GENERAL BOND
RESOLUTION AND 2013 FIRST SUPPLEMENTAL RESOLUTION."
Each Governmental Unit has covenanted that if its Municipal Bonds constitute ten percent or
more of the outstanding principal amount of the Municipal Bonds held by the Bond Bank under the 2005
General Bond Resolution, such Governmental Unit will provide to the Bond Bank for inclusion in future
official statements financial information generally of the type included in the Bond Bank's official
statements with respect to Governmental Units representing ten percent or more of the Bonds outstanding
under the 2005 General Bond Resolution. See Appendix D.
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 by lending money and purchasing bonds (initially general
obligations and now including revenue obligations and other debt instruments) issued by municipalities,
to assist municipalities in accessing the financial markets. The Act has been modified from time to time,
including changes to allow the authority to finance loans for revenue bond issues, to port authorities, for
electrical generation projects including hydroelectric projects, to the Alaska Municipal League Joint
Insurance Association, to the University of Alaska and, most recently, to joint action agencies and
regional health organizations. The bonds issued by the Bond Bank to finance loans to Governmental
Units are issued primarily pursuant to the 2005 General Bond Resolution. Bonds may be issued by the
Bond Bank pursuant to the 2005 General Bond Resolution only to finance loans to Governmental Units
that were eligible for such assistance as of July 13, 2005.
The Bond Bank provides capital funds for eligible governmental borrowers primarily through
loans and by issuing its bonds and notes to finance such loans under conditions set forth in the Act and the
administrative regulations thereunder (Chapter 144 of the Alaska Administrative Code). The Bond Bank
generates funds to make such loans primarily by selling bonds on the national market and using the proceeds
to purchase bonds from eligible borrowers within the State. 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 2016 Series Three and Four Bonds. The Bond Bank is 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."
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 2016 Series Three and
Four Bonds, the Bond Bank also maintains a Reserve Fund as additional security for the payment of the
Bonds. The Bond Bank is required under the Act to seek annual 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, see
Appendix G - "STATE OF ALASKA."
PURPOSE OF THE 2016 SERIES THREE AND FOUR BONDS
Purpose of the 2016 Series Three Bonds
The 2016 Series Three Bond proceeds are to be used: (i) to make a new loan to the City and
Borough of Juneau; (ii) to refund certain outstanding Reserve Fund Obligations (defined herein) and
certain outstanding bonds previously issued by the Bond Bank, the proceeds of which were used to make
loans to the Aleutians East Borough, the City of Bethel, the City of Dillingham, the Kenai Peninsula
Borough, the City of Kodiak, the Kodiak Island Borough, the City of Nome, the Northwest Arctic
Borough, the City of Petersburg, the City of Seward, the City and Borough of Sitka, the Municipality of
Skagway and the City of Wasilla; and (iii) to pay a portion of the costs of issuing the 2016 Series Three
Bonds. The loan to the City and Borough of Juneau is to be used for the following purposes: (i) to pay a
portion of the costs of renovations to the Capital Transit maintenance shop; and (ii) to refund bonds
previously issued by the City and Borough of Juneau.
Purpose of the 2016 Series Four Bonds
The 2016 Series Four Bond proceeds are to be used: (i) to make a new loan to the City of
Ketchikan; (ii) to refund certain outstanding Reserve Fund Obligations and certain outstanding bonds
previously issued by the Bond Bank, the proceeds of which were used to make a loan to the City of
Ketchikan; and (iii) to pay a portion of the costs of issuing the 2016 Series Four Bonds. The loan to the
City of Ketchikan is to be used to pay a portion of the costs of improvements to harbor facilities in the
City of Ketchikan.
Refunding Plan
Certain proceeds of the 2016 Series Three and Four Bonds are to be used to refund and defease
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.
I 1 4 UJI ] 1 DX1
The Refunded Bonds to be refunded with proceeds of the 2016 Series Three Bonds are set forth
below.
Maturity Principal Interest Redemption Redemption
Series Date Amount Rate Date Price
2007 One ' 12/01/2017 $ 1,515,000 500% 12/05/2016 100
2007 One 12/01/2017 1,285,000 4.125 12/05/2016 100
2007 One 12/01/2018 1,915,000 5.00 12/05/2016 100
2007 One (1) 12/01/2018 1,430,000 4.125 12/05/2016 100
2007 One 12/01/2019 1,760,000 4.00 12/05/2016 100
2007 One 12/01/2020 2,320,000 4.125 12/05/2016 100
2007 One 12/02/2021 425,000 4.25 12/05/2016 100
2007 One (2) 12/01/2026 580,000 4.375 12/05/2016 100
2007 Two 12/01/2017 940,000 4.00 12/05/2016 100
2007 Two 12/01/2018 1,030,000 5,00 12/05/2016 100
2007 Two 12/01/2019 1,105,000 5.00 12/05/2016 100
2007 Two 12/01/2020 1,830,000 5.00 12/05/2016 100
2007 Two 12/01/2021 1,925,000 4.00 12/05/2016 100
2007 Two 12/01/2022 2,270,000 4.00 12/05/2016 100
2007 Two 12/01/2023 2,525,000 4.50 12/05/2016 100
2007 Two 12/01/2024 1,910,000 4.125 12/05/2016 100
2007 Two (2) 12/01/2026 4,200,000 4.50 12/05/2016 100
2007 Two (2) 12/01/2028 5,340,000 4.50 12/05/2016 100
2007 Three (2) 9/01/2022 1,005,000 5.00 9/01/2017 100
2007 Three (2) 9/01/2027 1,290,000 5.00 9/01/2017 100
2007 Five (3) 9/01/2017 130,000 6.00 9/01/2017 100
2007 Five 9/01/2018 135,000 6.00 9/01/2017 100
2007 Five 9/01/2019 145,000 4.00 9/01/2017 100
2007 Five 9/01/2020 150,000 4.125 9/01/2017 100
2007 Five 9/01/2021 160,000 4,25 9/01/2017 100
2007 Five 9/01/2022 165,000 4.30 9/01/2017 100
2007 Five 9/01/2023 175,000 4,40 9/01/2017 100
2007 Five 9/01/2024 180,000 4,50 9/01/2017 100
2007 Five 9/01/2025 190,000 4.50 9/01/2017 100
2007 Five 9/01/2026 200,000 4.50 9/01/2017 100
2007 Five 9/01/2027 205,000 4.625 9/01/2017 100
2007 Five 9/01/2028 215,000 4.625 9/01/2017 100
2007 Five 9/01/2029 285,000 4.625 9/01/2017 100
2007 Five 9/01/2030 300,000 4.75 9/01/2017 100
2007 Five 9/01/2031 315,000 4.75 9/01/2017 100
2007 Five 9/01/2032 330,000 4.75 9/01/2017 100
2007 Five (2) 9/01/2037 1,910,000 4.75 9/01/2017 100
(1) Bifurcated maturity.
(2) Term Bonds.
(3) To be defeased to maturity.
Maturity Principal Interest Redemption Redemption
Series Date Amount Rate Date Price
2008 One (1)(2) 4/01/2017 $ 370,000 4.00% 4/01/2017 100
2008 One (1)(2) 4/01/2018 380,000 4.00 4/01/2018 100
2008 One 4/01/2019 1,345,000 4.00 4/01/2018 100
2008 One 4/01/2020 1,400,000 4.25 4/01/2018 100
2008 One 4/01/2021 1,460,000 4,25 4/01/2018 100
2008 One 4/01/2022 1,520,000 4.375 4/01/2018 100
2008 One (3) 4/01/2023 1,590,000 4.50 4/01/2018 100
2008 One 4/01/2024 1,655,000 4.70 4/01/2018 100
2008 One 4/01/2025 1,740,000 4.80 4/01/2018 100
2008 One 4/01/2026 1,825,000 4,90 4/01/2018 100
2008 One 4/01/2 027 1,915,000 5.00 4/01/2018 100
2008 One 4/01/2028 2,010,000 5.00 4/01/2018 100
2008 One 4/01/2029 305,000 5.00 4/01/2018 100
2008 One (4) 4/01/2033 1,390,000 5.10 4/01/2018 100
2008 One (4) 4/01/2038 2,185,000 5.20 4/01/2018 100
2008 Two 6/01/2019 245,000 4,40 6/01/2018 100
2008 Two 6/01/2 020 260,000 4.50 6/01/2018 100
2008 Two 6/01/2 021 270,000 4.60 6/01/2018 100
2008 Two 6/01/2022 285,000 4,70 6/01/2018 100
2008 Two (5) 6/01/2 023 295,000 4.75 6/01/2018 100
2008 Two 6/01/2024 310,000 4.80 6/01/2018 100
2008 Two 6/01/2 025 325,000 4.85 6/01/2018 100
2008 Two 6/01/2026 340,000 4.90 6/01/2018 100
2008 Two (4)(5) 6/01/2 028 730,000 5.00 6/01/2018 100
2009 One '6 9/01 /2017 25,000 5.00 9/01/2017 100
2009 One 9/01/2018 25,000 5.00 9/01/2018 100
2009 One 9/01/2019 25,000 5,00 9/01/2018 100
2009 One 9/01/2020 25,000 5.00 9/01/2018 100
2009 One 9/01/2021 30,000 5.00 9/01/2018 100
2009 One 9/01 /2022 30,000 5.00 9/01/2018 100
2009 One (7) 9/01/2023 30,000 5.25 9/01/2018 100
2009 One 9/01 /2024 30,000 5.25 9/01/2018 100
2009 One 9/01/2025 35,000 5.375 9/01/2018 100
2009 One 9/01 /2026 35,000 5,50 9/01/2018 100
2009 One 9/01/2027 40,000 5.50 9/01/2018 100
2009 One (7) 9/01/2028 40,000 5.50 9/01/2018 100
2009 One 9/01/2029 40,000 5.625 9/01/2018 100
2009 One 4 9/01/2033 195,000 5.75 9/01/2018 100
2009 One (4) 9/01/2037 245,000 5.875 9/01/2018 100
Total $66,790,000
(1) To be defeased to maturity.
(2) Partial maturity. $1,810,000 principal amount of the 2017 maturity and $2,920,000 of the 2018
maturity are to remain outstanding.
(3) Partial maturity. $1,085,000 principal amount of the 2023 maturity and $1,135,000 of the 2028
maturity are to remain outstanding.
(4) Term Bonds.
(5) Partial maturity. $400,000 principal amount of the 2023 maturity and $420,000 of the 2028 maturity
are to remain outstanding.
(6) Partial maturity. $795,000 principal amount of the 2017 maturity and $1,015,000 of the 2018 maturity
are to remain outstanding.
(7) Partial maturity. $185,000 principal amount of the 2023 maturity and $195,000 of the 2028 maturity
are to remain outstanding.
The Refunded Bonds to be refunded with proceeds of the 2016 Series Four Bonds are set forth
below.
Series
Maturity
Date
Principal
Amount
Interest
Rate
Redemption
Date
Redemption
Price
2006 Two (1) 12/01/2021 $ 5,430,000 5.50% 12/05/2016 100%
2006 Two (1) 12/01/2026 7,095,000 5.50 12/05/2016 100
2006 Two (') 12/01/2031 9,180,000 5.00 12/05/2016 100
2006 Two (1) 12/01/2035 10,905,000 5,00 12/05/2016 100
Total $32,610,000
(1) Term Bonds.
Certain proceeds of the 2016 Series Three and Four 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 (i) 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, and (ii) the computations
supporting the conclusion that the 2016 Series Three and Four Bonds are not "arbitrage bonds" under
Section 148 of the Code are to be verified by Causey Demgen & Moore P.C., independent certified public
accountants.
!I1U tSJ DIPI IIJ *II] tIJ1 I1
The table below sets forth the sources and uses of funds related to the 2016 Series Three and Four
Bonds, rounded to the nearest dollar.
2016 Series Three 2016 Series Four Total (5)
Sources:
Principal Amount $ 80,435,000 $ 29,400,000 $ 109,835,000
Net Original Issue Premium 9,180,556 4,118,870 13,299,425
Transfer from Reserve Fund (1) 1,991,772 1,809,734 3,801,506
Prior Governmental Unit Reserves 610,959 394,322 1,005,280
Other Sources (2) 329,754 4,117 333,872
Total Sources $ 92,548,041 $ 35,727,043 $ 128,275,083
Uses:
Deposit to Redemption Account (3)
Loan to City and Borough of Juneau
Loan to City of Ketchikan
Governmental Unit Reserves
Costs of Issuance and Rounding 4)
Total Uses
$ 69,479,435 $ 33,468,512
21,755,998 -
- 2,000,000
461,581 -
851,026 258,531
$ 92,548,041 $ 35,727,043
$ 102,947,947
21,755,998
2,000,000
461,581
1,109,557
$ 128,275,083
(1) Represents available amounts to be transferred from the Reserve Fund. See "SECURITY AND SOURCES
OF PAYMENT FOR THE BONDS —2005 General Bond Resolution Reserve Fund."
(2) Represents prior Governmental Unit bond proceeds and Bond Bank contribution to payment of costs of
issuance.
(3) See "PURPOSE OF THE 2016 SERIES THREE AND FOUR BONDS - Refunding Plan."
(4) Includes Bond Bank and Governmental Unit costs of issuance such as Underwriters' discount, legal
fees, financial advisory fees, rating agency fees, Trustee fees, bond insurance premium, Debt Service
Reserve Fund Surety Bond premium, accounting, printing and other costs of issuance of the 2016
Series Three and Four Bonds.
(5) Totals may not foot due to rounding.
DESCRIPTION OF THE 2016 SERIES THREE AND FOUR BONDS
General Description
The 2016 Series Three and Four 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 2016 Series Three and Four Bonds. Principal of and interest on
the 2016 Series Three and Four 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 I - "DTC AND ITS BOOK-ENTRY SYSTEM."
2016 Series Three and Four Bonds
The 2016 Series Three and Four 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 2016 Series Three
and Four Bonds of each Series are issuable in denominations of $5,000 or any integral multiple thereof
within a maturity. Interest on the 2016 Series Three and Four Bonds will accrue from the date of delivery
of the 2016 Series Three and Four Bonds, or from the most recent interest payment date to which interest
has been paid, and is payable on each June 1 and December 1, commencing December 1, 2016.
Optional Redemption
The 2016 Series Three Bonds maturing on or after December 1, 2028, are subject to redemption
in whole or in part at the option of the Bond Bank on any date on or after December 1, 2026, at a price of
100 percent of the principal amount thereof to be redeemed plus accrued interest to the date fixed for
redemption. Loans to the Governmental Units have corresponding optional prepayment provisions.
The 2016 Series Four Bonds maturing on or after December 1, 2027, are subject to redemption in
whole or in part at the option of the Bond Bank on any date on or after December 1, 2026, 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.
Mandatory Sinking Fund Redemption
The 2016 Series Three Bonds maturing on December 1, 2033, 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 equal to 100 percent of the principal amount to be redeemed plus
accrued and unpaid interest thereon to the date fixed for redemption, but without premium.
2016 Series Three Term Bonds Due 2033
Year Principal Amount
2032 $750,000
2033* 785,000
* Maturity.
The 2016 Series Three Bonds maturing on December 1, 2037, 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 equal to 100 percent of the principal amount to be redeemed plus
accrued and unpaid interest thereon to the date fixed for redemption, but without premium.
2016 Series Three Term Bonds Due 2037
Year Principal Amount
2034 $795,000
2035 825,000
2036 860,000
2037* 875,000
* Maturity.
The Resolution provides that if the Bond Bank redeems a portion of the 2016 Series Three Term
Bonds pursuant to the optional redemption provisions described above or purchases for cancellation or
defeases 2016 Series Three Term Bonds, the 2016 Series Three 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 Resolution provides that at least 20 days, but not more than 60 days, prior to the date upon
which any 2016 Series Three and Four Bonds are to be redeemed, the Trustee will mail a notice of
redemption to the registered owner (DTC so long as all of the 2016 Series Three and Four Bonds are held
under the DTC book-entry system) of any 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series
Three and Four Bonds will be the responsibility of DTC Participants. Neither the Bond Bank nor the
Trustee will mail redemption notices to the beneficial owners.
The Resolution provides that notice of redemption is required to state that on the redemption date
the redemption price will become due and payable on each Series 2016 Three and Four Bond called for
redemption, unless, in the case of optional redemption, money sufficient to redeem the 2016 Series Three
and Four 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 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 2016 Series Three or Series Four Bonds
specified in the notice, 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 2016 Series Three and Four 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 2016 Series Three and Four Bonds for Redemption
If fewer than all of the 2016 Series Three and Four Bonds are to be redeemed prior to maturity,
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 2016 Series Three and Four Bonds are in book-entry form, then
DTC will select the 2016 Series Three and Four Bonds for redemption within a maturity of a Series in
accordance with the Letter of Representations. The 2005 General Bond Resolution provides that if less
than all of the Bonds of any maturity of a Series are called for redemption and the Bonds are not in book-
entry form, the Bonds to be redeemed are to be selected by lot by the Trustee or in any manner as the
Trustee, in its sole discretion, may deem appropriate and fair. See Appendix I - "DTC AND ITS BOOK-
ENTRY SYSTEM."
SECURITY AND SOURCES OF PAYMENT FOR THE BONDS
General
The Bonds, including the 2016 Series Three and Four 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 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 resolutions including the 2010 Master Bond
Resolution and the 2016 Master Bond Resolution (each as defined herein), 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 2016 Series Three and Four Bonds. See "BONDS
OUTSTANDING."
The 2016 Series Three and Four 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 2016
Series Three and Four Bonds are the 36th and 37th Series of Bonds issued under the 2005 General Bond
Resolution.
The 2016 Series Three and Four Bonds are payable solely from the sources provided in the
Bond Resolution. The 2016 Series Three and Four Bonds do not constitute an indebtedness or other
liability of the State of Alaska, and the 2016 Series Three and Four 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 2016 Series Three and Four 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
2016 Series Three and Four Bonds. Neither the faith and credit nor the taxing power of the State of
Alaska is pledged for the payment of the 2016 Series Three and Four Bonds. The Bond Bank has no
taxing power.
As additional security for payment of principal of and interest on the 2016 Series Three and Four
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 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 Bond Bank 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
annually seek 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. An appropriation has been included in each State operating budget since 2009,
including for the current fiscal year ending June 30, 2017. 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. There is no guarantee
10
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 G - "STATE OF ALASKA - Government Budgets and
Appropriations."
Starting in fiscal year 2009 and continuing through fiscal year 2017, the Bond Bank has also
obtained annual appropriations of 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 State's 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
11
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
amount equal to the Reserve Fund Requirement. 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 June 30, 2016, the valuation of assets in the Reserve Fund was approximately
$62.9 million, an amount sufficient to satisfy the Reserve Fund Requirement. As of that date,
approximately $36.6 million, representing 58.2 percent of the assets in the Reserve Fund, was funded
from cash deposits by the Bond Bank from available funds, approximately $15.8 million, representing
25.1 percent, was funded from Bonds issued by the Bond Bank to make deposits in the Reserve Fund
("Reserve Fund Obligations"), and approximately $10.5 million, representing 16.7 percent, was funded
with a surety policy (the "Debt Service Reserve Fund Surety Bond") from National Public Finance
Guarantee Corporation ("National"). In connection with the issuance of the 2016 Series Three and Four
Bonds, National committed to increase the face amount of the Debt Service Reserve Fund Surety Bond by
$7.5 million in substitution for a portion of the cash on deposit in the Reserve Fund. 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 2009, and
continuing through fiscal year 2017, 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 and has obtained an appropriation within the State's annual operating budget in
every year since 2009, 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 "Moral
Obligation."
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 F.
Debt Service Reserve Fund Surety Bond. The amount to be credited to the Reserve Fund
includes the Debt Service Reserve Fund Surety Bond in lieu of a cash deposit in the Reserve Fund, 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
12
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 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.
Moral Obligation. The Bond Bank is required 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 not
subject to the statutory annual earnings transfer, and current year investment earnings and as with the
Operating Account is not held by the Trustee or pledged to the payment of the Bonds. As of August 31,
2016, the unaudited market value of the Custodian Account was $11,231,851.
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 2017, all fiscal year earnings due to the
State's 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 a with 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.
In recent years the Bond Bank has generally used the Custodian Account to pay operating
expenses, to make direct loans to eligible borrowers and to make deposits in the Reserve Fund.
13
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
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 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 2016 Loan
Obligations and associated estimated coverage provided by those State payments. Capital spending that is
the source of matching grant funding to municipalities has been reduced significantly since fiscal year
2015, the School Debt Reimbursement Program has been curtailed and the State's tradition of forward-
funding Constitutionally-required K-12 education support payments also has stopped. This diminished
funding is expected to continue to result in a gradual diminishment of the balances in the matching grant
column of the table in Appendix B. Other than constitutionally required education support funding, 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, including
State pension system administrators, 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 G - "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 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.
Bond Insurance
The scheduled payment of principal of and interest on the 2016 Series Three and Four Bonds so
designated on the inside cover pages of this Official Statement (the "Insured Bonds") is to be insured by a
municipal bond insurance policy to be issued by National. See "BOND INSURANCE" and "RATINGS."
National may direct and must consent to any remedies available upon an event of default with
respect to the Insured Bonds, and the consent of National may be required in connection with
amendments to any applicable bond documents.
In the event National is unable to make payment of principal of and interest on the Insured Bonds
as such payments become due under the Policy, the Insured Bonds are payable solely from money
received pursuant to the applicable bond documents. In the event National becomes obligated to make
14
payments with respect to the Insured Bonds, no assurance is given that such event will not adversely
affect the market price of the Insured Bonds or the marketability (liquidity) of the Insured Bonds.
The obligations of National are general obligations of National and in an event of default by
National, the remedies available may be limited by applicable bankruptcy law or other similar laws
related to insolvency.
Neither the Bond Bank nor the Underwriters have made any independent investigation into the
claims-paying ability of National, and no assurance or representation is given regarding the financial
strength or projected financial strength of National. When making an investment decision, potential
investors should carefully consider the ability of the Bond Bank to pay principal of and interest on the
Insured Bonds when due and the claims-paying ability of National, particularly over the life of the
investment. See "BOND INSURANCE."
BOND INSURANCE
The following information has been furnished by National Public Finance Guarantee Corporation
("National") for use in this Official Statement. National does not accept any responsibility for the
accuracy or completeness of any information or disclosure contained herein, or omitted herefrom, other
than with respect to the accuracy of the information regarding National and the Financial Guaranty
Insurance Policy issued by National (the "Policy"). Additionally, National makes no representation
regarding the 2016 Series Three and Four Bonds or the advisability of investing in the 2016 Series Three
and Four Bonds. A specimen of the Policy is attached hereto as Appendix J.
Financial Guaranty Insurance Policy
The Policy unconditionally and irrevocably guarantees the full and complete payment required to
be made by or on behalf of the Bond Bank to the Trustee or its successor of an amount equal to (i) the
principal of (either at the stated maturity or by an advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on, the Insured Bonds as such payments shall become due but shall
not be so paid (except that in the event of any acceleration of the due date of such principal by reason of
mandatory or optional redemption or acceleration resulting from default or otherwise, other than any
advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed by the
Policy shall be made in such amounts and at such times as such payments of principal would have been
due had there not been any such acceleration, unless National elects in its sole discretion, to pay in whole
or in part any principal due by reason of such acceleration); and (ii) the reimbursement of any such
payment which is subsequently recovered from any owner of the Insured Bonds pursuant to a final
judgment by a court of competent jurisdiction that such payment constitutes an avoidable preference to
such owner within the meaning of any applicable bankruptcy law (a "Preference").
The Policy does not insure against loss of any prepayment premium which may at any time be
payable with respect to any Insured Bonds. The Policy does not, under any circumstance, insure against
loss relating to: (i) optional or mandatory redemptions (other than mandatory sinking fund redemptions);
(ii) any payments to be made on an accelerated basis; (iii) payments of the purchase price of Insured
Bonds upon tender by an owner thereof or (iv) any Preference relating to (i) through (iii) above. The
Policy also does not insure against nonpayment of principal of or interest on the Insured Bonds resulting
from the insolvency, negligence or any other act or omission of the Trustee and Paying Agent or any
other paying agent for the Insured Bonds.
15
National Public Finance Guarantee Corporation
National is an operating subsidiary of MBIA Inc., a New York Stock Exchange listed company.
MBIA Inc. is not obligated to pay the debts of or claims against National. National is domiciled in the
State of New York and is licensed to do business in and subject to regulation under the laws of all 50
states, the District of Columbia, the Commonwealth of Puerto Rico and the U.S. Virgin Islands.
The principal executive offices of National are located at 1 Manhattanville Road, Suite 301,
Purchase, New York 10577 and the main telephone number at that address is (914) 765-3333.
Regulation
As a financial guaranty insurance company licensed to do business in the State of New York,
National is also subject to the New York Insurance Law which, among other things, prescribes minimum
capital requirements and contingency reserves against liabilities for National, limits the classes and
concentrations of investments that are made by National and requires the approval of policy rates and
forms that are employed by National. State law also regulates the amount of both the aggregate and
individual risks that may be insured by National, the payment of dividends by National, changes in
control with respect to National and transactions among National and its affiliates.
The Policy is not covered by the Property/Casualty Insurance Security Fund specified in
Article 76 of the New York Insurance Law.
Financial Strength Ratings of National
National's current financial strength ratings from the major rating agencies are summarized
below:
Agency Rating Outlook
S&P Global Ratings AA- Stable
Moody's Investors Service A3 Negative
Kroll Bond Rating Agency AA+ Stable
Each rating of National should be evaluated independently. The ratings reflect the respective
rating agency's current assessment of the creditworthiness of National and its ability to pay claims on its
policies of insurance. Any further explanation as to the significance of the above ratings may be obtained
only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the Insured Bonds, and such
ratings may be subject to revision or withdrawal at any time by the rating agencies. Any downward
revision or withdrawal of any of the above ratings may have an adverse effect on the market price of the
Insured Bonds. National does not guaranty the market price of the Insured Bonds nor does it guaranty that
the ratings on the Insured Bonds will not be revised or withdrawn.
Recent Litigation
In the normal course of operating its business, National may be involved in various legal
proceedings. Additionally, MBIA Inc. may be involved in various legal proceedings that directly or
indirectly impact National. For additional information concerning material litigation involving National
and MBIA Inc., see MBIA Inc.'s Annual Report on Form 10-K for the year ended December 31, 2015
and Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, which is hereby incorporated by
16
reference into this Official Statement and shall be deemed to be a part hereof, as well as the information
posted on MBIA Inc.'s web site at http://www.mbia.com.
MBIA Inc. and National are defending against/pursuing the aforementioned actions and expect
ultimately to prevail on the merits. There is no assurance, however, that they will prevail in these actions.
Adverse rulings in these actions could have a material adverse effect on National's ability to implement its
strategy and on its business, results of operations and financial condition.
Other than as described above and referenced herein, there are no other material lawsuits pending
or, to the knowledge of National, threatened, to which National is a party.
National Financial Information
Based upon statutory financials, as of June 30, 2016, National had total net admitted assets of
$4.8 billion (unaudited), total liabilities of $2.1 billion (unaudited), and total surplus of $2.7 billion
(unaudited) determined in accordance with statutory accounting practices prescribed or permitted by
insurance regulatory authorities.
For further information concerning National, see the financial statements of MBIA Inc. and its
subsidiaries as of December 31, 2015, prepared in accordance with generally accepted accounting
principles, included in the Annual Report on Form 10-K of MBIA Inc. for the year ended December 31,
2015, which are hereby incorporated by reference into this Official Statement and shall be deemed to be a
part hereof.
Incorporation of Certain Documents by Reference
The following documents filed by MBIA Inc. with the Securities and Exchange Commission (the
"SEC") are incorporated by reference into this Official Statement:
MBIA Inc.'s Annual Report on Form 10-K for the year ended December 31, 2015;
MBIA Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016.
Any documents, including any financial statements of National that are included therein or
attached as exhibits thereto, or any Form 8-K, filed by MBIA Inc. pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934, as amended, after the date of MBIA Inc.'s most recent
Quarterly Report on Form 10-Q or Annual Report on Form 10-K, and prior to the termination of the
offering of the Insured Bonds offered hereby shall be deemed to be incorporated by reference in this
Official Statement and to be a part hereof from the respective dates of filing such documents.
Any statement contained in a document incorporated or deemed to be incorporated by reference
herein, or contained in this Official Statement, shall be deemed to be modified or superseded for purposes
of this Official Statement to the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Official Statement.
MBIA Inc., files annual, quarterly and special reports, information statements and other
information with the SEC under File No. 1-9583. Copies of MBIA Inc.'s SEC filings (MBIA Inc.'s
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 and MBIA Inc.'s Annual Report on
Form 10-K for the year ended December 31, 2015) are available (i) over the Internet at the SEC's web
site at http://www.sec.gov; (ii) at the SEC's public reference room in Washington, D.C.; (iii) over the
17
Internet at MBIA Inc.'s web site at http://www.mbia.com; and (iv) at no cost, upon request to National at
its principal executive offices.
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 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 Department of Commerce, Community and Economic Development 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.
Mark Pfeffer - Chair. Term expires July 15, 2017. Mr. Pfeffer was originally appointed to the
Board on October 10, 2001. Mr. Pfeffer is a registered architect who owns an architectural practice in
Anchorage, Alaska. He is active in the development, design and management of commercial real estate
projects, many of which include public/private partnerships. He is President of Pfeffer Development,
LLC. Mr. Pfeffer received a Bachelor of Architecture Degree from the University of Nebraska.
Gregory Gursey - Vice Chair. Term expires July 15, 2018. Mr. Gursey was originally appointed
to the Board on June 22, 2009. Mr. Gursey became President of Benefit Brokers, Inc. in 2001, after
working as Vice President of Investments for Wedbush Morgan Securities for 11 years. Mr. Gursey also
serves as a Fll'4RA industry arbitrator in both civil and industry arbitration cases. After graduating from
the University of Alaska Anchorage with a degree in finance, Mr. Gursey became involved with the
University of Alaska Foundation. He served as the first Chairman of the UAA College of Fellows, served
as a Trustee to the UA Foundation, and was a member of the Investment Committee to the UA
Foundation. Mr. Gursey has served on both the State of Alaska Dental Examiner's Board and the U.S.
Treasury Department's Taxpayer Advocacy Panel. He has served on the Investment Commission for the
Municipality of Anchorage and several other local boards.
Luke Welles - Mem ber. Term expires July 15, 2019. 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 the Yukon Kuskokwim Healthcare Corporation, which administers healthcare in 52 rural
communities, including a hospital located in Bethel, Alaska. 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.
18
Michael Lamb —Member. Mr. Lamb is the first delegate for Chris Hladick, Commissioner of the
Department of Commerce, Community and Economic Development. Mr. Lamb is a certified public
accountant with more than 25 years' experience as a chief financial officer and has worked in private,
public, and governmental financial management positions. He serves as the chief financial officer for the
Alaska Industrial Development and Export Authority and the Alaska Energy Authority. Prior to that, for
almost 15 years Mr. Lamb was the chief financial officer for the Fairbanks North Star Borough, Alaska.
For almost 9 years, prior to the Borough, he was the chief financial officer for the City of St. Paul,
Alaska. Mr. Lamb is a graduate of the University of Washington School of Business with a Bachelor of
Arts in Business Administration, with an emphasis in accounting.
Pamela Leary - Member. Ms. Leary is the first delegate for Randall Hoffbeck, Commissioner of
the Department of Revenue. She is the Director of the Department of Revenue - Treasury Division and
serves as the State Treasurer. She previously served in the Department of Revenue as State Comptroller
from 2007 through 2013. Ms. Leary began her career as an auditor with Price Waterhouse and became a
partner in the firm PricewaterhouseCoopers, LLP. After moving to Alaska, Ms. Leary owned and
operated a business before reentering the accounting profession with the Alaska Permanent Fund
Corporation. She holds a bachelor's degree in economics from the Wharton School, University of
Pennsylvania, and is a certified public accountant in the State of Alaska.
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 Department of Revenue - 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 Department of Revenue 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
Department of Revenue - Treasury Division, with responsibility for the management of all debt of the
State, was appointed Executive Director of the Bond Bank in 1999. Mr. Mitchell has worked for the
Department of Revenue since 1992. He previously held several positions in Alaska financial institutions.
Ms. Mitchell holds a Bachelor of Science Degree in Business Administration from Northern Arizona
University. He serves as board member and chairman of the Wildflower Court Nursing Home.
Ryan S. Williams, who also serves as Operations Research Analyst in the Department of
Revenue - Treasury Division, was appointed Finance Director of the Bond Bank in 2014. Mr. Williams
has worked for the Department of Revenue 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.
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.
19
BONDS OUTSTANDING
The total amount of Bond Bank bonds and notes outstanding at any one time may not exceed
$1,792.5 million, consisting of statutory authorizations of: $87.5 million for the University of Alaska,
$205 million for regional health organizations and $1,500 million for all other authorized purposes. As of
October 1, 2016, the total principal amount of Bond Bank bonds and notes outstanding, not including the
2016 Series Three and Four Bonds, was $1,068,314,207.
Under the provisions of the Act, within the limitations described above, 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 Bond Bank currently has bonds outstanding
under the following resolutions.
2005 General Bond Resolution
The 2016 Series Three and Four Bonds are the 36th and 37th Series of Bonds issued under the
2005 General Bond Resolution. As of October 1, 2016, the Bond Bank has issued $1,335,160,000 of
general obligation bonds under the 2005 General Bond Resolution (not including the 2016 Series Three
and Four Bonds), $1,009,975,000 of which remain outstanding. Bonds may be issued by the Bond Bank
pursuant to the 2005 General Bond Resolution only to finance loans to Governmental Units that were
eligible for such assistance as of July 13, 2005, The Bond Bank expects to continue to use the 2005
General Bond Resolution as the primary means of financing loans to those borrowers.
2010 Master Bond Resolution
Bonds issued under the Municipal Obligation Bond Resolution (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
October 1, 2016, the Bond Bank has issued $4,765,000 of bonds under the 2010 Master Bond Resolution,
$4,010,000 of which remain outstanding. The Bond Bank has no plans at this time to issue additional bonds
under the 2010 Master Bond Resolution.
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 October 1, 2016, the Bond Bank has issued $44,135,000 of bonds
under the 2016 Master Bond Resolution, all 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 October 1, 2016, was $10,194,207.
20
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 7 in Appendix E. The Bond Bank has no plans at this time to issue additional
CEIP bonds.
Direct Loans
With money from the Custodian Account and with funds appropriated by the State to the Bond
Bank, the Bond Bank has acquired certain Municipal Bonds and has defeased certain Bonds while
retaining the underlying Municipal Bonds.
As of October 1, 2016, the Bond Bank held $1,328,307 of City of Galena utility revenue bonds
and $144,678 of City of Galena appropriation obligations. The related loans were funded with
appropriations by the State to the Bond Bank specifically for this purpose.
As of October 1, 2016, the Bond Bank held $2,805,000 of Kenai Peninsula Borough taxable
revenue bonds. The related loans were funded with money from the Custodian Account 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.
Loans by the State of Alaska
The Bond Bank has statutory authority to borrow funds from the State's General Fund at the
discretion of the Commissioner or the Department of Revenue. In November 2010 and August 2011 the
Bond Bank borrowed $6.0 million and $7.0 million, respectively, 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 a $13.2 million appropriation to the Bond Bank that was effective April 15, 2012. This amount
reflected the original loan amounts plus interest accrued on those loans. The Bond Bank does not
currently have any outstanding loans from the State.
BONDS ISSUED AND OUTSTANDING AS OF OCTOBER 1, 2016
Original Amount
Amount Issued Outstanding
I. 2005 General Bond Resolution Bonds $1,444,995,000 (1) $1,020,410,000 W
II. 1976 Master Bond Resolution Bonds 721,985,000 -
III. 2010 Master Bond Resolution Bonds 4,765,000 4,010,000
IV. 2016 Master Bond Resolution Bonds 44,135,000 44,135,000
V. Coastal Energy Impact Program Loans (2) 35,456,046 10,194,207
(1) Includes the 2016 Series Three and Four Bonds and excludes the Refunded Bonds.
(2) The CEIP loans are not liabilities of the Bond Bank but are included when calculating the amount of
bonds outstanding under the Act.
21
DEBT CAPACITY
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
General Obligation Bonds
2005 General Bond Resolution 1,020,410,000 (2) (3)
2010 Master Bond Resolution 4,010,000
2016 Master Bond Resolution 44,135,000 (4)
$1,068,555,000
Coastal Energy Impact Program Loans (5) 10,194,207
Total Outstanding Debt $1,078,749,207
Remaining Debt Capacity
University of Alaska 1,415,000
Regional Health Organizations 160,865,000
All Other Authorized Purposes 551,470,793
(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 G - "STATE OF ALASKA - Public Debt and Other
Obligations of the State - Future State Supported Pension Obligation Bonds."
(2) Includes the 2016 Series Three and Four Bonds and excludes the Refunded Bonds.
(3) Of this amount, $86,085,000 was issued to make a loan to the University of Alaska.
(4) All of this amount was issued to make a loan to a regional health organization.
(5) The CEIP loans are not liabilities of the Bond Bank but are included when calculating the amount of
bonds outstanding under the Act.
22
DEBT SERVICE REQUIREMENTS
BONDS ISSUED AND OUTSTANDING UNDER THE 2005 GENERAL BOND RESOLUTION
AND THE 2016 SERIES THREE AND FOUR BONDS
(Fiscal Years Ending June 30)
2016 Series Three Bonds
Principal Interest
$ 460,000 $ 1,916,681
7,150,000 3,244,594
9,110,000 2,990,894
8,220,000 2,644,294
9,105,000 2,297,794
8,230,000 1,951,094
4,490,000 1,674,244
4,885,000 1,439,869
4,450,000 1,206,494
4,735,000 976,869
5,005,000 733,369
4,855,000 486,869
2,755,000 296,619
675,000 217,619
700,000 196,556
720,000 174,369
750,000 150,931
785,000 125,988
795,000 99,816
825,000 72,478
860,000 44,044
875,000 14,766
$ 80,435,000 $ 22,956,247
2016 Series Four Bonds
Principal Interest
$ 610,000 $ 821,682
950,000 1,406,250
990,000 1,367,250
1,045,000 1,316,375
1,090,000 1,263,000
1,145,000 1,207,125
1,205,000 1,148,375
1,260,000 1,086,750
1,325,000 1,022,125
1,390,000 954,250
1,460,000 883,000
1,535,000 808,125
1,615,000 729,375
1,690,000 646,750
1,780,000 560,000
1,865,000 468,875
1,960,000 373,250
2,055,000 272,875
2,165,000 167,375
2,265,000 56,625
$ 29,400,000 $ 16,559,432
Outstanding
Fiscal Year Bonds (1)
2017
$ 102,399,667
2018 96,963,808
2019 90,758,138
2020
88,198,144
2021 82,915,905
2022 79,847,872
2023 81,854,059
2024 74,942,384
2025 65,855,344
2026 61,200,520
2027 56,111,962
2028 57,151,561
2029 54,268,620
2030 49,045,064
2031 48,041,430
2032 43,774,076
2033 43,270,202
2034 36,980,127
2035 26,389,440
2036 23,535,581
2037 18,675,393
2038
18,414,078
2039 18,190,441
2040 16,036,963
2041 16,042,500
2042 15,898,900
2043 15,897,600
2044
15,904,975
2045 13,319,800
2046 5,429,750
2047 5,428,500
2048 2,155,000
2049 2,152,500
Total (2)
$1,427,050,301
T.-d-..1 (2)
$ 106,208,030
109,714,651
105,216,282
101,423,813
96,671,699
92,381,090
90,371,678
83,614,002
73,858,963
69,256,639
64,193,330
64,836,555
59,664,613
52,274,433
51,277,987
47,002,320
46,504,383
40,218,989
29,616,630
26,754,684
19,579,437
19,303,844
18,190,441
16,036,963
16,042,500
15,898,900
15,897,600
15,904,975
13,319,800
5,429,750
5,428,500
2,155,000
2,152,500
$1,576,400,980
(1) Excludes the Refunded Bonds.
(2) Totals may not foot due to rounding.
23
Future Financing Plans
The Bond Bank anticipates issuing additional bonds pursuant to the 2005 General Bond Resolution
or other bond resolutions within the next 12 months and making related loans to eligible borrowers,
including Governmental Units. The principal amount of such additional bonds depends on the number and
size of the applications for Bond Bank financing from eligible borrowers. The Bond Bank has received an
application for a loan from the Yukon Kuskokwim Health Consortium Regional Health Organization for
$102.5 million for their Bethel hospital and health clinic project. The Board is expected to consider this
application in mid-November 2016, which if approved would be financed with proceeds of bonds issued
pursuant to the 2016 Master Resolution or pursuant to a separate resolution.
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 in Appendix F. 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 equal and proportionate 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 or redemption premium, if any, of, 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
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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 F. The 2005 General Bond Resolution provides that Municipal Bonds and the
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 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 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 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
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 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 hereby 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, but
not be limited to, 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,
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 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 redemption premium, and
(iv) the costs and expenses of the Bond Bank in effecting the redemption of the Loan Obligation.
(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 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 the 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 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 the Trustee will deposit any such money in the
Principal Account and Interest Account in place of said unpaid Municipal Bonds Payments or in the event
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deficiencies in said Accounts created by such default will have 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 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
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 Bond Bank will pay into the Reserve Fund
(i) money made available by the State and paid by the State 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
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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 will be provided
by any Series Resolution; (iv) Credit Enhancement; and (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. 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, 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 of 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 will be a deficiency in the Interest Account or in the Principal Account, 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
Account within 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 therefor 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 incurred 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 will be
continuously and fully secured, for the benefit of the Bond Bank and the 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 will be 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 F.
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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 provided in the Bonds according to the true intent and meaning
thereof, and will duly and punctually satisfy 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 revise such Fees and Charges if 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 the Administrative Expenses of the
Bond Bank and of 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 State 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, 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.
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 will pay or cause to be paid
all other sums payable under the 2005 General Bond Resolution, 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.
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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 will have 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 will have 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 thereof, 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, will be 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" and Article XIII of the 2005
General Bond Resolution in Appendix F.
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
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 F.
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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 will become 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 will be certified 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 (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 will continue 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 will be 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 will become due during the period for which the Bond Bank will be
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 paragraph (a) above, the Trustee will proceed, or upon the happening and
continuance of any event of default described in paragraphs (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, will deem most
effectual to protect and enforce such rights:
(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;
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(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 of and interest on Bonds then Outstanding, the Trustee 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 before any
judgment or decree for the payment of the money due will have 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 will have been made good or cured to the
satisfaction of the Trustee or provision deemed by the Trustee to be adequate will have been made
therefor, then the holders of at least a majority in aggregate principal amount of the Bonds then
outstanding, 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 F.
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 will not be otherwise than in accordance with law or
the 2005 General Bond Resolution, and that the Trustee will have 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 will have 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 will have made written
request of the Trustee and will have 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 will have been offered to the Trustee reasonable security and indemnity against the
costs, expenses and liabilities to be incurred thereby, and the Trustee will have 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 herein provided and for the benefit of all Bondholders.
Excess Earnings
The Bond Bank covenants and agrees 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.
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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 One 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 2016 Series Three and Four Bonds and
govern the rights and obligations of the Holders thereof.
LITIGATION
As a condition to the delivery of the 2016 Series Three and Four Bonds, the Bond Bank is
required to furnish a certificate to the effect that as of the date of delivery, among other things, there is no
litigation pending in any court to restrain or enjoin the issuance or delivery of the 2016 Series Three and
Four Bonds, or in any way contesting the validity or enforceability of the 2016 Series Three and Four
Bonds, the 2005 General Bond Resolution or any Bonds or money pledged under the 2005 General Bond
Resolution.
CERTAIN LEGAL MATTERS
Legal matters incident to the authorization, issuance and sale by the Bond Bank of the 2016
Series Three and Four 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 is set forth in
Appendix A.
Certain legal matters will be passed upon for (i) the City of Ketchikan and the City and Borough
of Sitka by their bond counsel, Stradling Yocca Carlson & Rauth, P.C. of Seattle, Washington, (ii) the
City of Dillingham, the City of Kodiak, the City of Nome, the Northwest Arctic Borough, Petersburg
Borough and the City of Wasilla by their bond counsel, Birch Horton Bittner & Cherot of Anchorage,
Alaska, (iii) the Municipality of Skagway and the City and Borough of Juneau by their bond counsel,
K&L Gates LLP of Seattle, Washington, (iv) the City of Bethel, the Kenai Peninsula Borough and the
City of Seward by their bond counsel, Jermain, Dunnagan & Owens, P.C. of Anchorage, Alaska, and
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(v) the Aleutians East Borough and the Kodiak Island Borough by their co-bond counsel, Foster Pepper
PLLC of Seattle, Washington, and the Levesque Law Group, LLC of Anchorage, Alaska.
Certain legal matters will be passed upon for the Underwriters by their special counsel, Foster
Pepper PLLC, 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.
The firm of Foster Pepper PLLC, Seattle, Washington has secured the consent of the
Underwriters, the Aleutians East Borough and the Kodiak Island Borough regarding the multiple
representations of clients in this transaction.
UNDERWRITING
The 2016 Series Three Bonds are to be purchased by RBC Capital Markets, LLC, acting on
behalf of itself and as representative of Merrill Lynch, Pierce, Fenner & Smith Incorporated, at a purchase
price of $89,379,966.58 (reflecting the aggregate principal amount of the 2016 Series Three Bonds, plus a
net original issue premium of $9,180,555.75, less an underwriters' discount of $235,589.17). The
Underwriters have represented to the Bond Bank that the 2016 Series Three Bonds have been
subsequently reoffered to the public initially at the prices or prices corresponding to the yields set forth on
the inside cover pages of this Official Statement.
The 2016 Series Four Bonds are to be purchased by RBC Capital Markets, LLC, acting on behalf
of itself and as representative of Goldman, Sachs & Co., at a purchase price of $33,419,535.65 (reflecting
the aggregate principal amount of the 2016 Series Four Bonds, plus an original issue premium of
$4,118,869.55, less an underwriters' discount of $99,333.90). The Underwriters have represented to the
Bond Bank that the 2016 Series Four Bonds have been subsequently reoffered to the public initially at the
prices or prices corresponding to the yields set forth on the inside cover pages of this Official Statement.
The initial offering prices or prices corresponding to the yields set forth on the inside cover pages
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 2016 Series Three and Four 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 pages of this Official Statement.
The Underwriters and their respective 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
respective 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 respective affiliates may engage in transactions for their own
accounts involving the securities and instruments made the subject of this securities offering or other
offering of the Bond Bank or the Governmental Units. The Underwriters and their respective affiliates
may make a market in credit default swaps with respect to municipal securities in the future. The
Underwriters and their respective 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,
In May 2013, Bank of America Corporation ("BAC") and MBIA Inc. ("MBIA") and certain of
their respective subsidiaries entered into a settlement agreement to resolve all outstanding representations
and warranties claims and all other claims between the parties. As part of the settlement, BAC paid MBIA
Insurance Corporation ("MBIA Corp.") approximately $1.7 billion and provided it with a three-year
senior secured $500 million credit facility. In addition, BAC agreed to terminate all of its outstanding
34
credit default swap protection agreements purchased from MBIA Corp. on commercial mortgage-backed
securities, as well as to terminate certain other trades in order to close out positions between the
companies. MBIA issued to BAC five-year warrants to purchase approximately 4.9 percent of its then-
outstanding common shares at an exercise price of $9.59 per share. MBIA's public finance insurance
business is operated primarily through National Public Finance Guarantee Corporation ("National"). See
"BOND INSURANCE." National and MBIA Corp. are subsidiaries of MBIA. Merrill Lynch, Pierce,
Fenner & Smith Incorporated, an underwriter of the 2016 Series Three Bonds, is a subsidiary of BAC.
MUNICIPAL ADVISOR
The Bond Bank has retained Western Financial Group, LLC ("WFG") to serve as municipal
advisor to provide certain advice to the Bond Bank with respect to the issuance of the 2016 Series Three
and Four Bonds. WFG was recently acquired by, and is a wholly-owned subsidiary of, PFM Financial
Advisors LLC. WFG 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. WFG 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, 2016, set forth in
Appendix E 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.
TAX MATTERS
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 2016 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 2016 Series Four Bond for any period that such 2016 Series Four Bond is
held by a "substantial user" of the facilities financed or refinanced by the 2016 Series Four Bonds or by a
"related person" within the meaning of Section 147(a) of the Internal Revenue Code. Bond Counsel
observes, however, that interest on the 2016 Series Four Bonds is a specific preference item for purposes
of the federal individual and corporate alternative minimum taxes. In the further opinion of Bond
Counsel, interest on the 2016 Series Three Bonds is not a specific preference item for purposes of the
federal individual or corporate alternative minimum taxes, although Bond Counsel observes that such
interest is included in adjusted current earnings when calculating corporate alternative minimum taxable
income. Bond Counsel is also of the opinion, based on existing laws of the State, that interest on the 2016
Series Three and Four 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 is set forth in
Appendix A.
To the extent the issue price of any maturity of a Series of the 2016 Series Three and Four Bonds
is less than the amount to be paid at maturity of such 2016 Series Three and Four Bonds (excluding
amounts stated to be interest and payable at least annually over the term of such 2016 Series Three and
35
Four 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 2016 Series Three and
Four Bonds which is excluded from gross income for federal income tax purposes. For this purpose, the
issue price of a particular maturity of a Series of the 2016 Series Three and Four Bonds is the first price at
which a substantial amount of such maturity of the 2016 Series Three and Four 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 a Series of the 2016 Series Three and Four Bonds accrues daily over the term to maturity of such 2016
Series Three and Four 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 2016 Series Three and Four Bonds to determine taxable gain or loss upon
disposition (including sale, redemption, or payment on maturity) of such 2016 Series Three and Four
Bonds. Beneficial Owners of the 2016 Series Three and Four Bonds should consult their own tax advisors
with respect to the tax consequences of ownership of 2016 Series Three and Four 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 2016 Series Three
and Four Bonds is sold to the public.
2016 Series Three and Four 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
2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four Bonds being included in gross income for federal income tax
purposes, possibly from the date of original issuance of the 2016 Series Three and Four Bonds. 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 2016 Series Three and Four Bonds may adversely
affect the value of, or the tax status of interest on, the 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four 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.
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Current and future legislative proposals, if enacted into law, clarification of the Internal Revenue
Code or court decisions may cause interest on the 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 current benefit of the tax status of such
interest. For example, the Obama Administration's budget proposals in recent years have proposed
legislation that would limit the exclusion from gross income of interest on the 2016 Series Three and Four
Bonds to some extent for high-income individuals. 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 2016 Series Three and Four Bonds. Prospective
purchasers of the 2016 Series Three and Four 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 2016 Series Three and Four Bonds ends with the
issuance of the 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and Four Bonds, and may cause the
Bond Bank, the Governmental Units or the Beneficial Owners to incur significant expense.
RATINGS
Fitch Ratings ("Fitch") and S&P Global Ratings ("S&P") have assigned ratings of "AA" (outlook
negative) and "AA" (watch negative), respectively, to the 2016 Series Three and Four Bonds.
On October 3, 2016, the Alaska Pension Obligation Bond Corporation (the "Corporation")
distributed a preliminary official statement pertaining to $2,352,980,000 (preliminary, subject to change)
aggregate principal amount of the Corporation's Pension Obligation Bonds, Series 2016 (Taxable) (the
"Corporation Bonds"), that was supplemented on October 12, 2016. On October 7, 2016, S&P assigned a
rating of "AA" to the Corporation Bonds. In its Credit Profile dated October 7, 2016, pertaining to the
Corporation Bonds, S&P (i) placed the general obligations of the Bond Bank, including the 2016 Series
Three and Four Bonds, on credit watch negative and (ii) stated that it expects to lower its ratings assigned
to State of Alaska appropriation-backed bonds, which include both the Corporation Bonds and the Series
2016 Three and Four Bonds, to "AA-" pending the sale and close of the Corporation Bonds, The
Corporation has announced that it expects to sell the Corporation Bonds on or about October 26, 2016,
37
and to close the Corporation Bonds on or about November 2, 2016. See Appendix G - "STATE OF
ALASKA - Public Debt and Other Obligations of the State - Future State Supported Pension Obligation
Bonds."
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: Fitch, One State Street Plaza, New York, New York 10004, (212) 908-0500; 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 is 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. Any such downward revision or
withdrawal of such ratings may have an adverse effect on the market price of the 2016 Series Three
and Four 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 2016
Series Three and Four Bonds to provide, or to cause to be provided, certain financial and operating
information not later than 210 days after the end of each Fiscal Year (currently June 30) in which any
2016 Series Three and Four Bonds are outstanding, commencing in the Fiscal Year ending June 30, 2016
(each, an "Annual Report"). 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
form of the Continuing Disclosure Certificate of the Bond Bank set forth in Appendix H. These covenants
have been made in order to assist the Underwriter 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 2016 Series Three and Four Bonds (the "2016 Series Three and Four Governmental
Units") has covenanted in its Loan Agreement or will covenant in its Loan Agreement to file with the
MSRB, on an annual basis, its audited financial statements no later than 210 days after the end of such
Governmental Unit's fiscal year for the term of the Municipal Bonds and any refunding Municipal Bonds.
In addition, each of the 2016 Series Three and Four Governmental Units has covenanted in its Loan
Agreement or will covenant in its Loan Agreement that if its bonds constitute ten percent or more of the
outstanding principal amount of the Municipal Bonds held by the Bond Bank under the 2005 General
Bond Resolution, such 2016 Series Three and Four Governmental Unit will execute a continuing
disclosure agreement prepared by the Bond Bank for purposes of complying with Rule 15c2-12. The
proposed forms of continuing disclosure certificates to be signed by the City of Ketchikan, the Kodiak
Island Borough, the City and Borough of Juneau and the City and Borough of Sitka are set forth in
Appendix H.
Beginning in 2009, each Governmental Unit from which the Bond Bank purchased Municipal
Bonds was required to covenant to execute a continuing disclosure certificate if such Governmental
Unit's bonds constituted ten percent or more of the outstanding principal amount of the Municipal Bonds
held by the Bond Bank under the 2005 General Bond Resolution. See Appendix D.
38
Effective as of October 30, 2014, each Governmental Unit from which the Bond Bank purchased
Municipal Bonds or refunding Municipal Bonds is required to covenant to file with the MSRB, on an
annual basis, its audited financial statements no later than 210 days after the end of such Governmental
Unit's fiscal year for the term of the Municipal Bond and any refunding Municipal Bond.
Compliance with Prior Continuing Disclosure Undertakings
Bonds Issued Under the 2005 General Bond Resolution. The Bond Bank previously has entered
into continuing disclosure undertakings under Rule 15c2-12 in connection with its outstanding Bonds.
The Bond Bank subsequently discovered it had not filed certain event notices in connection with rating
downgrades of insurers and underlying ratings upgrades. The Bond Bank subsequently filed event
notices.
In addition, the Bond Bank discovered it had not included in its annual report statistics of
Governmental Units similar to the statistics set forth in Appendix C of its official statements, as required
by prior continuing disclosure undertakings. Such information was included in publicly available official
statements prepared by the Bond Bank every year of noncompliance for Bonds issued under the 2005
General Bond Resolution. Such information was, however, dated on or about the date of the official
statement rather than as of the end of the Bond Bank's fiscal year end. This technical deficiency was
cured and the Bond Bank filed such information with the MSRB.
The Bond Bank has not retained Moody's Investors Service ("Moody's") to rate Bonds issued
under the 2005 General Bond Resolution since February 20, 2014, when the 2014 Series One Bonds were
issued. Moody's does rate other bonds of the State, however, and on February 29, 2016, when it reduced
its rating on the State's general obligation bonds to Aal/outlook negative, Moody's also reduced its rating
on all of the State's moral obligation debt to Aa3 from Aa2. This rating change affected Bonds issued by
the Bond Bank through February 20, 2014. Notices of Moody's downgrades were linked to the CUSIP
numbers for the State's bonds and other obligations but were not linked to the CUSIP numbers for the
Bond Bank's Bonds. The Bond Bank has subsequently linked the notice to the applicable Bond Bank
CUSIP numbers. The Bond Bank also discovered that one of the Governmental Units had not made all of
its required disclosures on time and had not disclosed such failures when required.
Other Bonds Issued by the Bond Bank. The Bond Bank previously entered into continuing
disclosure undertakings for bonds issued under its 1976 Master Bond Resolution and 2010 Master Bond
Resolution. The Bond Bank discovered that certain annual financial information relating to governmental
units participating in the 1976 Master Bond Resolution pool and the 2010 Master Bond Resolution pool
had not been filed. This technical deficiency was cured and such information was filed with the MSRB.
As of February 1, 2016, no bonds remain outstanding under the 1976 Master Bond Resolution. The Bond
Bank previously entered into continuing disclosure undertakings in connection with certain revenue bonds
issued by the Bond Bank. The Bond Bank discovered certain annual financial information relating to
governmental units was not filed under the terms of such undertakings. These revenue bonds no longer
remain outstanding.
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 believes it has complied in the past five years
in all material respects with its previous undertakings under Rule l5c2-12.
Governmental Units. In 2014, the Bond Bank discovered that certain of the Governmental Units
that timely filed annual financial information in accordance with their prior undertakings inadvertently
failed to associate that annual financial information with all Bonds issued and Outstanding under the 2005
General Bond Resolution. Effective February 20, 2014, each undertaking and/or Loan Agreement
39
executed by a Governmental Unit includes an express requirement that such filing be linked to the CUSIP
numbers for all Outstanding Bonds issued under the 2005 General Bond Resolution.
The City and Borough of Juneau, one of the Governmental Units representing ten percent or more
of the Bonds outstanding under the 2005 General Bond Resolution, failed to file certain required
operating data and failed to associate its 2011 financial statements with its outstanding water and sewer
revenue bonds, The City and Borough of Juneau subsequently filed the required operating data, linked the
2011 financial statements to the CUSIP numbers for its water and sewer revenue bonds and filed a notice
with the MSRB.
SOURCES OF CERTAIN INFORMATION
As of the date of this Official Statement, the Governmental Units that have loan obligations in an
amount of ten percent or greater in the pool of loans financed with proceeds of Bonds are the City and
Borough of Sitka (13.98 percent), the City and Borough of Juneau (11.73 percent) and the Kenai
Peninsula Borough (10.45 percent). These Governmental Units have provided the information set forth in
Appendix D.
The Bond Bank makes no representation as to the accuracy or completeness of the information
concerning the City and Borough of Sitka, the City and Borough of Juneau and the Kenai Peninsula
Borough set forth in Appendix D.
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 F.
"Act" - The Alaska Municipal Bond Bank 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
40
"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 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.
"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 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 Trustee at or prior to
such date, (ii) any Bonds for the transfer or exchange of or in lieu of or in substitution for which other
Bonds shall have been 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 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 stated 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 lesser amount as shall 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
41
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 shall at least be 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.
112005 General Bond Resolution" - The Bond Bank's General Obligation Bond Resolution
adopted July 13, 2005, as amended on August 19, 2009. (The Bond Bank may adopt additional general
obligation resolutions for the same or different purposes.) The amendments adopted in the 2013 First
Supplemental Resolution will be effective after all Bonds outstanding on February 19, 2013 no longer are
outstanding. See the forms of the 2005 General Bond Resolution and the 2013 First Supplemental
Resolution in Appendix F.
OFFICIAL STATEMENT
The Bond Bank has authorized the execution and distribution of this Official Statement.
e K" -Wi Oc ell
Executive Director
42
oi
PROPOSED FORM OF OPINION OF BOND COUNSEL
[CLOSING DATE]
Alaska Municipal Bond Bank
Juneau, Alaska
Alaska Municipal Bond Bank General Obligation and Refunding Bonds,
2016 Series Three and Four
(Final Opinion)
Ladies and Gentlemen:
We have acted as bond counsel to the Alaska Municipal Bond Bank (the "Bond Bank") in
connection with issuance of $80,435,000 aggregate principal amount of Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Three (the "2016 Series Three Bonds"), and
$29,400,000 aggregate principal amount of Alaska Municipal Bond Bank General Obligation and
Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and together with the 2016 Series
Three Bonds, 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, 20 16-05, adopted by the Board on September 6,
2016 (the "2016 Series Three and Four 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 bonds issued by Juneau to finance a school project and a loan to finance costs of a transit project;
(ii) making a loan to the City of Ketchikan, Alaska (the "City of Ketchikan"), a Governmental Unit, to
finance harbor projects; (iii) making loans to the City of Ketchikan and to thirteen 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; (iv) purchasing a surety policy in substitution for a portion of the amount currently on deposit
in the Reserve Fund; 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 Agreement, dated as of
October 18, 2016 (the "Juneau Loan Agreement"), between the Bond Bank and Juneau; the Loan
Agreement, dated as of October 18, 2016, and the Loan Agreement, dated as of July 1, 2006, as amended
by the Amendatory Loan Agreement, dated as of October 18, 2016 (together, the "City of Ketchikan Loan
Agreements"), each between the Bond Bank and the City of Ketchikan; each of the Loan Agreements and
Amendatory Loan Agreements (collectively, together with the Juneau Loan Agreement and the City of
Ketchikan Loan Agreements, the "Loan Agreements") between the Bond Bank and the Aleutians East
Borough, the City and Borough of Sitka, the City of Bethel, the City of Dillingham, the City of Kodiak,
the City of Nome, the Petersburg Borough, the City of Seward, the City of Was illa, the Kenai Peninsula
Borough, the Kodiak Island Borough, the Municipality of Skagway and the Northwest Artie Borough
(together with Juneau and the City of Ketchikan, the "Governmental Units"); the Tax Certificate, dated
the date hereof, of the Bond Bank (the "Tax Certificate"); authorizing ordinances and resolutions and tax
certificates of each of the Governmental Units; a Certificate of the State of Alaska Department of Law, as
A-I
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 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 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 presented to us (whether as originals or as copies) 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 and the Tax Certificate and
in each of the tax certificates of the Governmental Units, 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, each of the
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 (the "State"). We express no opinion with respect to any
indemnification, contribution, liquidated damages, penalty (including any remedy deemed to constitute 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 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 Bond 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 2016 Series Three Bonds is excluded from gross income for federal income tax
purposes under Section 103 of the Internal Revenue Code of 1986. Interest on the 2016 Series Three
A-2
Bonds is not a specific preference item for purposes of the federal individual or corporate alternative
minimum taxes, although we observe that it is included in adjusted current earnings when calculating
corporate alternative minimum taxable income. Interest on the 2016 Series Four Bonds is excluded from
gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986,
except that no opinion is expressed as to the status of interest on any 2016 Series Four Bond for any
period that such 2016 Series Four Bond is held by a "substantial user" of the facilities financed or
refinanced by the 2016 Series Four Bonds or by a "related person" within the meaning of Section 147(a)
of the Internal Revenue Code of 1986. Interest on the 2016 Series Four Bonds is a specific preference
item for purposes of the federal individual and corporate alternative minimum taxes. Interest on the
Bonds is exempt from taxation by the State 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,
A-3
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APPENDIX B
STATE PAYMENTS TO GOVERNMENTAL UNITS
The State of Alaska (the "State") disburses to Alaskan cities and boroughs (the "Governmental
Units") funds that generally are 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 Bond Bank is authorized
to cause such funds, held in custody by the State prior to disbursement, to be paid over to the Bond Bank.
However, the State may at any time reduce or terminate the disbursements or programs under which they
are made. 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, the 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 first program provides a system under which the State, subject to annual
appropriation by the Legislature, will reimburse 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 that 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. In 2015, the Legislature passed a moratorium on all school debt reimbursement
agreements for municipal general obligation bond authorizations approved after January 1, 2015. See
Appendix G - "STATE OF ALASKA - Public Debt and Other Obligations of the State - State Debt
Capacity." On June 29, 2016, the Governor signed the fiscal year 2017 budgets transmitted by the
Legislature and exercised his line-item veto authority to reduce the fiscal year 2017 appropriations by
approximately $1.29 billion, including a 25 percent reduction in the School Debt Reimbursement
Program. See Appendix G - "STATE OF ALASKA - Government Budgets and Appropriations - General
Appropriations."
Under the second program, the State aids local school districts in the payment of 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 the school districts.
Under the third program, the State aids local school districts for pupil transportation. The program
provides for monthly distributions to the school districts.
Under the fourth program, 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 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.
01
(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
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 the 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 to address any shortfalls in a Governmental Unit's loan
repayments to the Bond Bank. A reduction in the distribution of such funds, such as State assistance to
Governmental Units to address pension liabilities, could have a negative impact on the financial health of
Governmental Units.
Sources: State ofAlaska Department of Administration - Finance Division; State of Alaska, Office of Management
and Budget; and State ofAlaska Department of Revenue - Tax Division. Further information regarding the
State ofAlaska may be found at www,alaska.gov,
Alaska Municipal Bond Bank
Capability to Intercept Funds
FY 2015 FY 2017 Projected P02017 Rvroraa
ShudT,rxcu FY 2017 DOT School DrbO Fp2Bl7gdocutioco Aotior Matching GrotO Commoaoityjoilu - SlooriogFY2017
&F000 orrc Rrimburro.crrt Rmbrarocmont SrapporttonuIrorrd uooflrptrbroll, Troforondinl2 diohurdutonr
time Poogrum nofrrrrd ftan,frrrrd as debt in 12 Ileel monthly 20166411 be Insol monthly time by Octobor
troosforo for drht trouirn comor ocoobre comoc dror iosotollrorolo during drosco dunn on projn005 payments during of fiscal your
7 cutngorins due mi-urssosoally semi-an noully BurrO your (morons rorerp1010 ) ur and fiscal year (current (muerrot your Totul
of too and trot your uonnal (000ront your ammol your aons001 port year capital yoot your on000l P02017 PILTurmoul hotorcrpt
limenun typo uppropriotino) uppoopriution) oppropointion) upproprinti000) (1) uppropoiutioo) t000ppropriotioo( Capability l
1°iorol Your
2017 T&.1
Drht Sconce
(2)
Covorugo
Ratio
Boroughs
Aloutiors East Borough (3) 12068,304 $497,329 i $639,129 $4,601,658 $4,393,140 0 10 $246,021 $12,661,381 12,9026501 4.23
Municipality of Anchorage 1,438,032 0 33,639,898 329,866,566 294,233,167 0 0 9,280,122 668,479,482 292,950 1 2281.89
Foirbaulcu North Star Borough 425,829 337,199 9,812,110 118,643,871 7,682,865 0 0 2,178,169 139,045,039 4,112,750 33.81
Hoioro Borough 371,212 0 675,619 2,922,297 16,748,923 225,954 0 381,046 21,314,951 1,372,875 15.33
City & Borough of Juoouo (3) 4,890,315 0 9,226,696 35,402,330 8,494,459 0 0 1,305,254 62,319,034 17,590,251 3.34
Kenai Pooiou010 Borough (3) 1,162,737 0 2,321,622 80,573,649 11,647,720 0, 0 1,374,231 97,079,939 13,247,697 7.33
Kri Outrun Cutew yB or gh 2,303,101 01 2016588 22,998,319 11257,042 0 0 397,7541 38974 804 5,329,867 730
Kodioklsluod Borough (3) 1,352,566 0 4,136,604 26,636,105 1,496,225 0. 0 448,612 34,070,112 8,751,7211 3,89
Lake to Proriouulo Borough 353,370 0 745,546 9,173,326 587,296 0 0 272,951 11,132,489 1,420,088 7.84
Noothwrut Arctic Borough (S) 2,098 0 3,098,719 37,758,287. 1,525,937 0 0 273,191 42,658,232 6,172,600 6.91
Potoosbuog Borough (3) - 828,318 0 351,160 6,172,021 3,562.304 173,626 2 340,441 21,427,870 1,483,804 :70
City to Borough of Sitku (3) 1,288,123 0. 1,861,271 13,384,324 16,839,661 391,194 0 574,270 34,238,843 11,906,773 2.88
ri MocipultyofSkugovoy(3( 4,017,310 0: 0 992,876 5,902,240 0 0- 276,223' 14,158,649 1.092,345 - 893
City to Borough of Wrusrgrl 429,341 B 128,953 3,474,637: 3,066,825 325.274 0 379.315 7,804,545 311,100 35.09
Cities
Adak $71,151 $0 $0 80 $0 $0 $49,526 $69,456 $190,133 $107,969 1.76
Bothr7 (3) 816,560 0 B B 7,093,077' ty 860,090 247.489 8,219,216 287,807 25.56
Cordovo 1,270,344 0, 723,867 4,057,170 502,813 133,303 423,663 130,882 7,244,044 1,797,2 4.03
Craig 351,339 0 0 4,503,179 1,913,270 322,724 293,383 96,626' 7,482,521 136,488 54.82
Dillingham (3) 506,501 0 617,378 3.939,161. 340.030 526.551- 446,018 132.833 8,508,97/ 1,182,441 7.20
Foirhorrkoo 489,647 0 793,161 6,341,530 2,416,160 526,851 422.987 208.636 11,198,977 1,552,630 7.21
H000uh 771,705 0' 82,912 2944,466 24,043 0, 143.640 84.708 3,351,024 114r875 291
00 mrr° 83,435 0 1 B 0 1238592 424,080 0 215,905 1,962,011
100,5811
292,050672
87.93 159,020 0 B 0 7,943,000 424,050 B 337.5441 8,843,644
etrhikuo*(3) 2,301,501 2, 0 0 10,643,939 0 0. 309,695 13,257,235 10,344,7651 1.28
256,659 0 0 0 6.729.242 0 0'
Kiogovr° 408,355 0 0 0 879,963 0! 0 58,220 1,376,565 39
22awork 180 B 0 2,294,855 340,071 47.93
odiok°
0 203,266 83,518 2.926,190
(3) 1,116,054 0 0 0! 860,321 992,552 0' 249.981 3,227,908
278,232 7,254,133E175,398 42.36
3.37
omr(3( 43,642 0 250,016 9,232,424 4,574,634 0 473.409 175,555 15,049.9 1705
NorthPolo° 33,659 0 0 0 2,018.613 0'0 125,388 2,179,6 21.74
yotorreru 160,045 0. B. 0 4,872,961 0 0 245,357 3,278,3 48.85
SurdPoint° : 25,621- 0 0 0 B 0 0 89,731 115,3 .64
Suomou° 0 0 0 0 186,441 5!0 73,599 260,04 20.51
SrWurd*)3( 726.111 0. 0 0 18,015,203 568,952: 0 143,461' 19,243,72 6.40
Soldotnu° 44,074 0: 0 0 904,409 B' 0.
-
41101,
,
019
190,867 1,139,30 5.28
Uouluoku - 6,745,512 365,895 929,080 3,932,123 0 431.207 829,354, 199,45313,432,60 3.84
VoOdoo 441,395 203,250 1,263,223 4,712,173 3,2ff,246 354,749 732,147' 182,620 11,176,806 32.13
Wosilu° (3) 249,314 0 0 0 4,471,335 0: 0 315,429 5,036,076 - - 11.59
Wroorgoll 8251,392 $0' $0 $0 $17,877,620' $6 $0- $489,403 $18,129,012 353,2531
OthorJoriodiotioou -
ljoiveroity of Aluoku (4) - : 359,600.0001 4,057,8651
°Commsmitior that orr located inob0000ghostoiohoporoter the public oohooluics the community and 000rivrrthutcolotedgdorutioroSopporfFunding.
(1) Mutohioggeusots ore uppropriutod hytho Alusluo 85440 Lrgirlutore nod con unry signifiouotly from your to your.
(2) loclodoo cxro001 dr$4 tarot or uu000iuted 64th broods sold uodrc the Bond BunKo 1976 Rosolration.
(3) Boor-rat, this issue.
(4) lotororptoblr oos0000 of the tloiooroity of Aloohu is mompriord of direct upposspricti000 from the Stole of Alaska.
B-3
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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 OCTOBER 1, 2016
(Does Not Include 2016 Series Three and Four Bonds)
Borrower
Outstanding
Par
Percent of
Outstanding
City and Borough of Sitka $ 141,165,000 13.98%
City and Borough of Juneau 118,515,000 11.73
Kenai Peninsula Borough 105,525,000 10.45
City of Ketchikan 100,560,000 9.96
Kodiak Island Borough 95,025,000 9.41
University of Alaska 86,085,000 8.52
Fairbanks North Star Borough 57,300,000 5,67
Ketchikan Gateway Borough 35,165,000 3.48
City of Unalaska 32,680,000 3.24
City of Seward 31,790,000 3.15
Northwest Arctic Borough 31,585,000 3.13
Aleutians East Borough 25,910,000 2.57
Municipality of Skagway 20,630,000 2.04
City of Cordova 17,520,000 1.73
Lake and Peninsula Borough 16,500,000 1.63
City of Kodiak 12,735,000 1.26
Haines Borough 10,835,000 1.07
City of Dillingham 10,610,000 1.05
City of Petersburg 10,500,000 1,04
City of Nome 4,585,000 0.45
Municipality of Anchorage 3,495,000 0.35
City of Homer 3,340,000 0.33
City of King Cove 2,935,000 0.29
City of Bethel 2,470,000 0.24
City of Sand Point 2,435,000 0.24
City of Valdez 2,270,000 0.22
City of Soldotna 1,900,000 0.19
City of Craig 1,695,000 0.17
City of Kenai 1,530,000 0.15
City of Klawock 1,350,000 0.13
City of Wasilla 1,185,000 0.12
City of Hoonah 1,015,000 0.10
City and Borough of Wrangell 1,000,000 0,10
City of North Pole 755,000 0.07
City of Palmer 710,000 0.07
City of Adak 680,000 0.07
City of Saxman 155,000 0.02
Reserve Obligations 15,835,000 1.57
Total Outstanding Par $1,009,975,000 100.00%
C-i
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APPENDIX D
SUMMARY OF BORROWERS REPRESENTING
TEN PERCENT OR MORE OF OUTSTANDING BONDS
ISSUED UNDER THE 2005 GENERAL BOND RESOLUTION
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CITY AND BOROUGH OF SITKA
GENERAL OBLIGATION FINANCIAL SUMMARY
Municipal Financial Position 2011 2812 2013 2014 2015 Average
Properly Tax Collections
Borrowers Property Tax Rate per $1,000 $6.00 $6.00 $6.00 $6.00 $6.0 $6.00
Municipal Levy $5,799,400 $5,904,617 $5,957,735 $5,901,738 $6,032,826 $5,919,263
Current Years Collections $5,753,039 $5,874,918 $5,893,452 $5,842,721 $6,006,77 $5,874,181
Current Collection Rate 99.20% 99,50% 98.92% 99.00% 99.577. 99.24%
Total Year's Collections $5,807,869 $5,909,321 $5,893,452 $5,042,721 86,006,71 $5,892,520
Total Collection Rate 100.15% 100.08% 98.92% 99.00% 99.57 99.54%
General Fund
Unreserved Ending Fund Balance
_____________
9 11,506,475
__________
2 13,554,673
______________
4 14,2n6,394 S 15,99b,500 S 14,720,5/ $ 14,015,159
Expenditures $ 23,260,649 $ 24,075,729 $ 23,691,912 $ 23,628,379 $ 30,621,436 $ 25,055,621
Fund Balance/ Expenditures
Total Revenues
49%
$ 24,709,916
56%
$ 26,584,728
60%
$7 25,953,885
68 51.
$ 26,507,173
48
$ 29,227,14
56.38%
$ 26,596,568
Intergovernmental Revenues $ 2,380,296 3 2,659,323 $ 2,693,860 $ 2,771,990 $ 2,007,749 $ 2,662,644
Percentage Intergovernmental 107 10% 10% 10% 10% 10.02%
Overall Municipal Debt Position
S e8,607,401 $ 65,593,411 5 lUu,143,522 $ 302,040,000 $ 121,210.L30 Revenue Debt - Enterprise Funds
Revenue Debt - Governmental Funds $ 165,750 $ 156,000 $ 146,250 $ 202,641
General Obligation Debt - Governmental Funds $ 36,305,000 $ 32,290,000 $ 31,020,000 $ 28,635,000
General Obligation Debt - Enterprise Funds $ - $ - - -
Total General Obligattxn Debt $ 36,300,001)$ 32,290,006 $ 31,020,000 $ 28,635,000 $29,990.1). fl
Total Revenue and General Obligation Debt $ 105,273,191 $ 151,039,411 $ 137.312.072 $ 137,777,641
Governmental GO Debtilsxable Assessed Value
Total Revenue and GO Debt/A.V. 111.591, 1d.2l1', 13.130. 14,013. 14H1"
General Obligation Debt Per Capita 04,130 $3,607 $3,415 $3,152
gi6$16,488 Total Revenue and GO Debt Per Capita $12,000 $11,287 $15,116 I $15,167
General Economic and Demographic Data 2011 2012 2013 2014 2015 Annual Growth
Population 8,773 8,952 9,084 1 9,0841 9,061 -0.25%
Taxable Assessed Value $ 985,073,129 $ 990,930,238 $ 1,001,066,784 $ 983,623,000 $ 1,005,471,000
Assessed Value Per Capita 1 $ 112,285 $ 110,694 I $ 110,201 I $ 108,281 $ 110267
Top 10 Tax Payers r' o % of As,eese,1 Value 7.641, 7.57% 7.57% 757% 7571
The Boroagh has sot oessplotsd its lisal y— 2015 audit soot the date of the preparation of this table.
fl-i
City and Borough of Sitka
Electric Enterprise Fund
Financial Summary
2011 2012 2013 2014 2015
Assets
Cash 24,320,421 31,450,650 28,803,187 13,505,669 4,447,481
Restricted Assets 6,871,164 3,595,875 21,197,459 18,121,955 21,733,477
Other Assets 5,010,167 7,266,275 13,897,615 11,777,153 7,988,506
Construction in Progress 11,646,987 18,086,724 58,930,539 137,885,040 12,535,308
Utility Plant in Service 63,103,150 61,775,003 59,900,343 59,508,277 217,550,674
Total Assets 110,951,889 122,174,527 182,729,143 240,798,094 264,255,446
Liabilities and Net Assets
Liabilities
Other Liabilities 1,722,772 2,477,182 6,355,564 13,017,817 3,355,323
Revenue Bonds Payable 48,700,000 47,570,000 79,485,000 105,100,000 119,510,000
Deferred loss/premium on bonds 1,471,509 (1,711,547) 5,943,338 6,742,293 6,347,870
Revenue Note(s) Payable 8,800,188 8,535,498 7,973,608 7,973,608 10,050,744
Total Liabilities 60,694,469 56,871,133 99,757,510 132,833,718 139,263,936
Assets 50,257,420 65,303,394 82,971,633 107,964,376 124,991,510
Operating Revenues 11,401,523 11,611,319 12,077,554 14,240,772 17,118,321
Operating Expenses
Administrative and General 1,739,698 2,003,768 1,975,492 2,860,066 2,406,734
Operation and Maintenance 5,257,342 5,914,895 5,152,028 4,964,074 7,443,239
Depreciation 1,987,558 1,971,739 1,986,195 1,841,712 1,814,707
Operating Income 2,416,925 1,720,917 2,963,839 4,574,920 5,453,641
Nonoperating revenue (expense)
Investment Income 490,986 459,107 314,600 196,399 313,069
Interest Expense (1,725,198) (2,848,639) (1,678,238) (426,419) (316,203)
Other - 625,748 572,946 812,866 463,877
Net Income before
contributions and transfers 1,182,713 (42,867) 2,173,147 5,157,766 5,914,384
Capital contributions 4,039,237 5,266,050 17,169,455 19,455,106 9,986,217
Extraordinary Item:
Net Pension Obligation Relief 119,824 139,806 325,771 379,871 1,126,533
Transfer In (Out) net - - (998,128) - -
Change In Net Assets 5,341,774 5,362,989 18,670,245 24,992,743 17,027,134
Population of City and
Borough 8,773 8,952 9,084 9,098 9,061
If of electric customers 5,282 5,309 5,403 5,490 5,683
KwH Sold 111,795,344 111,048,623 111,155,330 111,155,330 105,293,250
Revenue Bond Debt Service 3,477,959 3,467,567 4,529,240 5,045,158 7,158,839
Revenue Bond Coverage (> 1.25) 1.41 1.43 1.27 1.34 1.27
Note: $2,500,000 transferred into Rate Stabilization Fund in FY2015
$2,006,696 transferred out of Rate Stabilization Fund in FY2015
Total of rate Stabilization Fund as of June 30, 2015 -$3,001,304
The Borough has not completed its fiscal year 2015 audit as of the date of the preparation of this table.
D-2
CITY AND BOROUGH OF SITP
HARBOR ENTERPRISE FUND
FINANCIAL SUMMARY
ASSETS
Plant In-Service (net of depreciation)
Land
Construction Work in Progress
Cash
Restricted Assets
Other Assets
Total Assets
LIABILITIES AND NET ASSETS
Revenue Bonds Payable
Other Liabilities
Total Liabilities
NET ASSETS
Operating Revenues
Operation and Maintenance
Administrative and General
Operating Income (Loss)
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
Capital Contributions
Net Transfers-In (Out)
Special item - NPOIOPEB write off
Change in Net Assets
2011 2012 2013 2014 2015
14,789,299 14,122,591 13,550,231 13,153,475 20,560,565
90,000 90,000 90,000 90,000 90,000
20,229 57,838 665,476 7,824,365 939,917
3,733,467 4,735,101 6,599,187 6,616,954 7,595,507
- - 3,615,663 589,166 317,566
1,342,572 1,339,389 1,216,385 1,524,898 1,036,361
19,975,567 20,344,919 25,736,942 29,798,858 30,539,916
0 0 4,569,486 3,840,000 3,705,000
1,405,227 1,156,003 1,144,138 1,689,033 1,592,094
1,405,227 1,156,003 5,713,624 5,529,033 5,297,094
18,570,340 19,188,916 20,023,318 24,269,825 25,242,822
2,854,858 3,154,885 3,096,419 3,164,252 3,365,977
2,492,110 2,434,329 1,708,210 2,454,599 2,194,755
899,956 986,619 668,511 666,074 669,102
(537,208) (266,063) 719,698 43,579 502,120
46,509 155,306 156,844 776,434 375,830
(490,699) (110,757) 876,542 820,013 877,949
1,690,873 2,549,949 0 3,458,599 122,108
3,804,600 675,000 (42,141) (32,105) (27,060)
5,004,774 3,114,192 834,401 4,246,507 972,997
9,061
5.31
8,773 8,952 9,084 9,098
No Harbor No Harbor No payments of
Bonds Bonds P&I 5.16
has not completed its fiscal year 2015 audit as of the date of the preparation of this table.
n of City
Bond Coverage
D-3
CITY AND BOROUGH OF JUNEAU
FINANCIAL SUMMARY
General Governmental Fund
Municipal Financial Position 2011 2012 2013 2014 2015 Average
'roperty Tax Collections _____
Borrower's Property Tax Rate per $1,000 $10.51 $10.55 $10.55 $10.66 $10.76 $10.61
Municipal Levy $40,739,944 $41,751,673 $44,252,019 745,108,992 $45,852,292 $43,540,954
Current Year% Collections $40,329,083 $41,431,682 $43,987,108 $44,818,184 $45,548,172 $43,222,846
Current Collection Rate 98.997 99,23% 99.40% 99.36% 99.34% 99.26%
Total Year's Collections $40,728,566 $41,721,795 $44,200,111 $45,017,746 $45,548,172 $43,443,278
Total Collection Rate 99,97% 99,93% 99.88% 99.807 99.34% 99.78%
General Fund _____________ __________
Unassigned Plus Emergency Operating Res (GASB#54) 9 1,729,315 $ ,9,464,iol 9 7,494,734 9 17,285,667 $ 20,222,360 5 10,053,252
Expenditures $ 50,540,314 $ 51,283,781 3 84,553,473 $ 86,380,150 $ 94,808,876 7 73,513,319
Fund Balance/ Expenditures 3.42% 6.79% 8.86% 20.01% 21.387, 12.09%
Total Revenues -$7 66,008,466 $ 50,036,584 7 88,778,005 $ 97,936,255 $ 98,018,606 $ 80,155,584
Intergovernmental Revenues $ 14,313,000 $ 15,464,700 $ 30,635,700 $ 41,429,692 $ 32,072,000 5 26,783,018
Percentage Intergovernmental 22% 31% 35% 427 33% 32.42%
Overall Municipal Debt Position
1 45,206,341 9 43,629,s62 9 41,900,0a7 9 40,093,901 9 36,430,440 Revenue Debt - Enterprise Funds
Revenue Debt Governmental Funds $ 3,599,575 $ 2,861,747 -2,091,457-7 $
Obligation Debt - Governmental Funds $148,301,000 $ 122,068,000
General
$ 133,446,000 $131,385,000
Obligation Debt - Enterprise Funds
6,807,086F26,972,320
General
General Obligation Debt
----
Total $ 148,301,000
$ 122,068,000
Total
$ 133,446,000 5 131,385,000
Revenue and General Obligation Debt $ 197,108,916 $ 179,987,429 $ 175382,524 6 168,965,994
1ve, i fl'fliI (1) D,r21/ FbIe ,\,',sed Value 3.72%1 3.28% 1 3.07% 1 2.79% 2.5
111,0 lG,eiiue nl CO [l'hl/ 1,1. 4.94% 4.42% 4.10% 3.867b 4.03
General Obligation Debt Per Capita 94,242 34,113 94,023 $3,69a $3,492
Total Revenue and GO Debt Per Capita $6,302 $5,548 $5,370 $5,116 1 $5,472
General Economic and Demographic Data 2011 2012 2013 2014 2015 Annual
Population 31,275 32,441 32,660 33,030 33,026 -0,01%
Taxable Assessed Value $ 3,989,344,944 $ 4,071,713,732 $ 4,275,067,217 $ 4,379,714,933 $ 4,484,327,332 2.39%
Assessed Value Per Capita $ 127,557 $ 125,511 $ 130,896 $ 132,598 $ 135,782
Tnpio Tax Payers asa%of Msessed Value 13.78% 13.73% 13.82% 13.61% 1371%
D-4
CITY AND BOROUGH OF JUNEAU
HARBOR ENTERPRISE FUND
FINANCIAL SUMMARY
2011 2012 2013 2014 2015
ETS
Plant In-Service (net ofdepreciation) $13,827,335 $12,844,129 $11,875,368 $14,325,870 $17,517,553
Construction Work in Progress 29,889,294 33,499,769 42,397,974 40,419,697 50,214,768
Cash 4,728,522 4,660,755 3,466,374 4,030,992 3,975,676
Restricted Assets 10,702,703 11,196,479 10,946,328 10,554,614 9,581,172
Other Assets 764,741 847,869 543,407 679,907 1,718,645
Total Assets
LIABILITIES AND NET ASSETS
Revenue Bonds Payable
Other Liabilities
Total Liabilities
NET ASSETS
Operating Revenues
Operation and Maintenance
Administrative and General
Depreciation
Operating Income (Loss)
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
Capital Contributions
Net Transfers-In (Out)
Special item - NPO/OPEB write off
Change in Net Assets
Population of City
Revenue Bond Coverage
59,912,595 63,049,001 69,229,451 70,011,080 83
9,700,000 9,691,595 9,380,434 9,033,637 9,758,734
2,110,290 2,140,909 1,401,365 2,050,500 3,105,738
11,810,290 11,832,504 10,781,799 11,084,137 12,864,472
48,102,305 51,216,497 58,447,652 58,926,943 70,143,342
2,854,858 3,154,885 3,173,272 3,508,430 4,202,862
2,492,110 2,434,329 2,498,178 2,814,717 3,347,050
899,956 986,619 968,761 1,003,707 1,150,701
(537,208) (266,063) (293,667) (309,994) (294,889
46,509 155,306 (214,686) 128,433 501,698
(490,699) (110,757) (508,353) (181,561) 206,809
1,690,873 2,549,949 7,392,466 660,852 5,788,674
3,804,600 675,000 500,000 0 6,224,425
5,004,774 3,114,192 7,384,113 479,291 12,219,908
31,275 32,441 32,660 33,064 33,064
1.19 1.79 1.21 1.67 2.60
D-5
CITY AND BOROUGH OF JUNEAU
PORT DEVELOPMENT SPECIAL REVENUE FUND
FINANCIAL SUMMARY
Qfl 2012 2013 2014 2015
Plant In-Service (net of depreciation)
Construction Work in Progress
Cash 4,428,233 (208,085) (252,013) 71,012 2,709,760
Restricted Assets - - -
Other Assets 314,814 269,712 484,639 294,257 408,137
Total Assets 4,743,047 61,627 232,626 365,269 3,117,897
LIABILITIES AND NET ASSETS
Revenue Bonds Payable
Other Liabilities
Total Liabilities
NET ASSETS
Operating Revenues
Operation and Maintenance
Administrative and General
Depreciation
Operating Income (Loss)
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
Capital Contributions
Net Transfers-In (Out)
Change in Net Assets
- - 151,020 349,585 642,980
- - 151,020 349,585 642,980
4,743,047 61,627 81,606 15,684 2,474,917
2,557,851 2,634,080 2,825,479 2,864,578 2,868,633
2,800 5,500 5,500 5,500 5,500
2,555,051 2,628,580 2,819,979 2,859,078 2,863,133
2,555,051 2,628,580 2,819,979 2,859,078 2,863,133
(1,500,000) (7,310,000) (2,800,000) (2,925,000) (403,900)
1,055,051 (4,681,420) 19,979 (65,922) 2,459,233
n of City 31,275 32,441 32,660
33,064
City and Borough at Juneau
Conduit Debt
WILDFLOWER COURT (A not for profit organziation)
FINANCIAL SUMMARY
2011 2012 2013 2014 2015
Audited Audited Audited Audited Audited
ASSETS
Plant In-Service 4,909,305 4,620,999 4,734,678 3,771,100 3,082,979
Cash 1,582,128 1,752,043 1,437,085 1,970,693 1,956,157
Restricted Assets 1,707,402 2,170,928 1,489,365 1,450,054 1,437,448
Other Assets 1,399,517 1,444,749 1,786,787 1,267,699 1,389,726
Total Assets 9,598,352 9,988,719 9,447,915 8,459,546 7,866,310
LIABILITIES AND NET ASSETS
Bond Debt 13,050,000 11,705,000 11,596,229 10,204,712 8,688,824
Other Liabilities 904,428 2,052,663 1,132,323 996,579 1,012,833
Total Liabilities 13,954,428 13,757,663 12,728,552 11,201,291 9,701,657
NET ASSETS (DEFICIT) (4,356,076) (3,768,944) 3,280,637 (2,741,745) (1,835,347)
Operating Revenues 10,859,195 10,841,324 11,057,791 11,447,862 11,445,168
Operating Expenses 9,894,353 9,594,317 9,666,530 9,961,681 9,745,914
Depreciation 832,579 780,765 935,669 1,008,253 841,433
Operating Income (Loss) 132,263 466,243 455,592 477,928 857,821
Non-Operating Revenue (Expense) 61,553 120,890 32,713 60,964 48,577
Change in Net Assets 193,816 587,132 488,305 538,892 906,398
Revenue Bond Coverage 1.33 1.32 1.12 1.10 1 1.18
In 2013 and 2014, Wildflower Court fell short of the required debt service coverage ratio of 1.15 times.
Pursuant to the loan agreement between the City and Borough of Juneau and Wildflower Court,
Wildflower Court worked with the City and Borough to identify measures to return the facility to
compliance with the required debt service coverage ratio in 2015.
D-7
CITY AND BOROUGH OF JUNEAU
BARTLETT REGIONAL HOSPITAL
FINANCIAL SUMMARY
2011 2012 2013 2014 2015
$72,772,410 $74,566,327 $74,002,798 $69,208,456 $63,710,212
6,866,781 6,202,224 2,826,314 228,425 3,647,565
14,990,308 17,386,169 26,113,833 38,596,921 44,834,531
10,160,114 6,549,498 5,490,768 5,327,673 5,327,519
23,011,263 23,462,113 25,230,206 20,528,164 23,810,042
127,800,876 128,166,331 133,663,919 133,889,639 141,329,869
25,570,000 24,926,795 25,304,679 24,346,618 24,346,618
11,391,053 8,999,867 8,829,067 11,033,875 46,306,102
36,961,053 33,926,662 34,133,746 35,380,493 70,652,720
90,839,823 94,239,669 99,530,173 98,509,146 70,677,149
90,680,836 95,026,373 84,250,207 80,198,274 90,281,184
83,883,389 89,411,913 76,967,444 78,820,476 92,676,249
6,552,177 7,145,290 7,001,295 7,086,559 6,815,728
245,270 (1,530,830) 281,468 (5,708,761) (9,210,793)
1,579,634 3,306,366 4,119,820 3,610,234 14,405,416
1,824,904 1,775,536 4,401,288 (2,098,527) 5,194,623
89,002 471,910 134,658 0 0
1,152,600 1,152,400 1,123,000 1,077,500 1,054,500
3,066,506 3,399,846 5,658,946 (1,021,027) 6,249,123
31,275 32,441 32,660 33,064 33,064
363 300 7.34 2.50 8.97
ASSETS
Plant In-Service (net of depreciation)
Construction Work in Progress
Cash
Restricted Assets
Other Assets
Total Assets
LIABILITIES AND NET ASSETS
Revenue Bonds Payable
Other Liabilities
Total Liabilities
NET ASSETS
Operating Revenues
Operation and Maintenance
Administrative and General
Depreciation
Operating Income (Loss)
Non-Operating Revenue (Expense)
Net Income (Loss) Before Contribution
Capital Contributions
Net Transfers-In (Out)
Special item - NPO/OPEB write off
Change in Net Assets
Population of City
Revenue Bond Coverage
KOnul Peoln0915 Borough - General Fund
General Oblig ation Financial Summary
Im,ldn,,l n,il Po,,tlon I 2011 2012 2013 2013 9015 Avrane
"iopUl t..i ColI',Iium
,nUv FropnitiThxR kp rSl,000 54'S 5490 &10 5450 0450
1 Lit' 519,059,274 530,41440 5,10,S23,497 S31,750:392 531,482,014
9rin90'1U9r CoOK i n 520639649 529,946,604 S 009034 533,2 2546 5 1,142,O' 02
.0 (ofled,on O,o 90 -3 %45, 99,371, 9868 OS'S'
ToK.1'4'o Col54hnn., 597,', $30,402 0 S30,79 405 ,
Told loIloth ,, 5.4., 99 ,94'. 9 914 90.0'
__________ ___________
- - - I U -
',enoral hind
Tot Ed.00d2,1.,. - 5'0. - -i
n,, 0 Ending Fo.,d 541,o
$ 72, 0. 7 - -
'I
5 74 4 7$,764
IL -
-
3 '1
lIMm,'lpHlol.tVo,llio.,
R~v& .4Do.G,o644lF,.,,d_
10o,r.,n Debt 50t,,,.-.-.,rrn.,L S 5 S
St S S
G.,1Ob1,0,b St ,*n,o,blI-ood, 4Cono50 Fond colvO S .3910,000 5 30 20,000 0,003' 8 1 0' .000 S 11,8 3' 51
G,—.1 Ot'l,,,USo,, FOAl Fotoipo Food S S S
4 ToO,ICI'n nil t,ou DUSt S 9 - 5 0 5 2o,820,t 079
9* II 5 3
-
dl
Gn,o,al FOoon,k n,t D uo5.pl.k D,,t 2011 2012 2013 2014 2015 A.mudG,o1li
141
A .,d 5 M,531,000 5 , '44,oOO 5 9,719 010,000
S T—
,1)
11" F
701' 1014 ,o42013 Jn,,:dFrn,d9,Lo,, oIAt,1NofoO,,s,h0d,Ioth,
4 ,,l*'f'.,o, ,3 313335402 0''UU 0''41397,, J .1(2 lU
w,,tilI,Uc., Ut ,utut i, I0004UTUII9IUI (2,02,4 33 3U29200E290 op oil bnioo'd
Central Peninsula General Hospital
FINANCIAL SUMMARY
2011 2012 2013 2014 2015
ASSETS
Capital Assets (net of depreciation) $67842931 $64,853,893 $69,429,959 $71387990 $93151047
Cash 21,700,302 27,803,487 35,197,813 35,508,443 37638,411
Cash held for Plant Replacement 10,097241 11,421,461 11322,729 16,447887 18,838950
Restricted Assets 3,584,121 633,493 500,000 4,693402 5,069,037
Unspent bond proceeds 31,275,450 18,468,485
Other Assets 19,105,716 29,383,574 29,863,006 32,652905 38942,891
Total Assets 122,330313 134,095,908 146,313,507 191,966,077 212,108821
LIABILITIES AND NETASSETS
Revenue Bonds Payable - - - 32,490,000 33,890,000
GO Bonds Payable 35,990,000 32,255,000 30,130,000 27,905,000 25,670,000
Other Liabilities 10,965,610 18,041,771 18,176,258 20,336761 24,137,536
Total Liabilities 46,955,610 50,296,771 48,306,258 80,731,761 83,697,535
NET ASSETS 75374,703 83,799,137 98,007,249 111,234,316 128,411,286
Operating Revenues 101,279,075 116,849605 123,951,269 126,713,712 144,009,565
Operating Expenses 86,771,449 99,255,770 102,247,165 104,364,018 117,067,440
Depreciation 8,056,595 8,004,562 7,959,305 8,066,688 8,471,959
Operating Income (Loss) 6,451,031 9,589,273 13,744,799 14,283,006 18,470,166
Non-Operating Revenue (Expense) (1,105,595) (808,2531 (1,541,657) (1,070,583) (1,300,456)
Net Income (Loss) Before Contribution 5,345,436 8,781,020 12,203,142 13,212,423 17,169,710
Capital Contributions 212,945 52,843 2,004,970 14,644 7,260
Change in Net Position 5,558,381 8,833,863 14,208,112 13,227,067 17,176,970
D-1O
APPENDIX E
FINANCIAL STATEMENTS OF THE ALASKA MUNICIPAL BOND BANK
FOR THE YEAR ENDED JUNE 30, 2016
[This page intentionally left blank.]
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Financial Statements
For the Year Ended June 30, 2016
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 3-9
Financial Statements
Statement of Net Position and Governmental Funds Balance Sheets 10
Statement of Activities and Governmental Funds Statements of
Revenues, Expenditures and Changes in Fund Balances/Net Position 11
Notes to Financial Statements 12-28
Supplemental Schedule of Statutory Reserve Accounts - Assets, Liabilities,
and Account Reserves 29
Continuing Disclosures Tables 30-37
Tel: 907-278-8878 3601 C Street, Suite 600
Fax: 907-278-5779 Anchorage, AK 99503
www.bdo.com
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, 2016, 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.
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 Alaska Municipal Bond Bank Authority, as of June 30, 2016, 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.
BOO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BOO International Limited, a UK company limited by guarantee., and forms part of
the international BOO network of independent member firms.
800 is the brand name for the BOO network and for each of the BOO Member Firms.
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 3-9 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.
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements
that collectively comprise the Alaska Municipal Bond Bank Authority's basic financial
statements. The supplemental schedules and tables noted in the table of contents are
presented for purposes of additional analysis and are not a required part of the basic
financial statements. The supplementary information is the responsibility of management
and was 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 supplementary information is fairly stated, in all material respects, in relation to the
basic financial statements as a whole.
i3co 1LS?1 LLfe
September 30, 2016
Anchorage, Alaska
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June. 30, 2016
This Management's Discussion and Analysis (MD&A) is required by GASB Statement 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, 2016. Summarized prior fiscal
year information is shown within this MD&A, as needed, for comparative purposes.
Required Financial Statements
GASB 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 2016, the Bond Bank entered into 16 loan agreements. Bond Bank loans resulted in 7
construction projects located in 5 communities, and refinanced 3 existing loans for savings. Included in
fiscal year 2016 totals are the University of Alaska Fairbanks heat and power plant project, and a
refinancing of the Tanana Chiefs Conference Chief Andrew Isaac Health Center for savings. The Bond
Bank issued approximately $233.0 million in bonds that generated $256.9 million in funding. Bond Bank
activity resulted in one $3.1 million direct loan, $180.6 million in loans for new capital projects, and
$76.3 million to refinance loans for savings. Bond Bank bond activity in fiscal year 2016 resulted in
present value savings of approximately $50.7 million to all borrowers. In comparison, during fiscal year
2015, the Bond Bank entered into 11 municipal loan agreements for construction projects in 7
communities. In fiscal year 2015, the Bond Bank issued $175.6 million in bonds and had one $3.2 million
direct loan, which resulted in $81.9 million in loans to communities for new capital projects, and included
$118.0 million used to refinance 25 community loans for savings. Bond Bank bond activity in fiscal year
2015 resulted in present value savings of approximately $17.1 million to borrowing communities.
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 dates, recorded at fair market value, and 2) Bond principal and interest payments
receivable from municipalities. 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. The fiscal year ending June 30, 2016 marked the
ninth consecutive year that the State operating budget has appropriated any excess earnings of the
operating account to the Bond Bank's reserve fund (HB 256, Sec. 26(f)). Interest received on bonds
1911
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June 30, 2016
purchased from municipalities is used to pay the Bond Banks corresponding interest payments on the
bonds that it has issued.
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, 2016 and 2015, as
well as liabilities and net position:
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
Assets:
Cash and investments $ 67,724,121 $ 72,860,616 $ (5,136,495) -7.05%
Bonds and bond interest receivable 1,096,118,127 940,576,872 155,541,255 16.54%
Other receivables 29,163 75,991 (46,828) -61.62%
Total assets 1,163,871,411 1,013,513,479 150,357,932 14.84%
Liabilities:
Accounts payable and accrued liabilities 2,980,601 3,352,177 (371,576) -11.08%
Bonds and bond interest payable 1,104,745,050 954,000,573 150,744,477 15.80%
Total liabilities 1,107,725,651 957,352,750 150,372,901 15.71%
Net Position:
Restricted 35,750,062 37,473,539 (1,723,477) -4.60%
Unrestricted 20,395,698 18,687,190 1,708,508 9.14%
Total net position $ 56,145,760 $ 56,160,729 $ (14, -0.03%
The Bond Bank's investments are all held in U.S. Government securities.
The increase in bonds and bond interest receivable, as well as in bonds and bond interest payable, reflects
the issuance of approximately $233.0 million in new bonds during the year, net of principal payments on
bonds previously issued of approximately $55.2 million. $180.6 million in new bonds and loans during
the year were lent to authorized borrowers for projects, and $76.3 million in new bonds were used to
refinance authorized borrower loans for savings. Additionally, the Bond Bank issued a short-term direct
loan to the Kenai Peninsula Borough in the amount of $3.1 million.
51
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June 30, 2016
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
expenditures 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 Banks' changes in net position as of June 30, 2016,
and 2015:
Changes from 2015 to 2016
As of June Increase/(Decrease)
2016
2015 Dollars Percent
Revenues
Interest income on bonds receivable
Investment earnings
Total income
Expenses:
Interest expense on bonds payable
Operating expenses
Total expenses
Change in net position
Net position, beginning of period
Net position, end of period
$ 44,803,553 $ 44,121,701 $ 681,852 1.55%
1,542,043 1,141,876 400,167 35.04%
46,345,596 45,263,577 1,082,019 2,39%
45,503,886 44,962,647 541,239 1.20%
856,679 704,193 152,486 21.65%
46,360,565 45,666,840 693,725 1.52%
(14,969) (403,263) 388,294 96.29%
56,160,729 56,563,992 (403,263) -0.71%
$ 56,145,760 $ 56,160,729 $ (14,969) -0,03%
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 increases in both of
these line items of $0.7 million (interest income) and $0.5 million (interest expense) are consistent with
the increase 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 during times of low investment returns in bond reserve funds. The
decrease in net position is primarily due to debt service on reserve obligations.
-5-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June 30, 2016
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 other financing source in the governmental funds statement of revenues and
expenses 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. Similarly,
repayment of debt principal is recorded as expenditure in the governmental funds statement of revenues
and expenses 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, 2016, and 2015.
General Fund
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
Assets:
Cash, investments and related
accrued interest $ 11,494,536 $ 14,599,556 $ (3,105,020) -21.27%
Bonds and bond interest receivable 7,391,659 4,922,414 2,469,245 50.16%
Other Receivables 29,163 - 29,163 100.00%
Interfund receivable 6,207,126 4,647,774 1,559,352 33.55%
Total assets 25,122,484 24,169,744 952,740 3.94%
Liabilities:
Accounts payable and accrued liabilities 336,059 257,400 78,659 30.56%
Fund Balance:
Restricted for debt service 4,956,430 4,956,430 - 0.00%
Unassigned 19,829,995 18,955,914 874,081 4.61%
Total fund balance 24,786,425 23,912,344 874,081 3.66%
Total liabilities and fund balance $ 25,122,484 $24,169,744 $ 952,740 3.94%
-6-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June 30, 2016
Debt Service Fund
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
Assets:
Cash, investments and related
accrued interest $ 56,229,585 $ 58,261,060 $ (2,031,475) -3.49%
Bonds and bond interest receivable 1,088,726,468 935,654,458 153,072,010 16.36%
Other receivables - 75,991 (75,991) -100.00%
Total assets 1,144,956,053 993,991,509 150,964,544 15.19%
Liabilities:
Accounts payable and accrued liabilities 2,644,542 3,094,777 (450,235) -14.55%
Interfund payables 6,207,126 4,647,774 1,559,352 33.55%
Total liabilities 8,851,668 7,742,551 1,109,117 14.32%
Fund Balance:
Restricted for debt service 1,136,104,385 986,248,958 149,855,427 15.19%
Total liabilities and fund balance $ 1,144,956,053 $ 993,991,509 $150,964,544 15.19%
General Fund
Revenues:
Interest income
Expenditures:
Operating expenses
Excess (deficiency) of revenues
over expenditures
Other financing sources (uses) - transfers
Excess (deficiency) of revenues and
transfers over expenditures
Fund balance, beginning of period
Fund balance, end of period
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
$ 428,051 $ 306,561 $ 121,490 39.63%
856,679 704,193 152,486 21.65%
(428,628) (397,632) (30,996) -7.80%
1,302,709 1,521,540 (218,831) 14.38%
874,081 1,123,908 (249,827) 22.23%
23,912,344 22,788,436 1,123,908 4.93%
$ 24,786,425 $23,912,344 $ 874,081 3.66%
-7-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion and Analysis
Year Ended June 30, 2016
Debt Service Fund
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
Revenues:
Interest income on bonds receivable $ 44,728,889 $ 44,099,543 $ 629,346 1.43%
Investment earnings 1,188,656 857,473 331,183 38.62%
Total revenues 45,917,545 44,957,016 960,529 2.14%
Expenditures:
Interest payments 44,259,409 42,333,257 1,926,152 4.55%
Principal payments 55,225,000 53,070,000 2,155,000 4.06%
Total expenditures 99,484,409 95,403,257 4,081,152 4.28%
Excess (deficiency) of revenues
over expenditures (53,566,864) (50,446,241) (3,120,623) -6.19%
Other financing sources (uses):
Bond proceeds 232,955,000 175,555,000 57,400,000 32.70%
Payments to Bond Escrow Agent (28,230,000) (105,040,000) 76,810,000 -73.12%
Transfers (1,302,709) (1,521,540) 218,831 -14.38%
Total other financing sources (uses): 203,422,291 68,993,460 134,428,831 194.84%
Excess of revenues and transfers over
expenditures 149,855,427 18,547,219 131,308,208 707.97%
Fund balance, beginning of period 986,248,958 967,701,739 18,547,219 1.92%
Fund balance, end of period $ 1,136,104,385 $986,248,958 $ 149,855,427 15.19%
Long-termDebt
At June 30, 2016 the Bond Bank had $1,090,420,000 of bonds and notes outstanding, up 15.9% from
$940,920,000 at June 30, 2015. 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 (7), to the financial
statements.
As discussed in the previous sections, net increase in 2016 long term debt balances is due to new bond
issuances for loans to authorized borrowers.
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. At the beginning of fiscal year 2016, the limit was $15875 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,
-8-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Management's Discussion andAnalysis
Year Ended June 30, 2016
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 this legislation, the total debt limit as of June 30, 2016 was $1.7925 billion,
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, 2016 was approximately $1.09 billion. The limit on additional bond issuance
as of June 30, 2016 is approximately $702.1 million, of which $539.8 million of authority is available for
the main political subdivision program, $1.4 million is available to the University of Alaska, and $160.9
million is available to Regional Health Organizations.
Outstanding long term debt is comprised of the following bonds and loans at year end:
Changes from 2015 to 2016
As of June 30, Increase/(Decrease)
2016 2015 Dollars Percent
GO bonds payable $ 1,090,420,000 $ 940,920,000 $149,500,000 15.89%
$ 1,090,420,000 $ 940,920,000 $149,500,000 15,89%
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.
ME
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Statement of Net Position and
Governmental Funds Balance Sheets
June 30, 2016
Statement of Net
General Fund Debt Service Fund Total Adjustments Position
$ 859,496 $ 4,885,062 $ 5,744,558 $ - $ 5,744,558
10,597,367 51,201,723 61,799,090 - 61,799,090
22,873 14,141,468 14,164,341 - 14,164,341
37,673 142,800 180,473 - 180,473
7,368,786 1,074,585,000 1,081,953,786 - 1,081,953,786
29,163 - 29,163 - 29,163
6,207,126 - 6,207,126 (6,207,126) -
$ 25,122,484 $ 1,144,956,053 $ 1,170,078,537 (6,207,126) 1,163,871,411
$ 19,856 $ - $ 19,856 - 19,856
309,150 - 309,150 - 309,150
- 2,644,542 2,644,542 - 2,644,542
7,053 - 7,053 - 7,053
- - - 14,325,050 14,325,050
- 6,207,126 6,207,126 (6,207,126) -
- - - 57,705,000 57,705,000
- - - 1,032,715,000 1,032,715,000
336,059 8,851,668 9,187,727 1,098,537,924 1,107,725,651
4,956,430 1,136,104,385 1,141,060,815 (1,141,060,815) -
19,829,995 - 19,829,995 (19,829,995) -
24,786,425 1,136,104,385 1,160,890,810 (1,160,890,810) -
$ 25,122,484 $ 1,144,956,053 $ 1,170,078,537
35,750,062 35,750,062
20,395,698 20,395,698
$ 56,145,760 $ 56,145,760
ASSETS
Cash and cash equivalents
Investments, at fair value (note 4)
Accrued interest receivable:
Bonds receivable
Investment securities
Bonds receivable (note 5)
Other receivables
Jnterfund receivables
Total assets
LIABILITIES
Accounts payable
Due to Primary Government
Principal and interest payments received in advance
Arbitrage interest rebate payable
Accrued interest payable
Interfund payables
Long-term liabilities (note 6):
Portion due or payable within one year:
General obligation bonds payable
Portion due or payable after one year:
General obligation bonds payable
Total liabilities
FUND BALANCES/NET POSITION
Fund balances:
Restricted (note 2)
Unassigned
Total fund balances
Total liabilities and fund balances
Net position:
Restricted (note 2)
Unrestricted
Total net position
The accompanying notes to the financial statements are an integral part of these statements.
-10-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Statement of Activities and
Governmental Funds Statements of Revenues, Expenditures, and
Changes in Fund Balances/Net Position
For the Year Ended June 30, 2016
Statement of
General Fund Debt Service Fund Total Adjustments Activities
Revenues:
Investment earnings $ 353,387 $ 1,188,656 $ 1,542,043 $ - $ 1,542,043
Interest income on bonds receivable 74,664 44,728,889 44,803,553 - 44,803,553
Total revenues 428,051 45,917,545 46,345,596 - 46,345,596
Expenditures / expenses:
Debt service:
Principal payments - 55,225,000 55,225,000 (55,225,000) -
Interest payments / expense - 44,259,409 44,259,409 1,244,477 45,503,886
Professional services 638,523 - 638,523 - 638,523
Personal services 185,189 - 185,189 - 185,189
Administrative travel 19,492 - 19,492 - 19,492
Office expense 13,475 - 13,475 - 13,475
Total expenditures / expenses 856,679 99,484,409 100,341,088 (53,980,523) 46,360,565
Excess (deficiency) of revenues
over expenditures / expenses (428,628) (53,566,864) (53,995,492) 53,980,523 (14,969)
Other financing sources / (uses):
Proceeds from bond refunding - 232,955,000 232,955,000 (232,955,000) -
Payments to refunded bond escrow agent - (28,230,000) (28,230,000) 28,230,000 -
Transfers to/from Custodial Fund 1,297,583 (1,297,583) - - -
Transfers - internal activities 5,126 (5,126) - - -
Total other financing sources I (uses) 1,302,709 203,422,291 204,725,000 (204,725,000) -
Net change in fund balance /
net position 874,081 149,855,427 150,729,508 (150,744,477)
(14,969)
Fund balances / net position:
Beginning of the year 23,912,344 986,248,958 1,010,161,302 (954,000,573) 56,160,729
End of the year $ 24,786,425 $ 1,136,104,385 $ 1,160,890,810 $ (1,104,745,050) $ 56,145,760
The accompanying notes to the financial statements are an integral part of these statements.
-11-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
For the Year Ended June 30, 2016
(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.
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 $15875 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 this legislation, the total debt limit as of June 30, 2016 was $1.7925
billion, 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, 2016 was approximately $1.09 billion. The limit on additional bond
issuance as of June 30, 2016 was approximately $702.1 million, of which $539.8 million of authority is
available for the main political subdivision program, $1.4 million is available to the University of
Alaska, and Si 60.9 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.
(a) Govermnent-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.
-12-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
(b) Measurement Focus, Basis ofAccounting, 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. Moneys 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 Operating Account may be used to pay (a) administrative
expenses of the Authority, (b) fees and expenses of the Trustee and paying agents, (c) financing
costs incurred with respect to issuance of bonds and (d) any expenses 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.
-13-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
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
municipalities 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 municipalities 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:
During fiscal year 2016, all remaining bonds issued under the 1976 Resolution were retired and the
amount held in the 1976 Resolution Reserve Fund was transferred to the Bond Bank's Custodian
Account.
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 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.
At June 30, 2016, the 2005 General Bond Resolution, 2010 General Bond Resolution and 2016
General 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 law. Amounts in excess of the required debt
service 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. Additionally, bond proceeds are reported as
financing sources in governmental funds and thus contribute 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. Similarly, repayment of principal is an expenditure in the governmental
funds and reduces the liability in the statement of net position.
-14-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
(d) Restricted Assets
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 $35,750,062 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
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 2,354,016
Total restricted for debt service/net position $ 35,750,062
(e) Bond Receivables
Bond receivables are secured by the revenues or are general obligations of the municipalities. 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.
(,9
Long-Terin 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
municipalities associated with the issuance and amortized by them, therefore, bonds payable are
presented at par. Bond issue costs are generally paid by the municipality but when a portion is paid
by the Authority they are paid from the General Account and considered operating expenses.
-15-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
(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.
(ii) 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.
(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.
Beginning for FY 2013 the Bond Bank's arbitrage rebate consultant will update all general
obligation bond rebate analysis annually as of June 30. As of June 30, 2016 the Bond Bank's
arbitrage rebate liability was $7,053.
Q) Income Taxes
The Authority is exempt from paying federal and state income taxes.
-16-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
(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, 2016
consist of money market accounts held with various financial institutions.
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. The aggregate fair value by input
level, as of June 30, 2016 is as follows:
Level
Debt Securities
General Fund
U.S. Treasury securities
U.S. Government agencies securities
Debt Service Fund
U.S. Treasury securities
Total
6/30/2016
$ 7,582,601 $ 7,582,601 $ -
3,014,766 - 3,014,766
51,201,723 51,201,723 -
$ 61,799,090 $ 58,784,324 $ 3,014,766 $ -
U.S. treasury securities are liquid and have quoted market prices. Fair value of U.S. treasuries 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.
-17-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
The fair value of debt security investments by contractual maturity as of June 30, 2016 is shown below.
Less than 1 1-5 6-10 More than 10 Total
General Fund
U.S. Treasury securities $ 1,001,739 $ 5,053,945 $ 1,526,917 $ - $ 7,582,601
U.S. Government agencies
securities - 3,014,766 - - 3,014,766
1,001,739 8,068,711 1,526,917 - 10,597,367
Debt Service Fund
U.S. Treasury securities 11,425,179 34,426,125 5,350,419 - 51,201,723
11,425,179 34,426,125 5,350,419 - 51,201,723
Total investments $ 12,426,918 $ 42,494,836 $ 6,877,336 $ - $ 61,799,090
Expected maturities may differ from contractual maturities because borrowers may have the right to call
or prepay obligations with or without penalty.
(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 operation,
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. The Custodian Account has to maintain sufficient liquidity to meet
operating requirements, provide the prior fiscal year's state dividend, 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% +1- 2% money market funds (no less than $750,000).
o 95% +1- 3% government agencies and U.S. Treasuries.
o The performance benchmark is 5% +1- 2% three month U.S. Treasury Bill, and 95% +1-
3% Barclays 1-5 year government bond index.
The following transactions are prohibited with the Custodian Account unless those transactions
have the prior written consent of the Investment Committee:
-18-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
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;
a Purchases of 'private placement' or unrated corporate bonds.
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 community. 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 and 2010 Reserve Fund bond resolutions limit investments to:
o 90% +1- 10% government agencies and U.S. Treasuries with maturities of less than 5
years.
o 10% +7- 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 US 1-5 year government bond index and 10%
Barclays US aggregate index.
The 1976 Reserve Fund bond resolutions limit investments to:
o Government agencies and U.S. Treasuries with maturities of 3 years or less.
a Performance benchmark is Barclays US 1-3 year government bond index.
-19-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
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 Risk
Concentration 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. The Authority's policies set out maximum concentration limits
for investments managed by the external investment manager.
(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 and
securities of agencies that are explicitly guaranteed by the U.S. government are not considered to
have credit risk.
(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.
-20-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
(5) Bonds Receivable
The General Fund includes bonds receivable with interest rates varying from 1% to 5% due from the City
of Galena and Kenai Peninsula Borough with maturities as follow:
Kenai Peninsula Total General Fund
City of Galena Borough Bonds Receivable
2017 $ 150,098 $ 728,000 $ 878,098
2018 165,319 817,000 982,319
2019 166,980 827,000 993,980
2020 168,658 843,000 1,011,658
2021 170,352 861,000 1,031,352
2022-2026 692,379 1,779,000 2,471,379
$ 1,513,786 $ 5,855,000 $ 7,368,786
Bonds receivable by debt service program at June 30, 2016 mature in varying annual installments as
follows:
Year ending
30 —June 2005 General 2010 General 2016 General Total Principal
2017 $ 57,485,000 $ 145,000 - $ 57,630,000
2018 57,210,000 150,000 6,975,000 64,335,000
2019 59,160,000 160,000 4,965,000 64,285,000
2020 57,610,000 165,000 5,225,000 63,000,000
2021 56,455,000 170,000 5,485,000 62,110,000
2022-2026 257,840,000 930,000 5,775,000 264,545,000
2027-2031 202,545,000 1,110,000 6,060,000 209,715,000
2032-2036 145,050,000 1,325,000 6,380,000 152,755,000
2037-2041 65,940,000 - 3,270,000 69,210,000
2042-2046 57,880,000 - - 57,880,000
2047-2051 9,120,000 - - 9,120,000
$ 1,026,295,000 $ 4,155,000 $ 44,135,000 $ 1,074,585,000
(6) Long—Term Liabilities
During the year ended June 30, 2016 the Authority's long-term liabilities changed as follows:
Beginning Repayments/ Faid
of year New debt Adjustments ofyear
General obligation bonds payable $ 940,920,000 $ 232,955,000 (83,455,000) $ 1,090,420,000
Total $ 940,920,000 $ 232,955,000 $ (83,455,000) $ 1,090,420,000
-21-
4,450,000 4.75%-6.00%
3,260,000 4.00%-5.50%
3,820,000 4.00%-6.00%
1,200,000
560,000
1,400,000
5,460,000 2.00%-4.00%
- 3.00%400%
495,000
430,000
20,425,000 - -
5,455,000 - -
7,415,000 - -
22,485,000 4.50%
3,310,000 4.00%
1,330,000 4,25%-4.50%
5,310,000 -
24,780,000 5,00%
685,000
415,000
1,070,000
3,260,000
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
Bond Bank's long term liabilities consist of the following as of June 30, 2016:
Statutory Reserve Account Ordinary
Debt Service Account Reserve Sub-Account
Principal Principal
Issue Interest rate outstanding Interest rate outstanding
2005 Master Bond Resolution:
2006-Two Series - Ketchikan, City of 4.25%-4.75% 31,775,000 5.00% 1,765,000
2007-One Series 4.00%-5,50% 13,020,000 4.00%-5.50% 1,265,000
Kenai Peninsula Borough
Inter-Island Ferry Authority
Nome
Northwest Arctic Borough
Petersburg
Seward
Sitka, City and Borough of
Wasilla
2007-Two Series
Kenai Peninsula Borough
Aleutians East Borough
2007-Three Series
Bethel, City of
Juneau, City and Borough of
2007-Four Series - Kenai Peninsula Borough
2007-Five Series - Kodiak, City of
2008-One Series
Dillingham
Kodiak Island Borough
Kodiak, City of
Seward
2008-Two Series
Seward
Sitks, City and Borough of
Skagway
2009-One Series
Kodiak, City of
Unalaska, City of
2009-Two Series
Cordova
Nome, City of
Unalaska, City of
Kodiak, Island Borough
2009-Three Series - Juneau, City and Borough of
2009-A-Four Series
Kenai Peninsula Borough
Ketchikan Gateway Borough
2009-B-Four Series - Ketchikan Gateway Borough
2010-A-Series One
Ketchikan, City of
Ketchikan Gateway Borough
Kenai, City of
Northwest Arctic Borough
Petersburg
Unalaska
2010-B Series One
Kenai, City of
Northwest Arctic Borough
Petersburg
Unalaska
(continued)
3.75%-5.00%
4.25%-5,50%
4.25%-5.00%
4.00%-6.00%
4.00%-5.00%
4.40%-6.00%
3,00%-5.63%
4.00%-6.00%
2.00%-4.00%
3.00%-4.00%
4.63%-5.40%
2.00%-5.00%
5.99%-6.34%
-22-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
Statutory Reserve Account Ordinary
Debt Service Account Reserve Sub-Account
Principal Principal
Issue Interest rate outstanding interest rate outstanding
2010-B Series Two 3.75%-4.91% 11,405,000
Juneau, City and Borough of
Cordova
King Cove, City of
2010-A Series Three 200%-400% 1,995,000
Aleutians East Borough
Unalaska
King Cove, City of
2010-B Series Three 4.93%-543% 6,900,000
Aleutians East Borough
Unalaska
King Cove, City of
2010-A Series Four 2.00%-500% 17,265,000
Kenai Peninsula Borough
Ketchikan, City of
Ketchikan Gateway Borough
Silks, City and Borough of
Sitka , City and Borough of (Refunding)
Soldotna
2010-B Series Four 1.420/6-6.26% 46,540,000
Kenai Peninsula Borough
Ketchikan, City of
Ketchikan Gateway Borough
Sitka, City and Borough of
Soldotna
2011-Series One 300%-513% 6,650,000
Kodiak Island Borough
Wrangell
2011-Series Two 2.00%4.38% 7,515,000
Juneau, City and Borough of
Silks, City and Borough of
2011-Series Three 2.00%-5.00% 60,705,000 2.00%-500% 1,390,000
Wrangell
Aleutians East Borough
Northwest Arctic Borough
Ketchikan Gateway Borough
Kenai Peninsula Borough
Cordova
Hoonah
Skagwsy
Seward
Kodiak Island Borough
2012-Series One 2.00%-500% 8,960,000
Juneau, City and Borough of (Wildflower Court)
Juneau, City and Borough of
2012-Series Two 1,75%-5.00% 41,480,000 200%4.00% 1,900,000
Juneau, City and Borough of
Ketchikan, City of
Ketchikan Gateway Borough
Kodiak Island Borough
None, City of
North Pole, City of
Palmer, City of
Petersburg
Sitka, City and Borough of
Valdez
(continued)
-23-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
Statutory Reserve Account Ordinary
Debt Service Account Reserve Sub-Account
Principal Principal
Issue Interest rate outstanding interest rate outstanding
2012-Series Three 150%-5.00% 16,550,000
Juneau, City and Borough of (School)
Juneau, City and Borough of (REP)
Petersburg
Haines Borough
2013-Series One 200%-500% 89,410,000
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% 16,435,000
Hosxer, City of
Ketchikan, City of
Ketchikan, City of(REF)
Skagway
2013-Series Two B
Kodiak Island Borough 3.00%-4.00% 15,880,000
2013 Series Three 1.50%-5.00% 68,490,000
Juneau, City and Borough of
Kenai Peninsula Borough
Lake and Peninsula Borough
Sitka, City and Borough of
2014-Series One A .38%-5.00% 55,760,000
Juneau, City and Borough of
Kodiakisland Borough
Kenai Peninsula Borough- Exempt
Kenai Peninsula Borough- Taxable
2014-Series Two A 300%-500% 44,875,000
Ketchikan, City of (Harbor)
Ketchikan, City of (Hospital)
King Cove, City of
2014-Series Three 1.25%-5.00% 54,605,000
City & Borough of Juneau
City of Saxman
City & Borough of Sitka
City ofAdak (REP)
Municipality of Ancorage (Rev REP)
Haines Borough (REF)
Kenai Peninsula
City ofNon (REP)
Northwest Arctic Borough (REP)
Petersburg Borough (REP)
City of Seward (REP)
City of Seward (REP) -2
(continued)
-24-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
Statutory Reserve Account Ordinary
Debt Service Account Reserve Sub-Account
Principal Principal
Is sue Interest rate outstanding Interest rate outstanding
2015-Series One 200%-500% 56,510,000
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 ofUnalaska (REF2005A)
Ketchikan Gateway Borough (itEF2005
Aleutians East Borough (REF2006A)
City of Nome (REF2006A)
City of Wrangell (REF2006A)
City and Borough of Sitka (REF2008-2)
City ofUnalaska (REF2009-1)
City of Cordova (REF2009-2)
City of Nome (REF2009-2)
2015-Series Two 2.00%-5.00% 57,250,000
City of Cordova - CC
Municipality of Skagway - PSB
City and Borough ofJuneau - PP
Municipality of Skagway - PP
City and Borough of Juneau - School
City and Borough of Juneau (REF2007-3)
Kenai Peninsula Borough (ItEF20074)
2015-Series Three 200%-5.25% 96,210,000
University ofAlaska
Haines Borough
Kodiak Island Brough - School
Kodiakisland Borough -R&R
King Cove, City of
2016-Series One 2.00%-5.00% 33,015,000
Kenai Peninsula Borough CES 7-Year Loan
Kenai Peninsula Borough CES 15-Year Loan
City ofKlawock
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% 59,595,000
Fairbanks North Star Borough
Ketchikan, City of
Total 2005 Master Bond Resolution: 1,026,295,000 15,835,000
2010 MasterBond Resolution:
2010-A-I Series One - Ketchikan Gateway Borough 3.00%-4.00% 455,000
2010-A-2 Series One - Ketchikan Gateway Borough 5.78%-6.86% 3,700,000
Total 2010 Master Bond Resolution: 4,155,000
2016 Master Bond Resolution:
2016-Series A - Tanana Chiefs Conference 5.00% 44,135,000
Total 2016 Master Bond Resolution: 44,135,000
$ 1,074,585,000 $ 15,835,000
-25-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
All bonds are secured by bonds receivable and by amounts in the reserve account. The Act further
provides that if a municipality 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 municipality 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.
In February 2016 the Authority issued $33.02 million in general obligation and refunding bonds with
interest rates ranging between 2% and 5%. The Authority issued the bonds to advance refund
$25,370,000 of the outstanding the 2008-1 and 2008-2 General Obligation bonds with interest rates
averaging between 4% and 6%. The Authority used the net proceeds along with other resources to
purchase U.S. government securities. These securities were deposited in an irrevocable trust to provide
for all future debt service on the refunded portion of the series bonds listed above. As a result, these
bonds are considered defeased, and the Authority has removed the liability from its financial
statements. The outstanding principal of the defeased bonds was $25,370,000 at June 30, 2016. The
advance refunding reduced total debt service payments over the next 22 years by nearly $5.2 million.
This results in an economic gain (difference between the present values of the debt service payments on
the old and new debt) of $3.5 million.
In April 2016 the Authority issued $59.6 million in general obligation and refunding bonds with interest
rates ranging between 3% and 5%. The Authority issued the bonds to advance refund $2,860,000 of the
outstanding 2005-1 and 2005-1 Reserve General Obligation bonds with interest rates averaging
between 3% and 5%. The Authority used the net proceeds along with other resources to purchase U.S.
government securities. These securities were deposited in an irrevocable trust to provide for all future
debt service on the refunded portion of the series bonds listed above. As a result, these bonds are
considered defeased, and the Authority has removed the liability from its financial statements. The
outstanding principal of the defeased bonds was $2,860,000 at June 30, 2016. This results in an
economic gain (difference between the present values of the debt service payments on the old and new
debt) of $33,000.
-26-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
The above bonds mature in varying annual installments. The maturities at June 30, 2016 are as follows:
2005 2010
2016
Year ending
June 30
2017
2018
2019
2020
2021
2022-2026
2027-2031
2032-2036
2037-2041
2042-2046
2047-2051
General
$ 57,485,000
57,210,000
59,160,000
57,610,000
56,455,000
257,840,000
202,545,000
145,050,000
65,940,000
57,880,000
9,120,000
Reserve
$ 75,000
4,805,000
1,035,000
925,000
490,000
3,645,000
3,095,000
1,765,000
General
6,975,000
4,965,000
5,225,000
5,485,000
21,485,000
General
145,000
150,000
160,000
165,000
170,000
930,000
1,110,000
1,325,000
$ 1,026,295,000 $ 15,835,000 $ 4,155,000 $ 44,135,000
Year ending
June 30
2017
2018
2019
2020
2021
2022-2026
2027-2031
2032-2036
2037-2041
2042-2046
2047-2051
Total Principal
$ 57,705,000
69,140,000
65,320,000
63,925,000
62,600,000
283,900,000
206,750,000
148,140,000
65,940,000
57,880,000
9,120,000
$ 1,090,420,000
Total Interest
$ 49,413,844
47,165,218
44,292,527
41,462,064
38,614,836
150,055,521
90,864,952
47,164,296
23,430,276
8,571,025
615,999
$ 541,650,558
(7) 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, 2016 the aggregate amount outstanding for
conduit debt obligations was $4,247,038.
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, 2016 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
-27-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(a Component Unit of the State of Alaska)
Notes to Financial Statements
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.
(8) Commitments
During 2011 State Legislature appropriated $2,450,000 to 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 2014 as discussed in Note 2(d), included $178,200
of City of Galena loan repayments for the year ended June 30, 2016. There were no excess receipts
over operating expenditures during fiscal year 2016.
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 2016; the cumulative state appropriated amount,
therefore, remained $33,396,046 at June 30, 2016.
The entire Custodian Account balance is available for appropriation, at any time, by the State Legislature.
(9) Subsequent Events
Subsequent to June 30, 2016, the Bond Bank Board adopted Alaska Municipal Bond Bank Resolution
2016-05, a series resolution authorizing the issuance of general obligation and refunding bonds, 2016
Series Three and 2016 Series Four in an aggregate principal amount of not to exceed $95 million for
the 2016 Series Three, and an aggregate principal amount of not to exceed $36 million for the 2016
Series Four. These bonds are expected to price in mid-October 2016. The 2016 Series Three bond
proceeds are being used for the following purposes: (i) to make a loan to the City and Borough of
Juneau; (ii) to refund bonds previously issued by the Bond Bank; and (iii) to pay a portion of the costs
of issuing the 2016 Series Three Bonds. The loan to the City and Borough of Juneau is to be used for
the following purposes: (i) to pay a portion of the costs of renovations to the Capital Transit
maintenance shop; and (ii) to refund bonds previously issued by the City and Borough of Juneau. The
2016 Series Four bond proceeds are being used for the following purposes: (i) to make a loan to the
City of Ketchikan; (ii) to refund bonds previously issued by the Bond Bank; and (iii) to pay a portion
of the costs of issuing the 2016 Series Four Bonds. The loan to the City of Ketchikan is to be used to
pay a portion of the costs of improvements to harbor facilities in the City of Ketchikan. Subject to
market conditions, certain proceeds of the 2016 Series Three and Four Bonds are to be used to refund
and redeem all or a portion of the outstanding bonds of the Bond Bank, including all or a portion of the
following Bond Bank Series: 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.
Supplemental Schedule
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of Statutory Reserve Accounts - Assets, Liabilities, and Account Reserves
June 30, 2016
2005 Resolution 2010 Resolution Total
ASSETS
Cash $ 2,076,877 $ 23,517 $ 2,100,394
Accrued interest receivable 142,267 533 142,800
Marketable securities 50,810,000 391,724 51,201,724
$ 53,029,144 $ 415,774 $ 53,444,918
LIABILITIES
Interaccountpayables $ 6,050,018 $ 16,990 $ 6,067,008
Bond payable 15,835,000 - 15,835,000
Accrued interest payable 183,573 - 183,573
22,068,591 16,990 22,085,581
State appropriated 28,046,530 393,086 28,439,616
Unappropriated 2,352,551 1,465 2,354,016
Unrealized gain 561,472 4,233 565,705
30,960,553 398,784 31,359,337
$ 53,029,144 $ 415,774 $ 53,444,918
See Independent Auditor's report
-29-
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, and 2016 master resolutions is provided in compliance with the Appendix C filing
requirement.
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2005 Master Resolution Program - Community Concentration
Borrower
City and Borough of Sitka
City and Borough of Juneau
Kenai Peninsula Borough
City of Ketchikan
Kodiak Island Borough
University of Alaska
Fairbanks North Star Borough
Ketchikan Gateway Borough
Northwest Arctic Borough
City of Unalaska
City of Seward
Aleutians East Borough
Municipality of Skagway
City of Cordova
Lake & Peninsula Borough
City of Kodiak
Haines Borough
Petersburg Borough
City of Dillingham
City of Nome
Municipality of Anchorage
City of Homer
City of King Cove
City of Bethel
City of Valdez
City of Sand Point
City of Soldotna
City of Craig
City of Kenai
City of Kiawock
City and Borough of Wrangell
City of Wasilla
City of Hoonah
City of North Pole
City of Palmer
City of Adak
City of Saxman
Reserve Obligations
Total Outstanding Par
June 30, 2016
Outstanding
Par
$ 144,555,000
125,325,000
111,590,000
101,825,000
96,820,000
86,085,000
57,300,000
36,950,000
34,995,000
34,015,000
32,285,000
27,275,000
20,645,000
17,900,000
17,145,000
12,875,000
11,690,000
11,280,000
10,610,000
4,925,000
3,615,000
3,340,000
2,990,000
2,635,000
2,505,000
2,435,000
2,010,000
1,755,000
1,530,000
1,360,000
1,245,000
1,185,000
1,080,000
820,000
785,000
755,000
160,000
15,835,000
$ 1,042,130,000
Percent of
Outstanding
13.87%
12.03%
10.71%
9.77%
9.29%
8.26%
5.50%
3.55%
3.36%
3.26%
3.10%
2.62%
1.98%
1.72%
1.65%
1.24%
1.12%
1.08%
1.02%
0,47%
0.35%
0.32%
0.29%
0.25%
0.24%
0.23%
0.19%
0.17%
0.15%
0.13%
0.12%
0.11%
0.10%
0.08%
0.08%
0.07%
0.02%
1.50%
100.00%
See Independent Auditor's report
-30-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule 2005 Matter Resolution Program - Debt Service Requirements
June 30, 2016
Borrower 2017 2016 2019 2020 2021 2022 -
City of Ketchikan Port - 2006 Loan $ 2,556,963 $ 2,553,063 $ 2,546,063 $ 2,550,039 S 2,543,850 $ 2,544,363 $
City of Name -2007 Refunding 177,419 100,247 182,059 .100,619 178,609 -
Northwest Arctic Borough -2007 Refunding 1,259,844 1,249,172 1,248,350 1,240,025 1,245,163 -
Potoosbssog Borough -2007 Refunding 145,919 140,159 144,391 143,681 147,991 -
City of Seward -2807 Refunding 241,844 241,709 237,394 238,363 234,525 239,994
City and Borough of Sitka -2007 Refundiug 848,701 851,672 849,219 - - -
City of Wasilla -2067 Refunding 421,601 423,241 424,580 - - -
Kenai Peninsula Borough -2007 Loon 312,625 - - - - -
Petersburg Borough -2087 Loan 88,544 90,778 92,894 90,100 92,356 09,425
Aleutians East Borough -2007 Refuuding 947,338 1,772,238 1,018,363 1,035,863 1,844,988 1,856,938
South Kenai Peninsula Hospital -2007 Reftmdiosg 144,100 143,500 142,825 146,950 709,450 788,258
City and Borough of Juneau - 2007 111 Dock Loan 356,325 353,625 - - - -
City of Bethel -2007 III Court Facility La= 293,038 294,125 295,125 290,750 291,008 290,750
Kenai Peninsula Borough South Hospital Service Area 694,413 695,300 - - - -
City of KodiakM&P Loan 125,971 128,121 125,121 127,521 125,287 127,878
City of Kodiak Lift Loan 240,900 241,330 241,380 242,030 243,271 244.186
Kodiak Island Borough 2008 One Loan 624,960 620,160 624,960 623,960 621,323 623,048
City of Dillingham 2008 One Loan 1,176,340 1,178,540 1,174,540 1,174,540 1,176,390 1,176,753
Kodiak Police Station 2000 One Loan 532,240 529,040 505,640 507,040 509,128 504,990
City of Seward Long Term Care 2008 One Loan 984,280 982,800 - - - -
City and Borough of Sitka 2008 Two Loan 153,220 355,100 - - - -
Municipality of Skagwuy 2008 Two Loan 394,435 395,210 391,110 395,330 393,630 396,210
City of Seward 2800 Two Loan 140,935 148,408 - - - -
City of Unalauka 2009 One Loan 860,500 856,625 055,875 - - -
City of Kodiak 2009 One Boat Lift Loan 67,713 71,500 70,338 69,000 67.838 71,463
City of Unalaska 2009 Two Loan 558,800 563,588 560,413 - - -
City of Cordova 2009 Two Loan 798,063 799,188 001,330 - - -
City ofNome 2009 Two Loan 20,806 32,775 31,425 - - -
City and Borough of Junrau -2009 Three Loan 1,485,600 1,495,800 1,444,000 1,468,000 - -
Ketchikan Gateway Borough-2009 Four Loan 1,775,519 1,760,232 1,754,104 1,743,479 1,731,390 1,722,642
City ofKenai-2010 One Loan 175,398 176,998 178,398 172,704 172,011 171,010
Ketchikan Gateway Borough-2010 One Loan 725,000 731,008 730,000 720,000 - -
Northwest Arctic Borough-2010 One Loan 283,165 282,565 281,765 280,765 204,565 281,315
Petersburg Borough -2010 One Loan 239.094 234,494 234,794 234,094 234,794 230.694
City of Unalaska-2010 One Loan 427,149 428,749 424,949 425,949 426,549 424,299
City and Borough ofJaneau -2010 Two Loans 1,139,029 1,129,772 1,117,534 1,107,744 2,472,665 1,820,539
City of Cordova 2010 Two Loan 48,430 46,859 45,130 48.180 46,070 -
City of King Cove 2010 Two Loan 45,743 44,762 43,686 42,540 41,363 40.155
Aleutians East Borough -2010 Loan 390,878 395,370 396,570 397,966 392,943 390,877
City of King Cove 2010 Three Loan 50,692 62,392 60,992 59,600 50,205 61,359
City of Unalaska 2010 Three Loan 437,267 437,867 430,067 433,605 432,617 429,319
Kenai Peninsula Borough 2010 Four Loan 1,459,087 1,442,725 1,431,305 1,411,775 1,395,269 1,376,201
City of Ketchikan 2010 Four Loan 623.153 616,549 600,190 603,500 597,054 506.163
Ketchikan Gateway Borough 2oto Four Loan 332,190 324,207 320,209 315,233 314,574 308,091
City and Borough of Sitka 2016 Four Loan 4,064,932 4,075,151 4,062,576 4,047,570 4,058,570 4,050,640
City of Soldotna 2010 Four Loan 215,646 216,594 211,985 211,752 206,311 205,509
City and Borough ofWrangell 2011 One Loan 24,475 20,075 28,000 27,000 26,000 -
Kodiak Island Borough 2011 One Loan 622,550 622,950 621,400 622,800 623,600 623,800
City and Borough of Juneau 2011 Two Loan 657,831 658,831 657,300 659,600 655,200 -
City and Borough of Sitka 2011 Two Loan 408,009 412,134 410,090 407,590 487,390 411,790
Aleutians East Borough 2011 Three Refunding 976,625 229,375 229,875 226,000 231,625 230,625
Kenai Peninsula Borough 2011 Three Refunding 1,640,450 1,630,075 1,621,823 1,617,850 967,375 958,750
Ketchikan Gateway Borough 2011 Three Refunding 616,300 610,175 618,800 615,900 616,875 614,000
See Independent Auditor's report
-31-
2023 2024 2025 2026
2,541,300 $ 2,539,525 $ 2,538,763 $ 2,538,738
91,297 92,906 89,406 90,797
2,121,938 2,271,750 2,347,869 2,392,575
784,350 787,325 - -
290,000 293,625 291,625 289,125
125,313 127,593 124,700 126,663
244,804 245,126 245,119 244,831
623,360 622,210 624,100 624,460
1,179,565 1,174,515 1,176,040 1,179,480
505,365 505,015 508,735 506,495
392,815 393,803 393,923 393,160
69,963 68,425 66,050 70,122
1,707,107 1,694,654 1,684,964 1,664,500
164,725 163,433 161,840 159,948
276,127 275,640 269,552 268.166
235,849 232,010 227,870 228,281
424,017 417,835 411,055 403,675
1,779,639 1,517,673 1,742,096 -
38,847 42,319 40,652 38.985
383,441 300,636 372,462 368,918
59,389 57,419 55,449 53,479
420,652 416,616 407,211 397,559
1,358,946 1,338,264 1,314,029 1,291,441
578,214 568,842 562,057 550,401
300,753 292,534 288,269 282,919
4,038,926 4,030,419 4,000,527 3,930,489
199,279 197,602 195,333 192,515
625,513 626,275 626,088 624,950
407,690 408,071 411,271 408,871
953,258 - - -
609,875 - - -
(continued)
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule 2005 Master Resolution Program - Debt Service Requirements
June 30, 2016
Borrower 2017 2018
Northwest Arctic Borough 2011 Three Refunding 2,491,900 2,486,775
Wrangell 2011 Thom Refmsdiog 41,000 -
Kenai Peninsula Borough (Control Hospital) 2011 Three 3,522,125 3,521,750
City of Cordova 2011 Three 57,875 55,625
City ofHoonah2otl Three 114,875 111,625
Kodiak Island Borough 2011 There 300,475 300,975
Municipality of Skagway 2011 Three 33,675 37,000
City of Seward 2011 Three 244,175 244,300
City and Borough of Juneau G. 0. Refunding 2012 One 1,091,625 -
Juneau Wildflower Court Refunding 2012 One 1,344,900 1,418,125
Juneau 2tl2Two 1,920,400 1,940,250
City of Ketchikan 2012 Two 354,444 356,644
Ketchikan Gateway Borough 2012 Two 686,150 682,350
Kodiak Island Borough 2012 Two 1,449,850 1,439,500
City of Nome 2012 Two 148,200 148,900
City of North Pole 2012 Two 100,250 102,550
City of Palmer 2012 Two 108,050 105,000
Petersburg Borough 2012 Two 490,600 496,600
City and Borough of Silka 2012 Two 1,456,250 1,460,150
City of Valdrz 2012 Two 347,850 348,250
Babes Borough 2012 Three 05,981 04,744
Juneau 2012 Three Refunding 916,950 918,950
Juneau 2012 Three School Construction 1,440,038 1,430,600
Petersburg Borough 2012 Three 104,838 103,050
Kenai Peninsula Borough (Bear Creek Fire) 2013 One 95,620 93,820
City and Borough of Juoeau (Bartlett Hospital) 2013 One 1,657,213 1,659,263
City and Borough ofJusseau2Ol3 One 202,410 203,610
Ketchikars Gateway Borough 2013 One 610,550 607,150
Kodiak Island Borough 2013 One 1,689,740 1,608,140
City of Sand Point 2013 One 180,500 182,980
City and Borough of Sitka (Harbor) 2013 Our 309,700 308,900
City and Borough of Sitka (Electric) 2013 One 1,757,360 1,757,360
City of Homer 2013 Two 292,050 207,050
City of Ketchikan 2013 Two 1,069,500 1,069,200
Kodiak Island Borough 2013 Two 1,356,788 1.355,908
Municipality of Skagway 2013 Two 71,350 70,300
City and Borough of Juneau 2013 Three 902,475 903,650
Kenai Peninsula Borough 1,627,300 1,626,550
Lake and Peninsula Borough 2013 Three 1,420,088 1,421,950
City and Borough of Sitka 2013 Them 1,274,975 1,274,975
Kenai Peninsula Borough 2014 One 2,956,200 2,956,670
Kodiak Island Borough 2014 One 1,777,113 1,774,713
City and Borough of Juneau 2014 One 403,838 407,038
City of Ketohikan Hospital (GO.) 2014 Two 1,753,700 2,553,700
City of Ketchikan Harbor (GO.) 2014 Two 203,900 205,300
City of King Cove Electric 2014 Two 160,650 161.050
City and Borough of Juneau 2014 Three 910,469 909,900
City and Borough of Sitka 2014 Three 816,250 816,250
City ofSaxmars20t4Three 12,681 12,550
City of Adak Refunding 2014 Three 107,969 106,000
Municipality of Anchorage Refunding 2014 Three 292,950 294,700
Homer Borough Refunding 2014 Three 1,196,044 1,196,100
Kenai Peninsula Borough Refunding 2014 Three 178,769 180,650
City of Nome Refunding 2014 Three 266,275 271,350
Northwest Arctic Borough Refunding 2014 Three 448,013 445,300
2019 2020 2021 2022 2023 2024 2025 2026
2,492,025 2,492,700 2,488,075 2,485,000 2,405,625 1,681,000 - -
3,520,000 3,521,000 3,525,500 3,528,625 3,533,750 3,520,875 - -
53,375 56,250 54,000 56,375 - -
113,250 90,500 93,125 90,375 92,500 09,500 91,700 89,100
300,975 301,550 301,625 300,125 298,125 300,500 298,600 302,500
36,800 35,900 35,000 34,000 37,875 36,625 35,500 34,500
244,175 244,350 244,275 243,400 242,275 245,775 244,600 243,900
1,486,925 1,555,825 437,725 484,575 534,966 583,463 442,172 491,063
1,958,400 - - - - - - -
352,519 352,019 355,894 355,344 354,294 351,544 353,169 357,306
689,250 681,625 - - - - - -
1,447,950 1,439,025 1,442,275 1,433,950 1,433,125 1,433,250 1,435,000 -
148,825 147,950 146,825 146,100 150,000 133,250 - -
99,400 100,775 101,900 103,200 104,250 99,750 100,125 101,375
108,450 104,850 105,725 106,000 107,625 107,750 107,625 -
491,075 480,125 488,375 489,750 485,250 468,125 246,000 -
1,456,775 1,455,650 1,456,650 1,451,200 1,453,000 1,450,375 630,375 -
351,850 343,725 340,225 342,550 344,125 343,500 317,750 -
82,719 85,344 82,844 85,219 87,344 84,344 86,544 83,944
928,250 937,125 948,625 947,875 959,750 973,750 - -
1,400,375 1,363,625 1,364,875 1,363,125 1,363,250 - - -
105,000 101,500 102,875 104,000 104,875 105,500 101,450 102,750
97,020 94,520 97,520 95,320 93,120 95,920 92,920 94,920
1,665,563 1,661,863 1,661,513 1,666,713 1,665,313 1,667,513 1,668,263 1,667,663
199,610 204,610 200,210 200,810 201,210 201,410 200,160 203,660
608,150 608,400 607,600 611,000 608,400 - - -
1,690,340 1,687,590 1,691,790 1,689,390 1,690,590 1,690,190 1,687,690 1,687,690
180,180 181,680 183,680 180,480 182,200 183,880 184,380 184,630
307,900 310,150 308,550 311,750 309,550 312,150 307,400 307,400
1,757,360 1,757,360 1,757,360 1,757,360 1,757,360 1,757,360 1,757,360 1,757,360
288,650 289,300 293,300 291,900 290,300 293,500 294,500 295,000
1,068,450 1,072,250 1,069,850 1,071,650 1,072,450 1,077,250 1,079,250 1,079,500
1,355,808 1,360,188 1,361,588 1,361,788 1,363,038 1,367,288 1,364,288 1,369,288
69,250 68,200 71,800 70,200 68,600 72,000 69,750 67,500
905,450 903,650 902,125 902,000 905,000 902,000 - -
1,625,550 1,626,600 1,627,325 1,628,500 1,627,675 1,630,175 1,630,175 1,627.675
1,419,850 1,423,900 1,423,250 1,424,250 1,423,500 1,422,000 1,423,375 1,422,500
1,274,975 1,274,975 1,274,975 1,274,975 1,274,975 1,274,975 1,274,975 1,274,975
2,960,067 2,960,062 2,959,103 2,955,849 2,957,500 2,955,500 2,958,250 2,959,500
1,772,713 1,775,113 1,772,113 1,776,363 1,773,113 1,772,613 1,769,613 1,774,925
404,838 406,538 403,138 404,638 405,638 406,138 406,138 404.575
2,553,700 2,551,700 2,552,700 2,556,450 2,557,700 2,556,450 2,557,700 2,561,200
205,550 205,550 205,300 204,800 209,050 207,800 206,300 209,550
160.050 163,800 42,050 41,050 40,050 39,050 38,050 37,050
908,400 909,000 911,375 907,625 907,750 911,500 908,875 909,875
616,250 816,250 816,250 816,250 816,250 816,250 816,250 816,250
12,350 12,125 11,875 11,625 11.375 16,000 15,500 15,000
103,000 104,500 100,500 101,375 102,000 102,375 102,500 -
294,600 298,500 296,375 294,000 296,250 298,000 294,375 290,500
1,198,600 1,195,375 1,191,125 1,194,625 1,190,750 1,189,500 1,190,625 1,189,000
180,750 180,000 183,250 181,125 178,750 181,000 177,875 179,375
268,650 269,625 269,125 268,125 266,625 269,500 271,625
448,200 448,875 447,250 449,750 446,375 447,125 442,000 445,875
(continued)
See Independent Auditors report
-32-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule 2005 Master Resolution Program - Debt Service Requirements
June 30, 2016
Borrower 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Petersburg Borough Refunding 2014 Three 401,475 399,550 398,750 401,000 401,125 400,500 399,125 401,875 398,750 399,750
City of Seward 2005 Rnfunding 2014 Three 102,206 105,400 107,500 104,125 105,250 106,125 106,750 107,125 102,375 102,500
City of Seward 2006 Refisnding 2014 Three 118,100 323,900 320,400 320,475 318,975 316,975 319,350 320,975 321,850 637,100
City of Cordova 2OtS One New Money 136,325 134,225 136,725 134,125 136,075 132,575 133,950 135,075 135.950 136,575
City of Cordova 2015 One 2805 Refunding 189,275 193,300 191,200 193,800 - - - - -
City of Cordova 2015 One 2009 Refunding 567,300 564,850 566,950 593,350 1,354,000 1,348,500 1,345,875 1,345,875 1,343,375 1,343,250
City of Craig 2015 One New Money 136,488 134,388 136,888 134,288 136,238 132,738 134,113 135,238 136,113 136,738
Aleutians East Borough 2015 One 2006 Refunding 328,850 276,000 253,100 250,400 251,375 255,750 269,125 169,125 117,500 97,375
Ketchikan Oatrway Borough 2015 One 2005 Refunding 583,350 594,200 586,500 - - - - - -
Kelchikan2ol5 One 2005ARefunding 797,725 800,700 - - - - - - -
Name 2815 One 2006 Refunding 85,975 88,950 91,450 83,950 86,125 87,750 89,125 90,250 86,258 87,125
Name 2815 One 2009 Refunding 19,700 19,700 19,700 49,100 52,625 50,875 49,125 52,250 50,250 48,258
Northwest Arctic Borough 2015 One 2005 Refunding 1,636,200 1,637,600 1,635,100 1,630,400 1,640,000 - - - -
Sitka 2015 One 2085 Refunding 400,250 397,800 398,100 397,800 - - - - - -
Silka 2015 One 2008 Refunding 196,275 196,275 539,275 535,075 533,500 539,125 538,625 537,688 536,000 537.875
Unalaska 2015 One 2005 Refiarding 394,975 397,600 397,900 392,780 - - - - - -
Unalaska 2015 Our 2009 Refunding 815,900 815,900 815,900 1,852,438 1,853,125 1,849,844 1,848,994 1,846,138 1,841,825 1,840,575
Wrangell 2015 One 2006 Refunding 245,625 238,450 240,850 241,250 240,875 - - - - -
Cordova 2015 Two 209,150 211,450 212,650 212,650 212,400 211,900 211,150 213,750 212,500 211,000
Slcagway20l5Two 604,708 683,550 680,150 684,400 682,900 680,900 683,400 683,100 684,600 680,350
City and Borough of Juneau 2015 Two (0.0. Refunding) 698,050 705,350 705,750 708,750 - - - - -
City and Borough of Juneau 2015 Two (Harbor Refunding) 362,100 362,100 742,100 738,100 738,350 737,600 740,858 741,650 743,150 738,480
Kenai Peninsula Borough 2015 Two 407,200 402,058 1,097,050 1,097,300 1,090,800 1,092,800 1,092,800 1,091.000 1,093,250 1,088,250
Juneau 2015 Two (Cruise Deck) 1,689,400 1,687,500 1,692,500 1,688,250 1,692,250 1,689,000 1,688,750 1,686,250 1,686,500 1,689,250
Skagway 2015 Two (Port) 362,738 363,088 361,688 363,438 359,688 360,688 361,188 361,188 360,688 359,688
University of Alaska 2015 Three 4,857,863 4,057,863 5,586,663 5,589,588 5,585,838 5,587,838 5,590,213 5,587,838 5,590,463 5,587,838
Haters Borough 2015 Three 90,050 94,300 93,100 91,300 89,388 92,175 89,925 92,550 90,050 92,425
Kodiak Island Borough 2015 Three High School 491,363 492,413 491,313 491,839 490,838 494,213 491,963 494,888 490,588 491,463
Kodiak Island Borough 2015 Three Renewal & Replace 222,150 224,200 224,600 222,500 224,250 225,500 226,250 226,500 226,250 225,500
King Cove 2015 Three 48,588 48,588 48,588 48,588 72,963 76,588 75,088 73,588 76,963 75,213
Kenai Peninsula Borough CR5 7-Year Loan -2016 One 58,557 86,125 87,758 89,125 90,250 86,250 87,125 - - -
Kenai Peninsula Borough CES l5-Year Loan -2016 One 131,831 178,313 178,188 177,813 177,188 176,313 175,188 178,688 176,813 179,563
City of KlawockNew Money Loan -2016 One 61,057 89,950 87,950 85,950 88,825 86,575 84,325 86,950 89,325 91,450
Kodiak Island Borough R&R Loan -2016 One 485,411 674,250 676,625 677,750 677,625 676,250 678,500 674,375 678,750 676,500
Kodiak Island Borough High School Loan -2016 One 100,969 133,794 130,544 132,169 133,544 134,669 130,669 131,544 132,169 132,544
City of Onward 2008 One Refunding -2016 One 877,797 649,006 649,006 1,458,256 1,455,756 1,451,256 1,444,756 1,446,086 1,439,881 1,441,256
City of Seward 2008 Two Refunding- 2016 One 294,179 196,575 200,700 341,075 337,708 338,950 539,700 339,958 334,825 339,200
Fairbanks North Star Borough -2Ol6Two 4,112,750 4,110,525 4,109,400 4,113,275 4,111,900 4,110,150 4,112,650 4,189,150 4,109,400 4,112,900
City ofKetchikan200S One Refunding -20l6Two 2,393,625 - - - - - - - -
Total Loan Obligation Debt Service $ 104,117,215 $ 101,370,731 $ 108,900,555 S 96,824,435 $ 93,131,445 8 88,283,738 $ 87,935,497 5 83,267,127 $ 74,145,910 $ 69,540,320
See Independent Auditor's report
-33-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2010 Master Resolution Program - Community
Concentration
Borrower
Ketchikan Gateway Borough
Total Outstanding Par
June 30, 2016
Outstanding
Par
$ 4,155,000
$ 4,155,000
Percent of
Outstanding
100.00%
100.00%
See Independent Auditor's report
-34-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule 2010 Master Resolution Program - Debt Service Requirements
June 30, 2016
Borrower 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Ketchikan Gateway Borough $400,544 $399,644 $403,444 $400,474 $395,791 $390,819 $385,558 $380,007 $ 374,168 $372,895
Total Loan Obligation DS $400,544 $399,644 $ 403,444 $400,474 $ 395,791 $ 390,819 $ 385,558 $ 380,007 $ 374,168 $ 372,895
See Independent Auditor's report
-35-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule of 2016 Master Resolution Program - Community
Concentration
June 30, 2016
Outstanding Percent of
Borrower Par
Outstanding
Tanana Chiefs Conference $ 44,135,000
100.00%
Total Outstanding Par $ 44,135,000 100.00%
See Independent Auditor's report
-36-
ALASKA MUNICIPAL BOND BANK AUTHORITY
(A Component Unit of the State of Alaska)
Supplemental Schedule 2016 Master Resolution Program - Debt Service Requirements
June 30, 2016
Borrower 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Tanana Chiefs Conference 1,789,919 9,068,000 6,762,500 6,771,125 6,766,625 6,771,625 3,351,750 6,784,750 3,351,750
Total Loan Obligation DS $1,789,919 $9,068,000 $6,762,500 $6,771,125 $6,766,625 $6,771,625 $3,351,750 $6,784,750 $3,351,750 $ -
See Independent Auditors report
-37-
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APPENDIX F
2005 GENERAL BOND RESOLUTION AND
2013 FIRST SUPPLEMENTAL RESOLUTION
[This page intentionally left blank.]
Section 101 -Authority for This Resolution..................................................................................................
Section 102- Resolution Constitutes Contract............................................................................................
Section103- Definitions ..............................................................................................................................
ARTICLE II
AUTHORIZATION AND ISSUANCE OF BONDS
Section 201 - Authorization of Bonds and Interest Rate Exchange Agreements ........................... ........... 12
Section 202- Issuance and Delivery of Bonds ..........................................................................................12
Section 203 - Provisions for Issuance of Bonds ........................................................................................12
Section 204- Provisions for Refunding Bonds ..........................................................................................15
ARTICLE Ill
GENERAL TERMS AND PROVISIONS OF BONDS
Section 301 - Description of Bonds; Payment ...........................................................................................16
Section302- Legends ...............................................................................................................................17
Section 303 - Execution and Authentication ..............................................................................................17
Section 304- Interchangeability of Bonds .................................................................................................18
Section 305 - Negotiability, Transfer and Registry ....................................................................................18
Section 306 - Regulations with Respect to Exchanges and Transfers......................................................18
Section 307- Bonds Mutilated, Destroyed, Stolen or Lost ........... ............................................................. 19
Section 308 - Preparation of Definitive Bonds; Temporary Bonds ............................................................20
Section 309 - Cancellation and Destruction of Bonds ...............................................................................20
GENERAL OBLIGATION BOND RESOLUTION
ITI
ALASKA MUNICIPAL BOND BANK
TABLE OF CONTENTS
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
ARTICLE IV
REDEMPTION OF BONDS
Section 401 - Redemption Provisions ................................................................................................. ....... 20
Section 402 - Notice of Redemption ..........................................................................................................21
Section 403 - Partially Redeemed Fully Registered Bonds .......................... ............................................. 22
Adopted July 13, 2005
ARTICLE V
CUSTODY AND APPLICATION OF CERTAIN PROCEEDS OF BONDS
Section 501 - Application of Certain Proceeds ..........................................................................................23
Section502— Loans ....... ................. ....................... .............................................................................. 23
Section 503 - Retention and Inspection of Documents..............................................................................24
ARTICLE VI
ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF
Section 601 - Pledge ............................................................................................. ..................................... 24
Section 602 - Establishment of Funds and Accounts ................................................................................25
Section603- Reserve Fund ......................................................................................................................25
Section 604- Interest Account, Principal Account and Redemption Account...........................................27
ALAKSA MUNICPAL BOND BANK
Table of Contents (Amended)
Page 1
Section 605 - Rebate Fund .29
Section 606 - Operating Fund....................................................................................................................30
Section 607- Reduction of Required Debt Service Reserve.....................................................................30
Section 608 - Trustee's Maintenance of Records on Payment of Bonds ..................................................30
Section 609 - Obtaining Credit Enhancements and Interest Rate Exchange Agreements ......................30
Section 610- Creation of Additional Funds, Accounts and Subaccounts; Separate Credit
Enhancement Funds; Pledge with Respect to Credit Enhancements and
Interest Rate Exchange Agreements ........................................................................32
ARTICLE VII
SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS
Section 701 - Security for Deposits............................................................................................................ 33
Section 702 - Investment of Funds and Accounts Held by the Trustee.....................................................33
Section 703 - Liability of Trustee for investments ................ .............................. .............. .......................... 34
ARTICLE VIII
THE TRUSTEE AND THE PAYING AGENTS
Section 801 - Appointment and Acceptance of Duties of Trustee .............................................................34
Section 802 - Appointment and Acceptance of Duties of Paying Agents ..................................................34
Section 803 - Responsibilities of Fiduciaries .............................................................................................34
Section 804- Evidence on Which Fiduciaries May Act .............................................................................36
Section805- Compensation......................................................................................................................37
Section 806 - Permitted Acts and Functions ..................................... ......................................................... 37
Section 807 - Resignation of Trustee ........................ ....... .......................................................................... 37
Section 808 - Removal of Trustee .............................................................................................................37
Section 809 - Appointment of Successor Trustee ..................................................... ................................. 38
Section 810 - Transfer of Rights and Property to Successor Trustee .......................................................38
Section 811 -Merger or Consolidation ......................................................................................................39
Section 812 - Resignation or Removal of the Paying Agents and Appointment of Successors................39
Section 813- Evidence of Signatures of Bondholders and Ownership of Bonds......................................39
ARTICLE IX
COVENANTS OF THE BANK
Section 901 - Payment of Bonds ...............................................................................................................40
Section 902 - Extension of Payment of Bonds ...... ..................................................................................... 41
Section 903 - Offices for Servicing Bonds .................................................................................................41
Section 904 - Further Assurances .............................................................................................................41
Section 905- Power to Issue Bonds and Make Pledges ................................................................. ...........41
Section 906 - General Covenants of the Bank ..................................................................... ...................... 42
Section 907 - Accounts and Reports .........................................................................................................43
Section 908 - Personnel and Servicing of Programs .............. ......................... .......................................... 43
Section 909 - Waiver of Laws ....................................................................................................................44
Section910- Fees and Charges ...............................................................................................................44
Section 911 - Administration of Reserve Fund ..........................................................................................44
Section 912- Issuance of Additional Obligations ......................................................................................45
Section 913- Loan Agreement Provisions.................................................................................................46
Section 914 - Modification of Loan Agreement Terms...............................................................................47
Section 915-Sale of Municipal Bonds by Bank ...................................................................................... ..48
Section 916- Disposition of the Proceeds of Sale or Redemption of Municipal Bonds ............................48
Section 917- Enforcement of Municipal Bonds.........................................................................................48
Section 918- Continuing Disclosure; Bankruptcy ..................... .... ................... .......................................... 49
Section919-Tax Covenants.....................................................................................................................49
ARTICLE X
SERIES RESOLUTION AND SUPPLEMENTAL RESOLUTIONS
Section 1001- Modification and Amendment without Consent .................................................................49
Section 1002 - Supplemental Resolutions Effective with Consent of Bondholders...................................50
Section 1003- General Provisions Relating to Series Resolutions and Supplemental Resolutions 50
ARTICLE XI
AMENDMENTS
Section 1101 - Powers of Amendment ......................................................................................................51
Section 1102 - Consent of Bondholders ....................................................................................................51
Section 1103 - Modifications by Unanimous Consent ...............................................................................53
Section 1104- Mailing and Publication......................................................................................................53
Section 1105- Exclusion of Bonds ............................................................................................................53
Section1106- Notation on Bonds .............................................................................................................53
ARTICLE XII
DEFAULTS AND REMEDIES
Section 1201 -Trustee to Exercise Powers of Statutory Trustee.. ............................................................ 54
Section 1202- Events of Default ...............................................................................................................54
Section1203- Remedies...........................................................................................................................55
.... .............. .....56 Section 1204- Priority of Payments After Default ...............................................................
Section 1205- Termination of Proceedings ........................................ ....................................
.... ............... 58
Section 1206- Bondholders' Direction of Proceedings..............................................................................58
Section 1207- Limitation on Rights of Bondholders..................................................................................58
Section 1208- Possession of Bonds by Trustee Not Required.................................................................59
Section 1209- Remedies Not Exclusive ..................... ....................................................... ........................ 59
Section 1210- No Waiver of Default .................................................................................. ........................ 59
Section 1211 - Notice of Event of Default .......... ....................... ......................................................... ........59
ARTICLE XIII
DEFEASANCE
Section 1301 - Defeasance....... ...................... ................. .......................................................................... 60
ARTICLE XIV
MISCELLANEOUS
Section 1401 - Preservation and Inspection of Documents.......................................................................62
Section 1402- Parties of Interest .................. ...................................................................................... .......62
Section 1403- No Recourse Under Resolution or on Bonds ....................................................................62
Section1404- Severability ........................................................................................................................62
Section 1405- Headings .......................................... ..................................................................................
62
Section1406- Conflict...............................................................................................................................62
Section 1407- Governing Law. ..................................................................................................................
63
Section 1408- Effective Date ... .................. ...................................... .. ...................................................
63
ALAKSA MUN!CPAL BOND BANK
Table of Contents (Amended)
Page 2
ALAKSA MUN!CPAL BOND BANK
Table of Contents (Amended)
Page
GENERAL OBLIGATION BOND RESOLUTION
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.
BE IT RESOLVED by the Board of Directors of the Alaska Municipal Bond Bank as follows:
ARTICLE I
STATUTORY AUTHORITY AND DEFINITIONS
Section 101 - Authority for This Resolution. This Resolution is adopted pursuant to the provisions
of the Act.
Section 102- Resolution Constitutes Contract. In consideration of the purchase and acceptance
of the Bonds by those who shall hold the same from time to time, the provisions of this Resolution shall
be a part of the contract of the Bank with the Holders of Bonds and shall be deemed to be and shall
constitute a contract between the Bank, the Trustee and the Holders from time to time of the Bonds. The
pledge hereof and the provisions, covenants and agreements herein set forth to be performed by or on
behalf of the Bank shall be for the benefit, protection and security of the Holders of any and all of such
Bonds. Each Bond, Credit Enhancement facility, and Interest Rate Exchange Agreement, regardless of
the time or times of its issue or maturity, shall be of equal rank without preference, priority or distinction
over any other Bond, Credit Enhancement facility, or Interest Rate Exchange Agreement except as
expressly provided in this Resolution.
Section 103- Definitions. The following terms shall, for all purposes of this Resolution, have the
following meanings unless the context shall clearly indicate some other meaning:
"Accountant's Certificate" shall mean a certificate signed by an independent certified public
accountant or a firm of independent certified public accountants selected by the Bank.
"Accreted Amount" shall mean, with respect to Capital Appreciation of Bonds of any Series and
as of the date of calculation, the amount established pursuant to the Series Resolution authorizing such
Capital Appreciation Bonds as the amount representing the initial public offering price, plus the
accumulated and compounded principal and interest on such Bonds.
"Act" shall mean the Alaska Municipal Bond Bank Authority Act, constituting Chapter 85, Title 44,
of the Alaska Statutes, as amended to the date of adoption of this Resolution.
"Administrative Expenses" shall mean the Bank's expenses of carrying out and administering its
powers, duties and functions, as authorized by the Act, and shall include, without limiting the generality of
the foregoing: administrative and operating expenses, legal, accounting and consultant's services and
expenses, payments to pension, retirement, health and hospitalization funds, and any other expenses
required or permitted to be paid by the Bank under the provisions of the Act or this Resolution or
otherwise.
"Aggregate Debt Service" for any period shall mean, as of any date of calculation and with
respect to all Bonds, the sum of the amounts of Debt Service for such period.
"Annual Debt Service" shall mean the total amount of Debt Service for any Outstanding Bonds in
any Fiscal Year.
"Authorized Denominations" with respect to any Series of Bonds issued hereunder, has the
meaning specified in the related Series Resolution.
"Authorized Officer" shall mean the Chairman, Vice Chairman, Executive Secretary, or Executive
Director of the Bank and any other director, officer or employee of the Bank authorized by resolution of
the Bank to perform such act or discharge such debt
"Bank" shall mean the Alaska Municipal Bond Bank, a public body corporate and politic
constituted as a public corporation and instrumentality of the State of Alaska within the Department of
Revenue but having a legal existence independent of and separate from the State exercising public and
essential governmental functions and created by the Act, or any body, agency or instrumentality of the
State which shall hereafter succeed to the powers, duties and functions of the Bank.
"Beneficial Owner" shall mean the person in whose name a Bond is recorded as the beneficial
owner of such Bond by the respective systems of DTC and the DTC Participants or the Holder of the
Bond if the Bond is not then held in book-entry form.
"Bond" or "fl" shall mean any Alaska Municipal Bond Bank Bond or Bonds, or Alaska
Municipal Bond Bank Authority Bond or Bonds, as the case may be, authenticated and delivered under
this Resolution pursuant to a Series Resolution.
"Bondholder" or "Holder" or words of similar import, when used with reference to a Bond or
Bonds, shall mean any person who shall be the registered owner of any Outstanding Bond or Bonds
issued in fully registered form or the bearer of any Bond or Bonds issued in bearer form or registered to
bearer. When all Bonds of a Series are held by a securities depository, "Bondholder" or "Holder" shall
mean the beneficial owner of the Series in question determined under the rules of that securities
depository; otherwise Bondholder" or "Holder" means owner of record on the bond register maintained
by the Paying Agent. To the extent that the full payment of the interest on and principal of Bonds of a
Series is secured by Credit Enhancement, the Credit Enhancement Agency shall be considered to be the
ALAKSA MUNJOPAL BOND BANK
General QbIigtIon Bond Reoofttinn (Amended)
Page 2
Bondholder or 'Holder of all the Bonds of that Series for purposes of exercising any rights with respect
"Current Interest Bonds" shall mean Bonds not constituting Capital Appreciation Bonds, Interest
to supplements and amendments to this Resolution if the Credit Enhancement Agreement so provides. on Current Interest Bonds shall be payable periodically on the Interest Payment Dates provided therefor
in a Series Resolution.
'Bond Year shall mean each one-year period that ends on an anniversary of the date of issue of
the Bonds.
"Book-Entry System" shall mean the system in which the Bonds (represented by one Bond
certificate for each maturity of the Bonds) are delivered into the possession of DTC and are issued and
fully-registered as to principal and interest in the name of Cede & Co., and whereby beneficial interests in
the Bonds are purchased by investors through DTC Participants, such interests shown and transfers
thereof effected only through the records maintained by the respective DTC Participants from whom each
such investor acquired such beneficial interest
"Business Day" shall mean any day other than a Saturday or Sunday or any other day on which
banks in New York, Alaska, or the state or states in which any Trustee appointed hereunder performs its
duties hereunder are authorized or required to be closed or are closed.
"Capital Appreciation Bonds" shall mean Bonds, the interest on which (a) is compounded and
accumulated at the rates and on the dates set forth in the Series Resolution authorizing the issuance of
such Bonds and designating them as Capital Appreciation Bonds, and (b) is payable upon maturity or
redemption of such Bonds.
T1 "Continuing Disclosure Certificate" shall mean, for each Series, the continuing disclosure
certificate executed by the Bank for the purpose of satisfying the continuing disclosure requirements of
Rule 15c2-12 of the Securities and Exchange Commission with respect to such Series, as such
continuing disclosure certificate is originally executed and as it may be amended from time to time in
accordance with its terms.
Counsel's Opinion' shall mean an opinion signed by an attorney or firm of attorneys of nationally
recognized standing in the field of law relating to state and municipal financing (who may be counsel to
the Bank) selected by the Bank and acceptable to the Trustee.
"Credit Enhancement" shall mean 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" shall mean any bank or other institution that provides Credit
Enhancement
"Debt Service" shall mean for any Series of Bonds Outstanding, an amount equal to the sum of
(a) all interest payable during such period of calculation, plus (b) the Principal Installments, if any, payable
during such period of calculation on such Series of Bonds.
"Executive Director" shall mean the Executive Director or Acting Executive Director of the Bank.
"Fees and Charges ' shall mean all fees and charges authorized to be charged by the 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 Loan Agreements.
"Fiduciary" or "Fiduciaries" shall mean the Trustee, and Paying Agent, or any or all of them, as
may be appropriate.
"Fiscal Year" shall mean any twelve (12) consecutive calendar months commencing with the first
day of July and ending on the last day of the following June or such other date as is authorized by statute
and/or selected by the Bank.
"Fitch" shall mean Fitch Ratings, organized and existing under the laws of the State of Delaware,
its successors and their assigns, and, if such organization shall be dissolved or liquidated or shall no
longer perform the functions of a securities rating agency, "Fitch" shall be deemed to refer to any other
nationally recognized securities rating agency (other than Standard & Poor's or MoodVs) designated by
the Authorized Officer.
"Government Obligations" shall mean direct obligations of, or obligations of the payment of and
interest on which are unconditionally guaranteed by, the United States of America.
"Governmental Unit" shall mean a municipality or such other entity of which the 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 herein and in the Loan Agreement
"Governmental Unit's Allocable Proportion" shall mean the proportionate amount of the total
requirement in respect of which the term is used determined by the ratio that the Loan then outstanding to
such Governmental Unit bears to the total of all Loans then outstanding to all Governmental Units.
"Interest Account" shall mean the account by that name established by Section 602.
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 3
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 4
"Interest Payment Date"shall mean any date upon which interest on any Bonds is payable in
accordance with the terms thereof.
'Interest Rate Exchange Agreement" shall mean an agreement entered into by the Bank or the
Trustee, on behalf of the Bank, providing for an interest rate cap, floor or swap with respect to any Bonds
or Municipal Bonds.
"Investment Securities" shall mean the following to the extent permitted by the Act and the laws of
the State of Alaska:
(1) Governmental Obligations;
(2) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following federal agencies and provided such obligations are backed by
the full faith and credit of the United States of America (stripped securities are only permitted if
they have been stripped by the agency itself);
(a) Farmers Home Administration ("FmHA") Certificates of Ownership;
(b) Federal Housing Administration ("FHA") Debentures;
(c) General Services Administration Participation certificates;
(d) Government National Mortgage Association ("GNMA" or "Ginnie Mae")
GNMA-guaranteed mortgage-backed bonds or GNMA-guaranteed pass-through
obligations (participation certificates);
(e) United States Maritime Administration Guaranteed Title XI financing;
(f) United States Department of Housing and Urban Development ('HUD')
Project Notes Local Authority Bonds;
(3) Bonds, debentures, notes or other evidence of indebtedness issued or
guaranteed by any of the following government agencies (stripped securities are only permitted if
they have been stripped by the agency itself);
(a) Federal Home Loan Bank System. Senior debt obligations
(Consolidated debt obligations);
71
Page 6 Page 5
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Rese!otior, (Amended)
ALAKSA MUNICIPAL BOND BANK
General Obligation Bend Resolution (Amended)
(b) Federal Home Loan Mortgage Corporation. ("FHLMC" or "Freddie Mac")
rated AAA by Standard & Poor's and Aaa by Moody's Participation Certificates
(Mortgage-backed securities) Senior debt obligations;
(c) Federal National Mortgage Association. ("FNMA" or "Fannie Mae") rated
AAA by Standard & Poor's and Aaa by Moody's Mortgage-backed securities and senior
debt obligations (excluded are stripped mortgage securities which are valued greater
than par on the portion of unpaid principal);
(d) Student Loan Market Association. ('SLMA" or "Sallie Mae") Senior debt
obligations;
(e) Resolution Funding Corp. ("REFCORP") Only the interest component of
REFCORP strips which have been stripped by request of the Federal Reserve Bank of
New York in book-entry form are acceptable; and
(f) Farm Credit System. Consolidated systemwide bonds.
(4) Money market funds registered under the Federal Investment Company Act of
1940, whose shares are registered under the Federal Securities Act of 1933, and having a rating
by S&P of "AAAm-G," "AAAm" or "Alm" or by Moody's of "Aaa" including funds from which the
Trustee or its affiliates receive fees for investment advisory or other services to such fund;
(5) Certificates of Deposit ("CD") secured at all times by collateral described in (a)
and/or (b) above. CD's must have a one-year or less maturity. Such certificates must be issued
by commercial banks, savings and loan associations or mutual savings banks whose short-term
obligations are rated "A-I-" or better by S&P, and "Prime-I" or better by Moody's. The collateral
must be held by a third party and the third party must have a perfected first security interest in the
collateral;
(6) Certificates of deposit, savings accounts, deposit accounts or money market
deposits which are fully insured by the Federal Deposit Insurance Corporation ("FDIC"), including
Bank Insurance Fund ("BIF") and Savings Association Insurance Fund ("SAIF");
(7) Commercial paper rated "Prime-I" by Moody's and "A-l+" or better by S&P and
which matures not more than 270 days after the date of purchase;
(8) Bonds or notes issued by any state or municipality which are rated by Moody's
and S&P in the highest long-term rating category assigned by such agencies;
(9) Federal funds or bankers acceptances with a maximum term of one year of any
bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-I" by
Moody's and "A-l+" by S&P;
(10) Repurchase agreements providing for the transfer of securities from a dealer
bank or securities firm (seller/borrower) to a municipal entity (buyer/lender), and the transfer of
cash from a municipal entity to the dealer bank or securities firm with an agreement that the
dealer bank or securities firm will repay the cash plus a yield to the municipal entity in exchange
for the securities at a specified date; provided, however, that the repurchase agreement must
satisfy certain criteria articulated in writing to the Bank by the Rating Agencies and such
agreement must be approved in writing prior to its acquisition by each bond insurer then insuring
any Series of Bonds; and
(11) Investment contracts with providers the long term, unsecured debt obligations of
which are rated at least "Aaa" by the Rating Agencies.
"Loan" shall mean a loan heretofore or hereafter made by the Bank to a Governmental Unit
pursuant to the Act and more particularly described in the applicable Series Resolution.
"Loan Agreement' shall mean an agreement, and any amendments thereto, heretofore or
hereafter entered into between the Bank and a Governmental Unit setting forth the terms and conditions
ITI of a Loan.
"Loan Obligation" shall mean that amount of Bonds and the Bonds themselves issued by the
Bank for the purchase of Municipal Bonds of a Governmental Unit.
"Maximum Annual Debt Service" shall mean, with respect to any Outstanding Series of Bonds,
the highest remaining Annual Debt Service for such Series of Bonds.
"Moody's" shall mean Moody's Investors Service, Inc., a corporation duly organized and existing
under and by virtue of the laws of the State of Delaware, and its successors and assigns, except that if
such corporation shall be dissolved or liquidated or shall no longer perform the functions of a securities
rating agency, then the term "Moody's" shall be deemed to refer to any other nationally recognized
securities rating agency (other than Fitch or Standard & Poor's) designated by the Authorized Officer.
"Municipal Bonds" shall mean 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 Bank as evidence of a Loan to the Governmental Unit pursuant
to the Act.
"Municipal Bonds Interest Payment" shall mean that portion of a Municipal Bonds Payment made
or required to be made by a Governmental Unit to the Bank which represents the interest due or to
become due on the Governmental Unit's Municipal Bonds.
"Municipal Bonds Payment" shall mean the amounts paid or required to be paid, from time to
time, for principal and interest by a Governmental Unit to the Bank on the Governmental Unit's Municipal
Bonds.
"Municipal Bonds Principal Payment" shall mean that portion of a Municipal Bonds Payment
made or required to be made by a Governmental Unit to the Bank which represents the principal due or to
become due on the Governmental Unit's Municipal Bonds.
"Notes" shall mean any obligations referred to herein issued by the Bank other than Bonds.
"Operating Fund" shall mean the fund by that name established by Section 602.
"Outstanding" when used with reference to Bonds, other than Bonds referred to in Section 1105
hereof, shall mean, as of any date, all Bonds theretofore or thereupon being authenticated and delivered
under this Resolution except:
(1) Any Bonds canceled by the Bank or the Trustee at or prior to such date;
(2) Bonds for the transfer or exchange of or in lieu of or in substitution for which other Bonds
shall have been authenticated and delivered pursuant to this Resolution; and
(3) Bonds deemed to have been paid as provided in subsection (B) of Section 1301.
"Paying Agent" for the Bonds of any Series shall mean the bank or trust company and its
successor or successors, which may include the Trustee, designated by the Bank as Paying Agent
pursuant to the provisions of this Resolution and a Series Resolution or any other resolution of the Bank
adopted prior to authentication and delivery of Bonds for which such Paying Agent or Paying Agents shall
be so appointed.
"Principal Account" shall mean the account by that name established by Section 602.
"Principal Installment" shall mean, as of any date of calculation and with respect to the
Outstanding Bonds of any Series, (i) the principal amount of such Bonds which are due on a certain
future date, reduced by the aggregate principal amount of such Bonds which would be retired by reason
of the payment when due and application in accordance with this Resolution of Sinking Fund Payments
payable before such future date for the retirement of such Bonds or (ii) the unsatisfied balance of any
Sinking Fund Payment due on a certain future date for such Bonds, plus the aggregate amount of the
ALAKSA MUNICPAL BOND BANK ALAKSA MIJNICPAL BOND BANK
General Obligation Bend Resolution (Amended) General Obligation Bond Resolution (Amended)
Page 7 Page 8
premiums, if any, which would be applicable on such future date upon the redemption of such Bonds by
application of such Sinking Fund Payments in a principal amount equal to said unsatisfied balance or (iii)
if such future dates coincide as to different Bonds of such Series, the sum of such principal amount of
Bonds, unsatisfied balance and applicable premiums, if any or (iv) for any particular Series of Bonds the
amount specified in the Supplemental Resolution authorizing such Series of Bonds.
"Put Bond" shall mean any Bond that is part of a Series of Bonds subject to mandatory purchase
by the Bank, its agent or a third party from the Owner of the Bond pursuant to provisions of the Series
Resolution authorizing the issuance of the Bond.
"Rating Agencies shall mean Moody's, Standard & Poo?s and Fitch or their respective
successors and assigns and/or such other securities rating agency selected by the Bank to provide a
rating with respect to a Series of Bonds, or any portion thereof, which Rating Agency, as of the applicable
date, shall have assigned a rating to any Series of Bonds or any portion thereof.
"Rebate Calculation Date" shall mean, with respect to each Series of Bonds, the interest payment
date next preceding the fifth anniversary of the issue date of such Series of Bonds, each fifth anniversary
of the initial Rebate Calculation Date for such Series of Bonds, and the date of retirement of the last bond
for such Series.
"Rebate Fund" shall mean the fund by that name established by Section 602.
1-11 "Rebate Requirement' shall mean the amount of arbitrage profits earned from the investment of
gross proceeds of the Bonds in nonpurpose investments described in Section 148(f)(2) of the Code and
defined as "Rebate Amount" in Section 1.148-3 of the Treasury Regulations, which are payable to the
United States at the times and in the amounts specified in Section 148(D)(3) of the Code and Section
1.148-3 of the Treasury Regulations.
"Record Date" shall have the meaning set forth in the Series Resolution authorizing the particular
Series of Bonds.
"Redemption Account" shall mean the account by that name established by Section 602.
and all Bonds thereafter authenticated and delivered upon the transfer or exchange of or in lieu of or in
substitution for such Bond pursuant to this Resolution.
"Regular Record Date" shall mean, unless otherwise provided in a Series Resolution, with
respect to the Bonds, the fifteenth (15th) day immediately preceding each Interest Payment Date (or the
Business Day immediately preceding such fifteenth (15th) day, if such fifteenth (15th) day is not a
Business Day).
"Required Debt Service Reserve" shall mean as of any date of calculation, the amount required to
be on deposit in the Reserve Fund which amount shall be at least equal to the Reserve Fund
Requirement
"Reserve Fund" shall mean the 2005 General Obligation Bond Resolution Reserve Account
established by Section 602 within the Alaska Municipal Bond Bank Reserve Fund created by Section
44.85.270 of the Act.
"Reserve Fund Obligations" shall mean the amount of Bonds issued by the Bank to obtain funds
deposited in the Reserve Fund.
"Reserve Fund Requirement" shall mean the least of (I) Maximum Annual Debt Service with
respect to all Bonds Outstanding; (H) 125% of Average Annual Debt Service with respect to all Bonds
Outstanding; (iii) 10% of the initial principal amount of each Series of 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 as provided for herein; 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 shall not, by itself, cause a withdrawal or
a downward revision of the ratings maintained by any Rating Agency with respect to the Bonds.
"Resolution" shall mean this General Obligation Bond Resolution as from time to time amended
or supplemented by Supplemental Resolutions or Series Resolutions in accordance with the terms and
provisions hereof.
"Redemption Price" shall mean, with respect to any Bond, the principal amount thereof, plus the
applicable premium, of any, payable upon redemption thereof pursuant to the provisions of such Bond,
this Resolution and the Series Resolution pursuant to which the same was issued.
"Refunding Bonds" shall mean all Bonds, whether issued in one or more series, authenticated
and delivered on original issuance for the purpose of refunding Bonds or other obligations of the Bank
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General Obligation Bond Resolution (Amended)
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"Security Instrument" shall mean an instrument or other device issued by a Security Instrument
Issuer to pay, or to provide security or liquidity for, a Series of Bonds. The term "Security Instrument"
includes, by way of example and not of limitation, letters of credit, bond insurance policies, standby bond
purchase agreements, lines of credit and other security instruments and credit enhancement or liquidity
devices; provided, however, that no such device or instrument shall be a "Security Instrument" for
purposes of this Resolution unless specifically so designated in a Series Resolution authorizing the use of
such device or instrument.
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General Obligation Bond Resolution (Amended)
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'Security Instrument Agreement' shall mean any agreement entered into by the Bank and a
Security Instrument Issuer pursuant to a Series Resolution and/or the applicable portions of a Series
Resolution providing for the issuance by such Security Instrument Issuer of a Security Instrument.
"Security Instrument Costs" shall mean, with respect to any Security Instrument, all fees,
premiums, expenses and similar costs, other than Security Instrument Repayment Obligations, required
to be paid to a Security Instrument Issuer pursuant to a Security Instrument Agreement or the Series
Resolution authorizing the use of such Security Instrument. Such Security Instrument Agreement or
Series Resolution shall specify any fees, premiums, expenses and costs constituting Security Instrument
Costs.
"Security Instrument Issuer" shall mean any bank or other financial institution, insurance
company, surety company or other institution issuing a Security Instrument
"Security Instrument Repayment Obligations" shall mean, as of any date of calculation and with
respect to any Security Instrument Agreement, any outstanding amounts payable by the Bank under the
Security Instrument Agreement or the Series Resolution authorizing the use of such Security Instrument
to repay the Security Instrument Issuer for payments previously or concurrently made by the Security
Instrument Issuer pursuant to a Security Instrument. There shall not be included in the calculation of the
amount of Security Instrument Repayment Obligations any Security Instrument Costs. Each Security
Instrument Agreement or the Series Resolution authorizing the use of such Security Instrument shall
71 specify any amounts payable under it which, when outstanding, shall constitute Security Instrument
Repayment Obligations and shall specify the portions of any such amounts that are allocable as principal
of and as interest on such Security Instrument Repayment Obligations.
"Series of Bonds" or "Bonds of a Series" or words of similar meaning shall mean the Series of
Bonds authorized by a Series Resolution.
"Series Resolution" shall mean a resolution of the Bank authorizing the issuance of a Series of
Bonds in accordance with the terms and provisions hereof and adopted in accordance with Article X.
"Sinking Fund Installment" shall mean, as of any particular date of calculation and with respect to
the Outstanding Bonds of any Series, the amount required to be paid at all events by the Bank on a single
future date for the retirement of Bonds of such Series which mature after said future date, but does not
include any amount payable by the Bank by reason only of the maturity of a Bond.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a Division of The McGraw-
Hill Companies, Inc., and its successors and assigns, except that if such corporation or division shall be
dissolved or liquidated or shall no longer perform the functions of a securities rating agency, then the term
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended) Pose 11
"Standard & Poor's" shall be deemed to refer to any other nationally recognized securities rating agency
(other than Moody's or Fitch) designated by the Authorized Officer.
"State" shall mean the State of Alaska.
"Supplemental Resolution" shall mean a resolution supplemental to or amendatory of this
Resolution, (other than a Series Resolution) adopted by the Bank in accordance with Article X.
"Trustee" shall mean the bank or trust company appointed pursuant to Section 801 to act as
trustee hereunder, and its successor or successors and any other bank or trust company at any time
substituted in its place pursuant to this Resolution.
"Variable Rate Bonds" shall mean, as of any date of calculation, Bonds the terms of which on
such date of calculation are such that interest thereon for any future period of time is expressed to be
calculated at a rate which is not susceptible to a precise determination.
Words of the masculine gender shall be deemed and construed to include correlative words of
the feminine and neuter genders. Unless the context shall otherwise indicate, words importing the
singular number shall include the plural number and vice versa, and words importing persons shall
include corporations and associations, including public bodies, as well as natural persons.
The terms ippf" "hereto," "herein," "hereunder," and any similar terms, as used in
this Resolution, refer to this Resolution.
ARTICLE It
AUTHORIZATION AND ISSUANCE OF BONDS
Section 201 - Authorization of Bonds and Interest Rate Exchange Agreements. (A) Bonds are
hereby authorized for issuance hereunder by the Bank. The Bonds may be issued in one or more Series
pursuant to one or more Series Resolutions which shall state the purpose or purposes for which each
Series of Bonds is being issued as hereinafter provided without limitation as to amount except as
provided in this Resolution or as may be limited by law. Interest Rate Exchange Agreements may only be
executed and delivered by the Bank in connection with the issuance and delivery of a Series of Bonds
hereunder or in connection with the renewal, substitution or extension of an Interest Rate Exchange
Agreement
(B) There is hereby created by this Resolution, in the manner and to the extent provided herein,
a continuing pledge and lien to secure the full and final payment of the principal or Redemption Price of,
interest on and Sinking Fund Installments for, all of the Bonds issued pursuant to this Resolution. The
Bonds shall be general obligations of the Bank payable as to principal or Redemption Price of, interest
ALAKSA MUNIOPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 12
on, and Sinking Fund Installments for the Bonds solely from the sources provided in this Resolution and
any Series Resolution. The State shall not be liable on the Bonds and the Bonds shall not be a debt or
liability, or constitute a pledge or loan of the faith and credit, of the State. The Bonds shall contain on the
face thereof a statement to the effect that the Bank is obligated to pay the principal or Redemption Price,
if any, of the Bonds and the interest thereon only from revenues or funds of the Bank and that the State is
not obligated to pay such principal or Redemption Price, if any, or interest and that neither the faith and
credit nor the taxing power of the State is pledged to the payment of the principal or Redemption Price, if
any, of, or the interest on, the Bonds.
Section 202 - Issuance and Delivery of Bonds. After their authorization by a Series Resolution,
Bonds of a Series may be executed by or on behalf of the Bank and delivered to the Trustee for
authentication and, upon compliance by the Bank with the requirements, if any, set forth in such Series
Resolution and with the requirements of Section 203 or, in the case of Refunding Bonds, Section 204, the
Trustee shall thereupon authenticate and deliver such Bonds to or upon the order of the Bank.
Section 203 - Provisions for Issuance of Bonds. (A) The issuance of the Bonds shall be
authorized by a Series Resolution or Series Resolutions of the Bank adopted subsequent hereto and the
Bonds may be issued in one or more Series. The Bonds of each Series, including Refunding Bonds,
shall, in addition to the title "Alaska Municipal Bond Bank General Obligation Bonds, contain such further
71
appropriate particular designations added to such title and the appropriate Series designation as the Bank
may determine in such Series Resolution. Each Bond shall bear upon its face the designations so
determined for the Series to which it belongs.
(B) Each Series Resolution authorizing the issuance of a Series of Bonds shall specify:
(1) The authorized principal amount of said Series of Bonds;
(2) The purposes for which such Series of Bonds is being issued, which shall be one or more of
the following: (i) making Loans to Governmental Units, (ii) making payments into the Reserve Fund, (iii)
the funding of Notes theretofore issued by the Bank for any purposes for which Bonds may have been
issued, (iv) the refunding of Bonds and related purposes, as provided in Section 204, and (v) any other
purpose authorized by law;
(3) The date and the maturity date or dates and amounts of each maturity of the Bonds of said
Series or the method of determining the same;
set forth in the Series Resolution, which may accrete or compound with such frequencies or in such
manner as shall be specified in such Series Resolution and which shall be as otherwise specified in the
Series Resolution), and the Interest Payment Dates and Record Dates therefor and (ii) a manner of
calculating accreted value or compounded principal value during all or any part of the term of the Series
of Bonds being authorized, if interest is not payable currently and the Bank determines that it is necessary
or appropriate;
(5) The denomination or denominations of, and the manner of numbering and lettering, the
Bonds of such Series, provided that each Bond shall be of the denomination of $5,000 or a multiple
thereof, not exceeding the aggregate principal amount of the Bonds of such Series maturing in the year of
maturity of the Bond for which the denomination is to be specified unless otherwise provided in the Series
Resolution authorizing the issuance of such Bonds;
(6) The Paying Agent or Paying Agents and the place or places of payment of the principal and
Redemption Price, if any, of and interest on the Bonds of such Series or the manner of appointing and
designating the same;
(7) The Redemption Price or Prices, if any, and, subject to the provisions of Article IV, the
redemption terms for the Bonds of such Series or the method of determining the same;
(8) The amount and due date of each Sinking Fund Installment, if any, for Bonds of like maturity
of such Series, or the method of determining such Sinking Fund Installment;
(9) The form or forms of the Bonds of such Series and of the Trustee's certificate of
authentication;
(10) The manner of execution of the Bonds of such Series;
(11) If, at the time of issuance of the Bonds of such Series, an Interest Rate Exchange
Agreement will apply to such Bonds or such Bonds are to be secured by Credit Enhancement, the form of
Credit Enhancement or Interest Rate Exchange Agreement to be obtained, the identity of the Credit
Enhancement Agency or of the counterparty to the Interest Rate Exchange Agreement, and the
substantial form of the significant documents relating to the Credit Enhancement or Interest Rate
Exchange Agreement;
(12) If Bonds of such Series are to contain any tender or put options or the like, whether such
Bonds are to be remarketed and, if so, the identity of any remarketing agent and the substantial form of
any remarketing agreement relating to such Bonds; and
(4) (i) The interest rate or rates (if any) or maximum interest rate of the Bonds of such Series, or
the method of determining such rate or rates (which may be determinable at one or more specified times
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General Obligation Bond Resolution (Amended)
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ALAKSA MUNICPAL BOND BANK
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(13) Any other provisions deemed advisable by the Bank, not in conflict with the provisions of this or more Series of Outstanding Bonds. Refunding Bonds shall be issued in a principal amount sufficient,
Resolution. together with other moneys available therefor, to accomplish such refunding and to make such deposits
as are required by the provisions of the Act, this Section and of the Series Resolution authorizing said
All Bonds of each Series of like maturity shall be identical in all respects, except as to
Series of Refunding Bonds.
denominations, interest rate, and numbers and letters.
(C) All (but not less than all) the Bonds of each Series shall be executed by the Bank for
issuance under the Resolution and delivered to the Trustee and thereupon shall be authenticated by the
Trustee and by it delivered to the Bank or to such other party as may be specified in a written order of the
Bank, but only upon the receipt by the Trustee of:
(1) A Counsels Opinion to the effect that (i) the Bank has the right and power to execute and
deliver this Resolution and the Series Resolution authorizing such Series under the Act as amended to
the date of such Opinion; (ii) this Resolution and such Series Resolution has been duly and lawfully
executed and delivered by the Bank, is in full force and effect and is valid and binding upon the Bank and
enforceable in accordance with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium, or other laws affecting creditors' rights generally from
time to time in effect); (it) this Resolution and such Series Resolution creates the valid pledge and
assignment which it purports to create of the Municipal Bonds, subject to the application thereof to the
purposes and on the conditions permitted by this Resolution; (iv) the Bonds of such Series are valid and
binding general obligations of the Bank, enforceable in accordance with their terms and the terms of this
71 Resolution and such Series Resolution; and (v) the Bonds of such Series have been duly and validly
CD authorized and issued in accordance with the constitution and statutes of the State, including the Act as
amended to the date of such Opinion, and in accordance with this Resolution;
(2) A written order as to the delivery of such Bonds, signed by an Authorized Officer;
(3) Either an original of the Series Resolution authorizing such Series or a copy thereof certified
by an Authorized Officer;
(4) Except in the case of Refunding Bonds, a certificate of an Authorized Officer stating that the
Bank is not in default in the performance of any of the covenants, conditions, agreements or provisions
contained in the Resolution;
(5) Such further documents, moneys and securities as are required by the provisions of this
Section 203, and Section 204, or Article X, or any Series Resolution or Supplemental Resolution adopted
pursuant to Article X.
Section 204 - Provisions for Refunding Bonds. (A) All or any part of one or more Series of
Refunding Bonds may be authenticated and delivered to refund all Outstanding Bonds or any part of one
(B) A Series of Refunding Bonds may be authenticated and delivered only upon receipt by the
Trustee (in addition to the receipt by it of the documents required by Section 203) of:
(1) Instructions to the Trustee to give due notice of redemption (which notice, in the case of an
optional redemption, shall state that the redemption is conditioned by the Trustee on the receipt of
sufficient funds for redemption) of all the Bonds to be refunded on the redemption date specified in such
instructions;
(2) Either (i) moneys (which may include all or a portion of the proceeds of the Refunding Bonds
to be issued) in an amount sufficient to effect payment at the applicable Redemption Price of the Bonds
or other obligations to be refunded, together with accrued interest on such Bonds or other obligations to
the redemption date, or (H) direct obligations of (including obligations issued or held in book-entry form on
the books of) the Department of the Treasury of the United States of America which are not subject to
redemption prior to the dates on which amounts will be needed to make payments on the Bonds or other
obligations to be refunded and the principal of and interest on which when due, together with the moneys
(which may include all or a portion of the proceeds of the Refunding Bonds to be issued), if any,
contemporaneously deposited with the Trustee, will be sufficient to pay when due the applicable
Redemption Price of the Bonds or other obligations to be refunded, together with accrued interest on
such Bonds or other obligations to the redemption date, which moneys or Investment Securities shall be
held by the Trustee or any one or more of the Paying Agents or an escrow agent or trustee for other
obligations in a separate account irrevocably in trust for and assigned to the respective Holders of the
Bonds or other obligations to be refunded; and
(3) A certificate of an Authorized Officer containing such additional statements as may be
reasonably necessary to show compliance with the requirements of subsection (A) and this subsection
(B) of this Section 204.
(C) From and after the delivery of the Refunding Bonds of a Series, the Trustee shall make
appropriate adjustment between the Interest Account and Principal Account when disbursing and
applying Municipal Bonds Payments deposited in the Debt Service Fund pursuant to the provisions of
Section 604 to the end that such portion of the Municipal Bonds Payment as shall represent Municipal
Bonds Interest Payment not required for deposit in the Interest Account for the purpose of paying interest
accruing upon the Bonds shall be deposited in the Principal Account Any surplus which might result upon
ALAKSA MUNICPAL BOND BANK ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resoiotioi, (Amended) General Obligation Bond Bond Renointion (Amended)
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and after such deposit shall be disposed of in the manner specified in the Series Resolution authorizing
such Series.
(D) Neither Investment Securities nor moneys deposited with the Trustee or an escrow agent or
trustee for other obligations pursuant to paragraph (13)(2) of this Section nor principal or interest payments
on any such Investment Securities shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the applicable Redemption Price of the Bonds or other obligations to be
refunded, together with accrued interest on such Bonds or other obligations to the redemption date, and
any cash received from such principal or interest payments, if not then needed for such purpose, shall, to
the extent practicable, be reinvested in such Investment Securities as are described in clause (ii) of said
paragraph maturing at times and in amounts sufficient to pay when due the applicable Redemption Price
of such Bonds or other obligations, together with such accrued interest.
ARTICLE Ill
GENERAL TERMS AND PROVISIONS OF BONDS
Section 301 - Description of Bonds; Payment (A) The Bonds of each Series issued under the
provisions hereof may be issued only as registered bonds and subject to Section 303 hereof, each Bond
shall be entitled "General Obligation Bonds" and shall bear such additional letter or number series
designation as shall be determined in the Series Resolution authorizing the Bonds of the Series of which
such Bond is one. Unless otherwise specified in the Series Resolution authorizing such Series of Bonds,
Bonds of each Series shall be in Authorized Denominations each or any integral multiple thereof, shall be
' numbered consecutively from I upwards and shall bear interest payable on Interest Payment Dates.
(B) The Bonds of each Series issued hereunder shall be dated as of and bear interest from the
date specified in the Series Resolution that authorized such Series, which date may be contemporaneous
with or prior to or after the date of issuance of such Bonds.
(C) Both the principal of and the interest on the Bonds shall be payable in any coin or currency
of the United States of America, as at the respective time of payment shall be legal tender for payment of
public and private debts. Payment of the interest on any Bond shall be made to the person appearing on
the Bond registration books of the Bank kept for such purpose by the Trustee, the registrar hereinafter
provided for as the Holder thereof, by check or draft mailed to the Holder at her or his address as it
appears on such registration books or to owners of $1,000,000 or more in aggregate principal amount of
Bonds by wire transfer to a bank account designated by the Holder in written instructions furnished to the
Trustee. The interest on Bonds so payable, and punctually paid or duly provided for, on any Interest
Payment Date will be paid to the person who is the Holder thereof at the close of business on the
applicable Record Date for such interest The principal of and premium, if any, on Bonds are payable
upon presentation and surrender thereof at the principal corporate trust office of the Trustee, as paying
AL4KSA MUNICPAL BOND BANK
Ge,rn,I Obligation Bond Resolution (Amended)
Page 17
agent, except as otherwise provided by Series Resolution. All such payments shall be valid and effectual
to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.
(D) The Bonds of each Series may contain or have endorsed thereon such provisions,
specifications and descriptive words not inconsistent with the provisions hereof as may be necessary or
desirable to comply with custom, the rules of any securities exchange or commission or brokerage board
or otherwise, as may be specified in the Series Resolution authorizing such Series of Bonds.
Section 302 - Legends. The Bonds of each Series shall contain or have endorsed thereon a
statement to the effect that the State shall not be liable thereon and that such Bond shall not be a debt of
the State and may contain or have endorsed thereon such provisions, specifications and descriptive
words not inconsistent with the provisions of this Resolution as may be necessary or desirable to comply
with custom, or otherwise, as may be determined by the Bank prior to the delivery thereof to the
Bondholder.
Section 303- Execution and Authentication. (A) The Bonds shall be executed in the name of the
Bank by the manual or facsimile signature of its Chairman or Vice-Chairman and its corporate seal (or a
facsimile thereof) shall be thereunto affixed, imprinted, engraved or otherwise reproduced, and attested
by the manual or facsimile signature of its Secretary or such officer or employee of the Bank as shall be
directed by the Series Resolution authorizing the issuance thereof, or in such other manner as may be
required by law. In case any one or more of the officers or employees who shall have signed or sealed
any of the Bonds shall cease to be such officer or employee before the Bonds so signed and sealed shall
have been actually authenticated and delivered by the Trustee, such Bonds may, nevertheless, be
authenticated and delivered as herein provided, and may be issued as if the persons who signed or
sealed such Bonds had not ceased to hold such offices or be so employed. Any Bonds of a Series may
be signed and sealed on behalf of the Bank by such persons as at the actual time of the execution of
such Bond shall be duly authorized or hold the proper office in or employment by the Bank, although at
the date of the Bonds of such Series such persons may not have been so authorized or have held such
office or employment.
(B) The Bonds of each Series shall bear thereon a certificate of authentication, in the form set
forth in the Series Resolution authorizing such Bonds, executed manually by the Trustee. Only such
Bonds as shall bear thereon such certificate of authentication shall be entitled to any right or benefit under
the Resolution and no Bond shall be valid or obligatory for any purpose until such certificate of
authentication shall have been duly executed by the Trustee. Such certificate of the Trustee upon any
Bond executed on behalf of the Bank shall be conclusive evidence that the Bond so authenticated has
been duly authenticated and delivered under the Resolution and that the Holder thereof is entitled to the
benefits of the Resolution.
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General Obligation Bond Resolution (Amended)
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Section 304 - Interchangeability of Bonds. Bonds, upon surrender thereof at the corporate trust
office of the Trustee with a written instrument of transfer satisfactory to the Trustee, duly executed by the
registered owner or their attorney duly authorized in writing, may, at the option of the registered owner
thereof, be exchanged for an equal aggregate principal amount of registered Bonds of the same Series,
maturity, and interest rate as the surrendered Bond.
Section 305 - Negotiability, Transfer and Registry. All the Bonds issued under this Resolution
shall be negotiable as provided in the Act, subject to the provisions for registration and transfer contained
in this Resolution and in the Bonds. So long as any of the Bonds shall remain Outstanding, the Bank
shall maintain and keep, at the corporate trust office of the Trustee, books for the registration and transfer
of Bonds; and, upon presentation thereof for such purpose at said office, the Bank shall register or cause
to be registered therein, and permit to be transferred thereon, under such reasonable regulations as it or
the Trustee may prescribe, any Bond entitled to registration or transfer. So long as any of the Bonds
remain Outstanding, the Bank shall make all necessary provisions to permit the exchange of Bonds at the
corporate trust office of the Trustee.
The Bank and each Fiduciary may deem and treat the person in whose name any Bond shall be
registered upon the books of the Bank as the absolute owner of such Bond, whether such Bond shall be
overdue or not, for the purpose of receiving payment of, or on account of, the principal and Redemption
Price, if any, of and interest on such Bond and for all other purposes, and all such payments so made to
any such registered owner or upon his 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 Bank nor any Fiduciary
shall be affected by any notice to the contrary. The Bank agrees to indemnify and save each Fiduciary
harmless from and against any and all loss, cost, charge, expense judgment or liability incurred by it,
acting in good faith and without negligence under this Resolution, in so treating any such registered
owner.
Section 306 - Regulations with Respect to Exchanges and Transfers. In all cases in which the
privilege of exchanging Bonds or transferring Bonds is exercised, the Bank shall execute and the Trustee
shall authenticate and deliver Bonds in accordance with the provisions of this Resolution. All Bonds
surrendered in any such exchanges or transfers shall forthwith be cancelled by the Trustee. For every
such exchange or transfer of Bonds, whether temporary or definitive, the Bank or the Trustee may, as a
condition precedent to the privilege of making such exchange or transfer, make a charge sufficient to
reimburse it for any tax, fee or other governmental charge required to be paid with respect to such
exchange or transfer. Notwithstanding any other provision of this Resolution the cost of preparing each
registered Bond upon each exchange or transfer, and any other expenses of the Bank or the Trustee
incurred in connection therewith (except any applicable tax, fee or other governmental charge) shall be
paid by the Bank as an Administrative Expense. Neither the Bank or the Trustee shall be required (i) to
ALAKSA MUN!CPAL BOND BANK
General Obligation Bead Resolution (Amended) Page 19
make any exchange or transfer of Bonds of any Series during the ten (10) days (or such other period of
time as may be specified in the Series Resolution authorizing such Series) nest preceding an interest
payment date on the Bonds of such Series or preceding any selection of Bond of such Series to be
redeemed or (ii) to transfer or exchange any Bonds previously called for redemption.
Section 307- Bonds Mutilated, Destroyed. Stolen or Lost In case any Bond shall become
mutilated or be destroyed, stolen or lost, the Bank shall execute and the Trustee shall authenticate and
deliver a new Bond of like Series, maturity and principal amount as the Bond so mutilated, destroyed,
stolen or lost, in exchange and substitution for such mutilated Bond, upon surrender and cancellation of
such mutilated Bond or in lieu of and substitution for the Bond destroyed, stolen or lost, upon filing with
the Bank evidence satisfactory to the Bank and the Trustee that such Bond have been destroyed, stolen
or lost and proof of ownership thereof, and upon furnishing the Bank and the Trustee with indemnity
satisfactory to them and complying with such other reasonable regulations as the Bank and the Trustee
may prescribe and paying such expenses as the Bank and the Trustee may incur in connection therewith.
All Bonds so surrendered to the Trustee shall be cancelled by it and evidence of such cancellation shall
be given to the Bank. Any such new 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 Bank, regardless of whether the Bonds so alleged to be destroyed, stolen or lost be at any
time enforceable by anyone, and shall be equally secured by and entitled to equal and proportionate
benefits with all other Bonds issued under this Resolution, in any moneys or securities held by the Bank
or the Fiduciaries for the benefit of the Bondholders. If a Bondholder satisfies the conditions set forth in
this section for the replacement of a mutilated Bond or a Bond alleged to be destroyed, stolen, or lost and
such Bond has matured or all principal thereof and interest thereon shall become due for any other
reason, then the Trustee may pay such principal of and interest on such Bond without issuing a
replacement Bond.
Section 308 - Preparation of Definitive Bonds: Temporary Bonds. Until the definitive Bonds of
any Series are prepared, the Bank may execute, in the same manner as is provided in Section 303, and
upon the request of the Bank, the Trustee shall authenticate and deliver, in lieu of definitive Bonds, but
subject to the same provisions, limitations and conditions as the definitive Bonds, except as to the
denominations thereof and as to exchangeability for registered Bonds, one or more temporary Bonds,
substantially of the tenor of the definitive Bonds in lieu of which such temporary Bond or Bonds are issued
in such denominations as may be authorized by the Bank, and with such omissions, insertions and
variations as may be appropriate to temporary Bonds. The Bank at its own expense shall prepare and
execute and, upon the surrender thereof of such temporary Bonds to the Trustee, The Trustee shall
authenticate and, without charge to the holder thereof, deliver in exchange therefor definitive Bonds of the
same aggregate principal amount and Series and maturity as the temporary Bonds surrendered. Until so
ALAK5A MUNJOPAL BOND BANK
General Obligation Bead Resolution (Amended)
Page 20
exchanged, the temporary Bonds shall in all respects be entitled to the same benefits and security as
definitive Bonds authenticated and issued pursuant to this Resolution.
If the Bank shall authorize the issuance of temporary Bonds in more than one denomination, the
holder of any temporary Bond or Bonds may, at his option, surrender the same to the Trustee in
exchange for another temporary Bond or Bonds of like aggregate principal amount, Series and maturity of
any other authorized denomination or denominations and thereupon the Bank shall execute and the
Trustee shall authenticate and, in exchange for the temporary Bond or Bonds so surrendered and upon
payment of the taxes, fees and charges provided for in Section 306, shall deliver a temporary Bond or
Bonds of like aggregate principal amount, Series and maturity in such other authorized denomination or
denominations as shall be requested by such holder.
All temporary Bonds surrendered in exchange either for another temporary Bond or Bonds or for
a definitive Bond or Bonds shall be forthwith cancelled by the Trustee.
Section 309 - Cancellation and Destruction of Bonds. All Bonds paid or redeemed, either at or
before maturity, shall be delivered to the Trustee when such payment or redemption is made, and such
Bonds, together with all Bonds purchased by the Trustee, shall thereupon be promptly cancelled. Bonds
so cancelled may, at any time, be cremated or otherwise destroyed by the Trustee, who shall execute a
Certificate of cremation or destruction in duplicate by the signature of one of its authorized officers
describing the Bonds so cremated or otherwise destroyed, and one executed Certificate shall be filed with
ri the Bank and the other executed Certificate shall be retained by the Trustee.
ARTICLE IV
REDEMPTION OF BONDS
Section 401 - Redemption Provisions. The Bonds of each Series may be subject to redemption
prior to maturity at such times and upon such terms as shall be fixed by the related Series Resolution. If
less than all of the Bonds of any one maturity of a Series shall be called for redemption, the particular
units of Bonds, as determined in accordance with Section 403 herein, to be redeemed shall be selected
by lot by the Trustee, or in any manner as the Trustee, in its sole discretion, may deem appropriate and
fair.
Section 402 - Notice of Redemption. (A) In the event any of the Bonds are to be redeemed, the
Registrar shall cause notice to be given as provided in this Section 402. Unless otherwise specified in the
Series Resolution authorizing the issuance of the applicable Series of Bonds, notice of redemption (i)
shall be filed with the paying agent designated for the Bonds being redeemed and (ii) shall be mailed by
first class mail, postage prepaid, to all Bondholder of Bonds to be redeemed at their addresses as they
appear on the registration books of the Trustee, at least thirty (30) days but not more than sixty (60) days
prior to the date fixed for redemption. Such notice shall state the following information:
(1) the complete official name of the Bonds, including Series, to be redeemed,
the identification numbers of Bonds and the CUSIP numbers, if any, of the Bonds being
redeemed, provided that any such notice shall state that no representation is made as to
the correctness of CUSIP numbers either as printed on such Bonds or as contained in
the notice of redemption and that reliance may be placed only on the identification
numbers contained in the notice or printed on such Bonds;
(2) any other descriptive information needed to identify accurately the Bonds
being redeemed, including, but not limited to, the original issue date or dated date of and
interest rate on such Bonds;
(3) in the case of partial redemption of any Bonds, the respective principal
amounts thereof to be redeemed;
(4) the date of mailing of redemption notices and the redemption date;
(5) the redemption price;
(6) that on the redemption date the redemption price will become due and
payable upon each such Bond or portion thereof called for redemption, and that interest
thereon shall cease to accrue from and after said date; and
(7) the place where such Bonds are to be surrendered for payment of the
redemption price, designating the name and address of the redemption agent with the
name of a contact person and telephone number.
(B) In addition to the foregoing, further notice of any redemption of Bonds hereunder shall be
given by the Trustee, at least two (2) Business Days in advance of the mailed notice to Bondholders, by
registered or certified mail or overnight delivery service, to all registered securities depositories then in the
business of holding substantial amounts (as reasonably determined by the Bondholders) of obligations of
types comprising the Bonds and to at least two national information services that disseminate notices of
redemption of obligations such as the Bonds. Such further notice shall contain the information required in
clause (a) above. Failure to give all or any portion of such further notice shall not in any manner defeat
the effectiveness of a call for redemption.
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General Obligation Bond Resolution (Amended) General Obligation Bond Resolution (Amended)
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(C) Upon the payment of the redemption price of Bonds being redeemed, each check or other
transfer of funds issued for such purpose shall bear the CUSIP number identifying, by issue and maturity,
the Bonds being redeemed with the proceeds of such check or other transfer.
(D) If at the time of mailing of any notice of redemption there shall not be on deposit with the
Trustee moneys sufficient to redeem all the Bonds called for redemption, such notice shall state that such
redemption is subject to the deposit of the redemption moneys with the Trustee not later than the
redemption date and that such notice shall be of no effect unless such moneys are so deposited.
(E) A second notice of redemption shall be given, not later than ninety (90) days subsequent to
the redemption date, to Bondholders of Bonds or portions thereof redeemed but who failed to deliver
Bonds for redemption prior to the 60th day following such redemption date. Any notice mailed shall be
conclusively presumed to have been duly given, whether or not the owner of such Bonds receives the
notice. Receipt of such notice shall not be a condition precedent to such redemption, and failure so to
receive any such notice by any of such Bondholders shall not affect the validity of the proceedings for the
redemption of the Bonds.
(F) In case any Bond is to be redeemed in part only, the notice of redemption which relates to
such Bond shall state also that on or after the redemption date, upon surrender of such Bond, a new
Bond in principal amount equal to the unredeemed portion of such Bond will be issued.
71 Section 403 - Partially Redeemed Fully Registered Bonds. Unless otherwise specified in the
Series Resolution authorizing the issuance of the applicable Series of Bonds, in case any registered Bond
shall be redeemed in part only, upon the presentation of such Bond for such partial redemption, the Bank
shall execute and the Trustee shall authenticate and shall deliver or cause to be delivered to or upon the
written order of the Holder thereof, at the expense of the Bank, a Bond or Bonds of the same Series,
interest rate and maturity, in aggregate principal amount equal to the unredeemed portion of such
registered Bond. Unless otherwise provided by Series Resolution, a portion of any Bond of a
denomination of more than the minimum Authorized Denomination to be redeemed will be in the principal
amount of the minimum Authorized Denomination or an integral multiple thereof, and in selecting portions
of such Bonds for redemption, the Trustee will treat each such Bond as representing that number of
Bonds of the minimum Authorized Denomination which is obtained by dividing the principal amount of
such Bonds by the minimum Authorized Denomination.
the purchase of Municipal Bonds, shall specify the name of each Governmental Unit which is to receive a
Loan by the Bank from such proceeds and the amount of such proceeds to be applied to the making of
each such Loan which shall be the amount of each such Loan. Contemporaneously with the issuance,
sale and delivery of any Series of Bonds, the Bank shall apply the amount of the proceeds derived from
the sale of such Series of Bonds, if any, as shall be specified in said Series Resolution for the purpose of
making such Loans to each of the Governmental Units specified in the Series Resolution authorizing the
issuance of such Series of Bonds.
(B) Accrued interest, if any, received upon the delivery of such Series of Bonds shall be
deposited in the Interest Account The amount received as a premium over the principal amount of such
Series of Bonds, if any, upon the delivery of such Series of Bonds shall be applied as provided in the
Series Resolution authorizing such Series of Bonds.
(C) The amount, if any, necessary to cause the amount on deposit in the Reserve Fund to
satisfy the Reserve Fund Requirement
(D) Any remaining proceeds derived from the sale of a Series of Bonds shall be applied as
provided in the Series Resolution authorizing such Series of Bonds.
Section 502- Loans. (A) A Loan to each Governmental Unit shall be made from the portion of the
proceeds derived from the sale of each Series of Bonds specified in the Series Resolution authorizing the
issuance of such Series of Bonds and the amount of each such Loan shall be the amount specified in
such Series Resolution. All such payments made pursuant to such Series Resolution shall be subject to
the provisions and restrictions of this Article V, and the Bank covenants that it will not cause or permit to
be paid from such portion of the proceeds derived from The sale of such Series of Bonds any sums except
in accordance with such provisions and restrictions.
(B) The Trustee shall pay to each Governmental Unit the amount of the Loan upon receipt by
the Trustee of:
(1) a written requisition of the Bank signed by an Authorized Officer stating
(i) the name of the Governmental Unit to which the payment is to be made; and
(ii) the amount to be paid;
ARTICLE V
CUSTODY AND APPLICATION OF CERTAIN PROCEEDS OF BONDS
Section 501 - Application of Certain Proceeds. (A) Each Series Resolution authorizing the
issuance of a Series of Bonds, a portion of the proceeds derived from the sale of which is to be applied to
ALAKSA MIJNICPAL BOND SANK
General Obligation Bond Resolution (Amended)
Page 23
(2) a certificate signed by an Authorized Officer and attached to the requisition certifying that the
terms and provisions of the Loan Agreement providing for such Loan are in compliance with Section 913,
and that to the knowledge of such Authorized Officer such Governmental Unit is not in default under any
of the terms or provisions of said Loan Agreement;
ALAKSA MUNICPAL BOND BANK
General Obligation Bend Resolution (Amended)
Page 24
(3) a Counsels Opinion stating that such Municipal Bonds are valid obligations of such
Governmental Unit as required by the Act and that the Loan Agreement has been duly authorized and
executed by the Governmental Unit and constitutes a valid and binding obligation of the Governmental
Unit enforceable in accordance with its terms; and
(4) such Municipal Bonds of such Governmental Unit, registered as to both principal and interest
in the name of the Bank or the Trustee and delivered in accordance with the Act.
Upon receipt of such requisition, accompanying certificate, Counsel's Opinion and Municipal
Bonds, the Trustee shall pay such amount directly to the Governmental Unit entitled thereto as named in
such requisition.
Section 503 - Retention and Inspection of Documents. All requisitions and certificates and
Counsel's Opinions and Municipal Bonds received by the Trustee, as required in this Article V as
conditions of payment may be relied upon by and shall be retained in the possession of the Trustee,
subject at all times during normal business hours to the inspection of the Bank and, after written request
received by the Trustee at least five business days prior to the date of inspection, by any Holder of at
least five per cent in principal amount of the Series of Outstanding Bonds.
ARTICLE VI
ESTABLISHMENT OF FUNDS AND ACCOUNTS AND APPLICATION THEREOF
Section 601 - Pledge. (A) The Bonds shall be direct and general obligations of the Bank, and its
full faith and credit are pledged to the payment of the principal and redemption premium, if any, of and
interest on the Bonds, subject to any agreements heretofore and hereafter made with the Holders of any
other notes or bonds of the Bank pledging any particular revenues or assets not pledged under this
Resolution.
(B) The Municipal Bonds and the Municipal Bonds Payment, the investments thereof and the
proceeds of such investments, if any, and all funds and accounts established by this Resolution to be
held by the Trustee are hereby 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 this Resolution, subject only to the provisions of this Resolution permitting the application
thereof for the purposes and on the terms and conditions set forth in this Resolution authorizing the Bank
to create Security Interests in said Municipal Bonds and Municipal Bonds Payment in favor of Credit
Enhancement Agencies and counterparties to Interest Rate Exchange Agreements. Subject to the
provisions of Section 805 of this Resolution, this pledge shall be valid and binding from and after the date
of adoption of this Resolution, and the Municipal Bonds and the Municipal Bonds Payment and all other
monies and securities in the funds and accounts established by this Resolution to be held by the Trustee
ALAKSA MUNICPAL BOND SANK
General Obligation Bond Resolution (Amended)
Page 25
hereby pledged shall immediately be subject to the lien of such pledge without any further act, and such
lien shall be valid and binding as against all parties having claims of any kind in tort, contract or otherwise
against the Bank, regardless of whether such parties have notice thereof.
Section 602 - Establishment of Funds and Accounts. (A) The Alaska Municipal Bond Bank Debt
Service Fund (the "Debt Service Fund") is hereby established and shall be maintained and held by the
Trustee pursuant to the provisions of this Resolution. There is hereby created and established in the
Debt Service Fund an "Interest Account," a "Principal Account" and a "Redemption Account" each of
which shall be held by the Trustee. Amounts in the Interest Account, the Principal Account and the
Redemption Account shall be used solely for the purpose of paying the principal of, Redemption Price of,
interest on and Sinking Fund Installments for, the Bonds and of retiring such Bonds at or prior to maturity
in the manner provided herein and in any Series Resolution. Amounts deposited in the Interest Account
and the Principal Account shall be disbursed and applied by the Trustee at the times and in the manner
provided in this Article VI and in paragraph (3) of Section 203.
(B) There is hereby established within the Alaska Municipal Bond Bank Reserve Fund created
by Section 44.85.270 of the Act, a 2005 General Obligation Bond Resolution Reserve Account (the
"Reserve Fund") which shall be maintained and held by the Trustee pursuant to the provisions of this
Resolution.
(C) There is hereby established a Rebate Fund, and within such fund, a separate account for
each Series of Bonds. -
(D) There is hereby established an Operating Fund which shall be held by the Bank pursuant to
the provisions of this Resolution.
Section 603 Reserve Fund. (A) On or before the first day of each month, the Trustee shall set
aside from amounts in the Reserve Fund derived from income or interest earned and profits realized by
the Reserve Fund due to the investment 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 day be equal to
the unpaid interest on the Reserve Fund Obligations accrued and to accrue to the last day of such month.
If the Trustee so determines, said amounts may be deposited in an account which the Trustee may create
in the Reserve Fund under the name of "Reserve Fund Obligations Interest Account". On or before each
interest payment date of the Reserve Fund Obligations, said amounts shall be deposited in the Interest
Account
(B) On or before each principal payment date and Sinking Fund Installment payment date of
Reserve Fund Obligations, the Trustee shall 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
ALAKSA MUNI OPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 26
Account and derived from sources other than Municipal Bonds Payment, will be equal to the Principal
Installment of the Reserve Fund Obligations falling due on such date.
(C) On or before December 31 of each year, after complying with the provisions of paragraphs
(1) and (2) above to the extent required by such date, the Trustee shall withdraw from the Reserve Fund,
any amount remaining therein derived from income or interest earned and profits realized by the Reserve
Fund due to the investment thereof, and pay over said amount to the Bank for deposit in 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 Required Debt Service Reserve.
(D) The Reserve Fund Requirement may be satisfied with (i) monies made available by the
State and paid to the Bank for the purpose of the Alaska Municipal Bond Bank Reserve Fund created by
Section 44.85.270 of the Act in the amount provided by a Series Resolution; (ii) all monies paid to the
Bank pursuant to the Act for the purpose of restoring the Reserve Fund to the amount of the Required
Debt Service Reserve; (iii) such portion of the proceeds of sale of Bonds, if any, as shall be provided by
any Series Resolution; (iv) Credit Enhancement; (v) any other monies which may be made available to
the Bank for the purposes of the Reserve Fund from any other source or sources; or (vi) any combination
of the foregoing.
(E) In the event there shall be, on any interest payment date, a deficiency in the Interest
Account, or, in the event there shall be, on any principal payment date or Sinking Fund Installment
71 payment date, a deficiency in the Principal Account, the Trustee shall make up such deficiencies from the
\ Reserve Fund by the withdrawal of cash therefrom for that purpose and by the sale or redemption of
securities held in the Reserve Fund, if necessary, in such amounts as will, at the respective times, provide
monies in the Interest Account and Principal Account sufficient to make up any such deficiency. If a
deficiency still exists immediately prior to a debt service payment date and after the withdrawal of cash,
the Bank shall then draw from any Credit Enhancement for the Bonds in sufficient amount to make up
such difference. Drawings under the Credit Enhancement shall be made on a pro-rata basis (in
proportion to the respective maximum coverages) available under the Credit Enhancement. Such draw
shall be made at such times and under such conditions as such Credit Enhancement shall provide.
Section 604 - Interest Account, Principal Account and Redemption Account
(A) Except as otherwise provided in paragraph (3) of Section 204, the Trustee shall deposit
Municipal Bonds Interest Payments and any other monies available for the payment of interest in the
Interest Account upon receipt thereof. The Trustee shall, on or before each interest payment date of the
Bonds, pay, out of amounts then held for the credit of the Interest Account, to itself and the Paying
Agents, the amounts required for the payment by it and such Paying Agents of the interest becoming due
on the Bonds on such interest payment date, and such amounts so withdrawn are hereby irrevocably
ALAKS..4 MUN!CP4L BOND BANK
General Obligation Bond Resolution (Amended)
Page 27
pledged for and shall be applied to the payment of such interest. The Trustee shall also pay out of the
Interest Account to itself and the appropriate Paying Agents, on or before any redemption date for Bonds
being refunded by Refunding Bonds, the amount required for the payment of interest on the Bonds then
to be redeemed, to the extent not otherwise provided in this Resolution.
(B) The Trustee shall deposit Municipal Bonds Principal Payments and any other monies
available for the payment of principal in the Principal Account, upon receipt thereof. The Trustee shall, on
or before each principal payment date of or Sinking Fund Installment date for, the Bonds, pay, out of the
monies then held for the credit of the Principal Account, to itself and the Paying Agents, the amounts
required for the payment by it and such Paying Agents of the principal or Sinking Fund Installment due on
the Bonds on such date, and such amounts so withdrawn are hereby irrevocably pledged for and shall be
applied to the payment of such principal or Sinking Fund Installment
(C) The Trustee shall establish in the Redemption Account a separate sub-account for the
Bonds of each Series Outstanding.
(1) Any monies deposited into the Redemption Account from any source other than pursuant to
Section 607 or Section 916 shall be applied to the purchase or redemption of Bonds in a manner to be
determined by the Bank in accordance with Article IV. Any monies deposited into the Redemption
Account pursuant to Section 607 shall be applied to the purchase or redemption of Reserve Fund
Obligations in a manner to be determined by the Bank in accordance with Article IV.
(2) The Bank shall deposit or cause to be deposited in the Redemption Account such portion of
the monies received as the proceeds of sale or redemption of Municipal Bonds, as required by Section
916 hereof, and, upon any such deposit, shall advise the Trustee in writing of the Series of Bonds to
which the same relates. Upon receipt, such monies shall be set aside by the Trustee in the appropriate
Series sub-account. Monies so held in each separate sub-account by the Trustee shall be applied to the
purchase or retirement of the Bonds of the Series in respect of which such sub-account was created as
follows:
(i) The Trustee shall promptly apply such monies to the purchase of Bonds of the Series
in respect of which such sub-account was created having the same maturity date or dates and in
the same principal amount within each maturity as the Municipal Bonds Principal Payments
required to be made for the Municipal Bonds sold by the Bank or redeemed by the Governmental
Unit at the most advantageous price obtainable with reasonable diligence, such price, however,
not to exceed the Redemption Price which would be payable on the next ensuing date on which
the Bonds of the Series so purchased are redeemable according to their terms. The Trustee shall
pay the interest accrued on the Bonds so purchased to the date of sale or redemption of the
Municipal Bonds from the Interest account and the balance of the purchase price from the
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 28
ITI
ILI
applicable sub-account in the Redemption Account, as hereinabove provided, but no such
purchase shall be made by the Trustee within the period of forty-five (45) days next preceding a
date on which such Bonds are subject to redemption under the provisions of the Series
Resolution authorizing the issuance thereof.
(ii) In the event the Trustee is able to purchase the requisite principal amount of Bonds
from a sub-account in accordance with and under the foregoing provisions of this subparagraph
(b) at a purchase price less than the sum of the deposits to such sub-account from the proceeds
from the sale or redemption of Municipal Bonds and the applicable transfers from the Interest
Account, upon the payment by the Trustee of the purchase price of such Bonds, the Trustee shall
transfer the balance of monies remaining in such sub-account to the Bank for deposit in the
Operating Fund.
(iii) In the event the Trustee is unable to purchase the requisite principal amount of
Bonds the Trustee shall call for redemption on the next ensuing redemption date such amount of
Bonds of the Series in respect of which such sub-account was created having the same maturity
date or dates and in the same principal amount within each maturity as the Municipal Bonds
Principal Payments required to be made for the Municipal Bonds sold by the Bank or redeemed
by the Governmental Unit, as, at the Redemption Price thereof, will exhaust said sub-account as
nearly as may be. Such redemption shall be made pursuant to the provisions of Article IV hereof.
The Trustee shall pay the interest accrued on the Bonds so redeemed to the date of sale or
redemption of the Municipal Bonds from the Interest Account and the balance of such interest to
the date of redemption of the Bonds and the Redemption Price from the applicable sub-account
(3) The Bank may, from time to time, by written instructions direct the Trustee to make purchases
under subparagraph (b) above only after receipt of tenders. The Bank may specify the length of notice to
be given and the date on which tenders are to be accepted or may authorize the Trustee to determine the
same in its discretion. All such tenders shall be by sealed proposals and no tenders shall be considered
or accepted at any price exceeding the price specified under subparagraph (b) above for the purchase of
Bonds. The Trustee shall accept tenders with the lowest price, as determined by the Trustee, and if the
monies available for purchase pursuant to such tenders are not sufficient to permit acceptance of all
tenders and there shall be tenders at an equal price above the amount of monies available for purchase
then the Trustee shall select by lot, in such manner as the Trustee shall determine in its discretion, the
Bonds tendered which shall be purchased. No purchase of Bonds, either on tenders or otherwise, shall
be made by the Trustee within the period of forty-five (45) days next preceding any date on which such
Bonds are subject to redemption.
(D) Monies set aside from time to time with the Trustee and Paying Agents for the payment of
principal or Redemption Price of, interest on and Sinking Fund Installments for, the Bonds shall be held in
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 29
trust for the Holders of the Bonds. Until so set aside for the payment of such principal, Redemption Price,
interest, and Sinking Fund Installments, all monies in such accounts shall be held in trust for the benefit of
the Holders of all Bonds at the time Outstanding equally and ratably and without any preference or
distinction as between Bonds of different Series, except that monies on deposit in the separate sub-
accounts established in the Redemption Account shall be held in trust for and applied to the payment of
the Bonds of the Series for which the applicable sub-account was established.
Section 605 - Rebate Fund. (A) The Trustee shall establish and thereafter maintain, so long as
the Bonds are Outstanding, a Rebate Fund which shall be held separate and apart from all other funds
and accounts established under this Resolution and from all other moneys of the Trustee.
(B) All amounts in the Rebate Fund, including income earned from investment of the fund, shall
be held by the Trustee free and clear of the lien of this Resolution. In the event the amount on deposit in
the Rebate Fund exceeds the aggregate amount of the Rebate Requirement for all Series of Bonds, as
verified in writing by an independent public accountant or other qualified professional selected by the
Bank at the time the Rebate Requirement is determined, less amounts of the Rebate Requirement
theretofore paid to the United States for all Series of Bonds, the Trustee shall, upon the Bank's request,
withdraw from the Rebate Fund and pay to or upon the order of the Bank an amount not to exceed such
excess to the Bank for deposit in the Operating Fund.
(C) The Bank shall determine the amount of the Rebate Requirement with respect to each
Series of Bonds on each applicable Rebate Calculation Date. The Bank shall deposit into the Rebate
Fund the Rebate Requirement, if any, with respect to each Series of Bonds. The Bank shall instruct the
Trustee to withdraw from the Rebate Fund and pay over to the United States Government with respect to
each Series of Bonds: (1) not less frequently than once each five years commencing no later than
60 days after the first Rebate Calculation Date for such Series of Bonds and upon each fifth anniversary
of such date, an amount which when added to all previous rebate payments made with respect to such
Series of Bonds equals 90% of the sum of the Rebate Requirement pertaining to such Series of Bonds
plus the amount, if any, of Rebate Requirement theretofore paid to the United States with respect to such
Series of Bonds, and (2) not later than 60 days after the retirement of the last Bond of such Series, 100%
of the Rebate Requirement with respect to such Series. The determination of rebatable arbitrage made
with respect to each such payment date and with respect to any withdrawal and payment to the Bank
from the Rebate Fund pursuant to this Resolution must be verified in writing by an independent public
accountant or other qualified professional selected by the Bank.
(D) The Trustee shall, at least sixty (60) days prior to each Rebate Calculation Date, notify the
Bank of the requirements of this Section. By agreeing to give this notice, the Trustee assumes no
responsibility whatsoever for compliance by the Bank with the requirements of Section 148 of the Code or
any successor. The Bank expressly agrees that (notwithstanding any other provision of this Resolution)
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
Page 30
any failure of the Trustee to give any such notice, for any reason whatsoever, shall not cause the Trustee
to be responsible for any failure of the Bank to comply with the requirements of said Section 148 or any
successor thereof.
(E) The Trustee, on behalf of the Bank, shall keep and retain, until the date six years after the
retirement of the last of the Bonds of each Series, records with respect to each Series of the Bonds and
the investment and expenditure of amounts on deposit with the Trustee to comply with the
aforementioned arbitrage rebate requirements, including without limitation a complete list of all
investments and reinvestments of amounts on deposit with the Trustee with respect to each Series of the
Bonds. For purposes of the computation required above, the Trustee shall, upon request, furnish to the
Bank all information in the Trustee's control which is necessary for such computations.
(F) The Bank hereby covenants and agrees that it will not enter, and will not cause the Trustee
to enter into, any transaction or cause any transaction to be entered into with respect to the investment of
gross proceeds of the Bonds, or otherwise, which reduces the amount which may be required to be paid
to the United States pursuant to the arbitrage rebate requirements specified herein above, because such
transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been
at arm's length and had the yield on each Series of the Bonds not been relevant to either party.
(C) The provisions of this Section may be amended or deleted, with respect to any or all series
of the Bonds, from this Resolution upon receipt by the Bank and the Trustee of an opinion of bond
counsel that such amendment or deletion will not adversely affect the exclusion from gross income of
00 interest on the Bonds.
Section 606 - Operating Fund. There shall be deposited in the Operating Fund all Fees and
Charges collected by the Bank or the Trustee, to the extent not otherwise encumbered or pledged, and
any other monies which may be made available to the Bank for the purposes of the Operating Fund from
any other source or sources including, without limiting the generality of the foregoing, amounts transferred
pursuant to paragraph (3) of Section 603, subparagraph (b)(ii) of paragraph (3) of Section 604 and the
amount received as a premium over the principal amount of a Series of Bonds, if any, to the extent
provided in the Series Resolution authorizing such Series. Monies at any time held for the credit of the
Operating Fund shall be used for and applied solely to the following purposes:
(a) To pay the Administrative Expenses of the Bank;
(b) To pay the fees and expenses of the Trustee and Paying Agents;
(c) To pay financing costs incurred with respect to a Series of Bonds, including fees and
expenses of the attorneys, initial Trustee's and Paying Agents' fees and expenses, costs and expenses of
financial consultants, printing costs and expenses, the payment to any officers, departments, boards,
ALAKSA MUNICPAL BOND BANK
General Obligation Band Resolution (Amended)
Page 31
agencies, divisions and commissions of, or reimbursement to, the State of any statement of cost and
expense or advances rendered to the Bank pursuant to the Act, and all other financing and other
miscellaneous costs; and
(d) To pay any expenses in carrying out any other purpose then authorized by the Act.
All amounts in the Operating Fund shall be free and clear of any lien or pledge created by this
Resolution but shall be held and applied in accordance with this section.
Section 607 - Reduction of Required Debt Service Reserve. Whenever the amount of the
Required Debt Service Reserve is reduced, the Trustee, only upon the written request of the Bank signed
by an Authorized Officer, shall withdraw from any amounts on deposit in the Reserve Fund and deposit in
the Redemption Account any amount not exceeding the amount of such reduction of the Required Debt
Service Reserve. The amount to be withdrawn from the Reserve Fund in each instance pursuant to the
provisions of this paragraph shall be determined by the Bank and the amount thereof certified to the
Trustee in writing signed by an Authorized Officer.
Section 608 - Trustee's Maintenance of Records on Payment of Bonds. In connection with the
payment, redemption or purchase of all Bonds under the provisions of this Resolution, the Trustee shall
keep accurate records of the source of the monies used to pay, redeem or purchase such Bonds.
Section 609 - Obtaining Credit Enhancements and Interest Rate Exchange Agreements. Except
as otherwise provided in a Series Resolution authorizing the issuance of a Series of Bonds, the Bank may
obtain Credit Enhancement or an Interest Rate Exchange Agreement with respect to such Bonds either at
the time of issuance of the Bonds or any time thereafter.
Section 610 - Creation of Additional Funds, Accounts and Subaccounts: Separate Credit
Enhancement Funds: Pledge with Respect to Credit Enhancements and Interest Rate Exchange
Agreements. (A) The Trustee shall establish within any Fund such Accounts in addition to the Accounts
herein established as the Bank shall by Series Resolution or Supplemental Resolution determine and
shall in like manner establish within any Account such additional subaccourits for the purposes of such
Account as the Bank shall so determine.
(B) The Bank may at any time by execution of a Series Resolution or Supplemental Resolution
establish a Fund or Account in which to hold any Credit Enhancement and the proceeds thereof or
drawings thereunder (a "Credit Enhancement Fund") for the benefit of any Series of Bonds to which such
Credit Enhancement has been pledged, which pledge may be (but is not required to be) exclusively for
the benefit of such Series of Bonds or certain designated Series of Bonds and not equally and ratably
among all the Series of Bonds. Amounts held in a Credit Enhancement Fund shall not be considered a
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part of the Municipal Bonds Payment but, rather, shall be subject to such lien and pledge as may be
created in the Series Resolution creating such Credit Enhancement Fund.
(C) If the Bank creates a Credit Enhancement Fund, the Bank may direct, in the Series
Resolution creating such Credit Enhancement Fund, that the Trustee pay, and if so directed in writing by
the Bank the Trustee shall pay, principal (including premium, if any) of and interest on the Bonds secured
by such Credit Enhancement Fund directly from amounts in such Credit Enhancement Fund and that the
Trustee reimburse, and if so directed in writing by the Bank the Trustee shall so reimburse, such Credit
Enhancement Fund for such payment from the Credit Enhancement Fund; provided, however, that the
Bank may, in the Series Resolution authorizing the Series of Bonds to be secured by Credit
Enhancement, treat any, or any part of any, obligation owed or which may in the future be owed to the
Credit Enhancement Agency pursuant to the Credit Enhancement Instrument as the Series of Bonds
secured by such Credit Enhancement if the Corporation, at the time of issuance of said Series of Bonds
and at the time of the creation of any such obligation satisfies the requirements of Section 203, in which
case the Trustee shall pay the principal of and interest on any such obligations in accordance with the
terms of this Resolution treating such obligations as a Series of Bonds. In a Series Resolution authorizing
a Series of Bonds secured by a Credit Enhancement Fund the Bank may fix provisions relating to such
Fund pursuant to the terms of a Series Resolution. In addition to the foregoing, the Bank may agree to
permit a Credit Enhancement Agency to be subrogated to the rights of any Bondholders whose Bonds
are secured by the Credit Enhancement provided that such Credit Enhancement Agency is not in default
I1 under such Credit Enhancement.
ARTICLE VII
SECURITY FOR DEPOSITS AND INVESTMENT OF FUNDS
Section 701 - Security for Deposits. All monies held hereunder by the Trustee shall be
continuously and fully secured, for the benefit of the Bank and the Holders of the Bonds 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. The Trustee or any Paying
Agent shall not be required to give security for the deposit of any monies 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 monies which shall be represented by obligations purchased under the provisions of this
Resolution as an investment of such monies.
Section 702 - Investment of Funds and Accounts Held by the Trustee. (A) Upon the deposit of
any amounts in any fund or account held by the Trustee under the provisions of this Resolution, in the
manner hereinabove prescribed, the Bank may furnish the Trustee with a schedule of dates on which it is
estimated by the Bank that such monies in said fund or account will be required to be expended. The
Bank may from time to time amend the schedule so furnished. Upon receipt of such schedule or
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General Obligation Bond Resolution (Amended) Page 33
amended schedule, the Bank may direct the Trustee to, or in the absence of receipt of such schedule or
such direction the Trustee shall, invest and reinvest in Investment Securities the monies in said fund or
account so that the maturity date or date of redemption at the option of the holder of such obligations
shall coincide as nearly as practicable with the times at which monies are needed by the Bank to be so
expended. The Bank also may direct the Trustee that all or part of the amounts in the Interest Account
and the Principal Account in the Debt Service Fund not be invested for specified periods of time.
(B) Obligations purchased as an investment of monies in any fund or account held by the
Trustee under the provisions of this Resolution shall be deemed at all times to be a part of such fund or
account and the income or interest earned, profits realized or losses suffered by a fund or account due to
the investment thereof shall be retained in, credited or charged, as the case may be, to such fund or
account, except that the income or interest earned and profits realized by the Reserve Fund due to the
investment thereof shall be transferred by the Trustee in accordance with and to the extent provided by
paragraphs (1), (3) and (5) of Section 603.
(C) In determining whether or not the amount in the Reserve Fund is at least equal to the
Reserve Fund Requirement, the Trustee shall include the amount of interest earned or accrued thereon
as of the date of evaluation and shall also include, but only if any other requirement therefor specified in a
Series Resolution has been satisfied, the principal component of any Credit Enhancement then on
deposit in the Reserve Fund.
(D) Except as otherwise provided in the Resolution, the Trustee shall sell at the best price
obtainable, or present for redemption or exchange any obligation purchased by it as an investment
pursuant to this Resolution whenever it shall be requested in writing by an Authorized Officer of the Bank
to do so or whenever it shall be necessary in order to provide monies to meet any payment or transfer
from the fund or account for which such investment was made. The Trustee shall advise the Bank in
writing, on or before the twentieth day of each calendar month, of the details of all investments held for
the credit of each fund and account in its custody under the provisions of this Resolution as of the end of
the preceding month.
Section 703 - Liability of Trustee for Investments. The Trustee shall not be liable or responsible
for the making of any investment authorized by the provisions of this Article, in the manner provided in
this Article, or for any loss resulting from any such investment so made except for its own negligence or
default
ARTICLE VIII
THE TRUSTEE AND THE PAYING AGENTS
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I'll
Section 801 - Appointment and Acceptance of Duties of Trustee. J.P. Morgan Trust Company,
National Association, a trust company or bank having the powers of a trust company doing business and
having a corporate trust office in Seattle, Washington, is hereby appointed as Trustee for the Holders
from time to time of the Bonds. The Trustee shall signify its acceptance of the duties and obligations
imposed upon it by this Resolution by executing the certificate of authentication endorsed upon the
Bonds, and, by executing such certificate upon any Bond, the Trustee shall be deemed to have accepted
such duties and obligations not only with respect to the Bond so authenticated, but with respect to all the
Bonds thereafter to be issued, but only, however, upon the terms and conditions set forth in the
Resolution.
Section 802 - Appointment and Acceptance of Duties of Paying Agents. The Bank shall appoint
one or more Paying Agents for the Bonds of any Series in the Series Resolution authorizing such Bonds
or shall appoint such Paying Agent or Paying Agents by or pursuant to a resolution of the Bank adopted
prior to the authentication and delivery of such Bonds, and may at any time or from time to time appoint
one or more other Paying Agents in the manner and subject to the conditions set forth in Section 812 for
the appointment of a successor Paying Agent. The Trustee may be appointed to act as Paying Agent
notwithstanding that it may then be acting in the capacity of Trustee. Each Paying Agent shall signify its
acceptance of the duties and obligations imposed upon it by this Resolution by written instrument of
acceptance executed and delivered to the Bank and the Trustee. The principal or corporate trust offices
of the Paying Agents are hereby designated as the respective agencies of the Bank for the payment of
the interest on and principal or Redemption Price of the Bonds.
Section 803 - Responsibilities of Fiduciaries. (A) The recitals of fact herein and in the Bonds
contained shall be taken as the statements of the Bank and the Fiduciaries assume any responsibility for
the correctness of the same. No Fiduciary shall be deemed to make any representations as to the validity
or sufficiency of this Resolution or of any Bonds issued hereunder or in respect of the security afforded by
this Resolution, and no Fiduciary shall incur any responsibility in respect thereof. The Trustee shall,
however, be responsible for its representations contained in its certificate on the Bonds. No Fiduciary
shall be under any responsibility or duty with respect to any other Fiduciary. No Fiduciary shall be under
any obligation or duty to perform any act which would involve it in expense or liability or to institute or
defend any suit in respect hereof, or to advance any of its own moneys, unless indemnified to its
satisfaction. No Fiduciary shall be liable in connection with the performance of its duties hereunder
except for its own negligence or willful misconduct. Neither the Trustee nor any Paying Agent shall be
under any responsibility or duty with respect to the application of any moneys paid to any one of the
others or the use or application by the Bank of the Bonds or the proceeds thereof.
(B) Except during the continuance of an Event of Default, the Trustee undertakes to perform
such duties and only such duties as are specifically set forth in this Resolution, and no implied covenants
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or obligations shall be read into this Resolution against the Trustee, and, in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the
opinion expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the
requirements of this Resolution.
(C) In case an Event of Default has occurred and is continuing, the Trustee shall exercise such
of the rights and powers vested in it by this Resolution and use the same degree of care and skill in their
exercise as a prudent person would exercise or use under the circumstances in the conduct of his own
affairs.
(D) No provision of this Resolution shall be construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to act, or its own willful misconduct, except that (1) the
Trustee shall not be liable for any error of judgment made in good faith by a responsible officer, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent facts, (2) the Trustee shall not
be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding Bonds relating to the time,
method and place of conducting any proceeding for any remedy available to the Trustee, or exercising
any trust or power conferred upon the Trustee, under this Resolution, and (3) no provision of this
Resolution shall require the Trustee to expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity
against such risk or liability is not reasonably assured to it. Except as otherwise expressly provided
herein, the Trustee shall determine whether any conditions or requirements set forth herein for any
purpose have been met, and such determination by the Trustee shall be conclusive.
(E) Regardless of whether it is therein expressly so provided, every provision of this Resolution,
any Series Resolution, or any related document relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this Article.
(F) The Trustee shall be under no obligation to exercise any of the rights or powers vested in it
by this Resolution at the request or direction of any of the Bondholders pursuant to this Resolution, unless
such Bondholders shall have offered to the Trustee security or indemnity to its satisfaction against the
costs, expenses and liabilities which might be incurred by it in compliance with such request or direction.
(G) The Trustee shall not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, or other paper or document.
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(H) The Trustee may execute any of the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or attorneys, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
(I) The permissive right of the Trustee to do things enumerated in this Resolution shall not be
construed as a duty.
(J) In accepting the trusts hereby created, the Trustee acts solely as Trustee for the
Bondholders and not in its individual capacity and all persons, including, without limitation, the
Bondholders and the Bank having any claim against the Trustee arising from this Resolution shall look
only to the funds and accounts held by the Trustee or its agent hereunder for payment except as
otherwise provided herein. Under no circumstances shall the Trustee be liable in its individual capacity
for the obligations evidenced by the Bonds.
Section 804 - Evidence on Which Fiduciaries May Act. Each Fiduciary may rely and shall be
protected in acting upon any notice, resolution, request, consent, order, certificate, report, opinion, bond
or other paper or document believed by it to be genuine, and to have been signed or presented by the
proper party or parties. Each Fiduciary may consult with counsel, who may or may not be of counsel to
the Bank, and the opinion of such shall be full and complete authorization and protection in respect of any
action taken or suffered or omitted by it hereunder in good faith and in reliance thereon. Whenever any
ITI Fiduciary shall deem it necessary or desirable that a matter be proved or established prior to taking or
suffering or omitting any action hereunder, including payment of moneys out of any Fund or Account,
such matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed
to be conclusively proved and established by a certificate signed by an Authorized Officer, and such
certificate shall be full warrant for any action taken or suffered in good faith under the provisions of this
Resolution upon the faith thereof, but in its discretion the Fiduciary may in lieu thereof accept other
evidence of such fact or matter or may require such further or additional evidence as to it may seem
reasonable. Except as otherwise expressly provided herein, any request, order, notice or other direction
required or permitted to be furnished pursuant to any provision hereof by the Bank to any Fiduciary shall
be sufficiently executed if executed in the name of the Bank by an Authorized Officer.
Section 805 - Compensation. The Bank shall pay to the Trustee and to each Paying Agent from
time to time reasonable compensation for all services rendered under this Resolution, and also all
reasonable expenses, charges, counsel fees and other disbursements, including those of its attorneys,
agents and employees, incurred in and about the performance of their powers and duties under this
Resolution, and the Trustee and each Paying Agent shall have a lien therefor on any and all funds at any
time held by it under this Resolution. The Bank further agrees to indemnify and save the Trustee and
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each Paying Agent harmless against any liabilities which it may incur in the exercise and performance of
its powers and duties hereunder, and which are not due to its negligence or default.
Section 806 - Permitted Acts and Functions. The Trustee and any Paying Agent may become the
owner of any Bonds, with the same rights it would have if it were not such Trustee or Paying Agent The
Trustee and any Paying Agent may act as depository for, and permit any of its officers or directors toast
as a member of, or in any other capacity with respect to, any committee formed to protect the rights of
Bondholders or to effect or aid in any reorganization growing out of the enforcement of the Bonds or this
Resolution, whether or not any such committee shall represent the Holders of a majority in principal
amount of the Bonds then Outstanding.
Section 807 - Resignation of Trustee. The Trustee may at any time resign and be discharged of
the duties and obligations created by this Resolution by giving not less than ninety (90) days' written
notice to the Bank and to the registered owners of Bonds, specifying the date when such resignation shall
take effect and such resignation shall take effect immediately upon the appointment of a successor
Trustee pursuant to Section 809 hereof.
Section 808- Removal of Trustee. The Trustee shall be removed by the Bank if at any time so
requested by an instrument or concurrent instruments in writing, filed with the Trustee and the Bank, and
signed by the Holders of a majority in principal amount of the Bonds then Outstanding or their attorneys-
in-fact duly authorized, excluding any Bonds held by or for the account of the Bank. The Bank may
remove the Trustee at anytime, except during the existence of an Event of Default, for such cause as
shall be determined in the sole discretion of the Bank by filing with the Trustee an instrument signed by
an Authorized Officer of the Bank.
Section 809 - Appointment of Successor Trustee. In case at any time the Trustee shall resign or
shall be removed or shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or if a
receiver, liquidator or conservator of the Trustee, or of its property, shall be appointed, or if any public
officer shall take charge or control of the Trustee, or of its property or affairs, the Bank covenants and
agrees that it will thereupon appoint a successor Trustee. The Bank shall provide written notice of such
appointment to the registered owners of the Bonds.
If in a proper case no appointment of a successor Trustee shall be made pursuant to the
foregoing provisions of this Section within forty-five (45) days after the Trustee shall have given to the
Bank written notice, as provided in Section 807, or after a vacancy in the office of the Trustee shall have
occurred by reason of its inability to act, the Trustee or the Holder of any Bond may apply to any court of
competent jurisdiction to appoint a successor Trustee. Said court may thereupon, after such notice, if
any, as such court may deem proper and prescribe, appoint a successor Trustee.
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Any Trustee appointed under the provisions of this Section 809 in succession to the Trustee shall
be a trust company or bank in good standing having the powers of a trust company within or outside the
State, and having a capital and surplus aggregating at least Fifty Million Dollars ($50,000,000) if there be
such a trust company or bank willing and able to accept the office on reasonable and customary terms
and authorized by law to perform all the duties imposed upon it by this Resolution.
Section 810- Transfer of Rights and Property to Successor Trustee. Any successor Trustee
appointed under this Resolution shall execute, acknowledge and deliver to its predecessor Trustee, and
also to the Bank, an instrument accepting such appointment, and thereupon such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all monies, estates,
properties, rights, powers, duties and obligations of such predecessor Trustee, with like effect as if
originally named as Trustee; but the Trustee ceasing to act shall nevertheless, on the written request of
the Bank, or of the successor Trustee, execute, acknowledge and deliver such instruments of
conveyance and further assurance and do such other things as may reasonably be required for more fully
and certainly vesting and confirming in such successor Trustee all the right, title and interest of the
predecessor Trustee in and to any property held by it under this Resolution, and shall pay over, assign
and deliver to the successor Trustee any money or other property subject to the trusts and conditions
herein set forth. Should any deed, conveyance or instrument in writing from the Bank be required by such
successor Trustee for more fully and certainly vesting in and confirming to such successor Trustee any
such estates, rights, powers and duties, any and all such deeds, conveyances and instruments in writing
'I
shall, on request, and so far as may be authorized by law, be executed, acknowledged and delivered by
the Bank. Any such successor Trustee shall promptly notify the Paying Agents of its appointment as
Trustee. The Bank shall pay the expenses of effecting a transfer under this Section.
Section 811 - Merger or Consolidation. Any company into which the Fiduciary may be merged or
converted or with which it may be consolidated or any company resulting from any merger, conversion or
consolidation to which it shall be a party or any company to which Fiduciary may sell or transfer all of its
corporate trust business, shall be the successor to such Fiduciary without the execution or filing of any
paper or the performance of any further act, provided that such company shall be a trust company or
bank which is qualified to be a successor to the Trustee under Section 809 or which is qualified to be a
successor to the Paying Agent under Section 812.
Section 812- Resignation or Removal of the Paying Agents and Appointment of Successors. Any
Paying Agent may at any time resign and be discharged of the duties and obligations created by this
Resolution by giving at least sixty (60) days written notice to the Bank and the Trustee. Any Paying Agent
may be removed at any time by an instrument filed with such Paying Agent and the Trustee and signed
by an Authorized Officer of the Bank. Any successor Paying Agent shall be appointed by the Bank and
shall be a trust company or bank having the powers of a trust company having a capital and surplus
aggregating at least Fifty Million Dollars ($50,000,000), and willing and able to accept the office of Paying
Agent on reasonable and customary terms and authorized by law to perform all the duties imposed upon
it by this Resolution.
In the event of the resignation or removal of any Paying Agent, such Paying Agent shall pay over,
assign and deliver any monies held by it to its successor, or if there be no successor then appointed, to
the Trustee until such successor be appointed. In the event that for any reason there shall be a vacancy
in the office of Paying Agent, the Trustee shall act as such Paying Agent.
Section 813- Evidence of Signatures of Bondholders and Ownership of Bonds.
(A) Any request, consent or other instrument which this Resolution may require or permit to be
signed and executed by the Bondholders may be in one or more instruments of similar tenor, and shall be
signed or executed by such Bondholders in person or by their attorneys appointed in writing. Proof of (i)
the execution of any such instrument, or of an instrument appointing any such attorney, or (ii) the holding
by any person of the Bonds shall be sufficient for any purpose of this Resolution (except as otherwise
herein expressly provided) if made in the following manner, but the Trustee may nevertheless in its
discretion require further or other proof in cases where it deems the same desirable:
(1) The fact and date of the execution by any Bondholder or his attorney of such
instrument may be proved by the certificate, which need not be acknowledged or verified, of an
officer of a bank or trust company satisfactory to the Trustee or of any notary public or other
officer authorized to take acknowledgments of deeds to be recorded in the state in which she
purports to act, that the person signing such request or other instrument acknowledged to him the
execution thereof, or by an affidavit of a witness of such execution, duly sworn to before such
notary public or other officer. The authority of the person or persons executing any such
instrument on behalf of a corporate Bondholder may be established without further proof if such
instrument is signed by a person purporting to be the president or a vice president of such
corporation with a corporate seal affixed and attested by a person purporting to be its secretary or
an assistant secretary;
(2) The amount of Bonds transferable by delivery held by any person executing such
request or other instrument as a Bondholder, and the numbers and other identification thereof,
and the date of his holding such Bonds, may be proved by a certificate, which need not be
acknowledged or verified, satisfactory to the Trustee, executed by an officer of a trust company,
bank, financial institution or other depository or member of the National Association of Securities
Dealers, Inc. wherever situated, showing that at the date therein mentioned such person
exhibited to such officer or had on deposit with such depository the Bonds described in such
certificate. Continued ownership after the date stated in such certificate may be proved by the
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presentation of such certificate if the certificate contains a statement by such officer that the
depository held that Bonds therein referred to on the date of the certificate and that they will not
be surrendered without the surrender of the certificate to the depository, except with the consent
of the Trustee, and a certificate of the Trustee, which need not be acknowledged or verified, that
such consent has not been given.
(B) Except in the case of Bonds transferable by delivery only, the ownership of Bonds and the
amount, numbers and other identification, and date of holding the same shall be proved by the registry
books. Any request, consent or vote of the owner of any Bond shall bind all future owners of such Bond
in respect of anything done or suffered to be done by the Bank or any Fiduciary in accordance therewith.
ARTICLE IX
COVENANTS OF THE BANK
The Bank covenants and agrees with the Holders of the Bonds as follows:
Section 901 - Payment of Bonds. The Bank shall 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 shall duly and
punctually pay, or cause to be paid, all Sinking Fund Installments, if any, becoming payable with respect
to any Series of Bonds.
71
Section 902- Extension of Payment of Bonds. The Bank shall not directly or indirectly extend or
assent to the extension of the maturity of any of the Bonds or the time of payment of any claims for
interest by the purchase or funding of such Bonds or claims for interest or by any other arrangement and
in case the maturity of any of the Bonds or the time for payment of any claims for interest shall be
extended, such Bonds or claims for interest shall not be entitled in case of any default under this
Resolution to the benefit of this Resolution or to any payment out of any assets of the Bank or the funds
(except funds held in trust for the payment of particular Bonds or claims for interest pursuant to this
Resolution) prior to benefits accorded to or the payment of the principal of all Bonds issued and
Outstanding the maturity of which has not been extended and of such portion of the accrued interest on
the Bonds as shall not be represented by such extended claims for interest Nothing herein shall be
deemed to limit the right of the Bank to issue Refunding Bonds as provided in Section 203 and such
issuance shall not be deemed to constitute an extension of maturity of Bonds.
Section 903 - Offices for Servicing Bonds. The Bank shall at all times maintain an office or
agency where Bonds may be presented for transfer or exchange, and where notices, presentations and
demands upon the Bank in respect of the Bonds or of this Resolution may be served. The Bank hereby
appoints the Trustee as its agent to maintain such office or agency for the transfer or exchange of Bonds
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and for the service of such notices, presentations and demands upon the Bank and may appoint one or
more co-registrars for such purposes. The Bank hereby appoints the Trustee as Paying Agent and
hereby appoints the Paying Agent as its agent to maintain such offices or agencies for the payment of
Bonds.
Section 904- Further Assurances. At any and all times the Bank shall, so far as it may be
authorized by law, pass, make, do, execute, acknowledge and deliver, all and every such further
resolutions, acts, deeds, conveyances, assignments, transfers and assurances as may be necessary for
the better assuring, conveying, granting, assigning, confirming all and singular the rights, Municipal Bonds
Payments, the Municipal Bonds and other monies, securities, funds and property hereby pledged or
assigned, or intended so to be, or which the Bank may hereafter become bound to pledge or assign.
Section 905 - Power to Issue Bonds and Make Pledges. The Bank is duly authorized pursuant to
law to authorize and issue the Bonds for the purposes herein authorized and to adopt this Resolution and
to pledge the Municipal Bonds Payments, the Municipal Bonds and other monies, securities, funds and
property purported to be pledged by this Resolution in the manner and to the extent provided in this
Resolution. The Municipal Bonds Payments, the Municipal Bonds, and other monies, securities, funds
and property 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 created by this Resolution,
except for the liens in favor of the Trustee and Paying Agents provided in Section 805 hereof, and all
corporate or other action on the part of the Bank to that end has been duly 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 Bank in accordance with their terms. The Bank shall 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 monies, securities, funds and property pledged under this Resolution and all the rights of the
Bondholders under this Resolution against all claims and demands of all persons whomsoever.
Section 906- General Covenants of the Bank. (A) The Bank 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 Bank
under law and this Resolution in accordance with the terms hereof.
(B) Upon the date of issuance of any of the Bonds, all conditions, acts and things required by
law and this Resolution to exist, to have happened and to have been performed precedent to and in the
issuance of such Bonds shall exist, have happened and have been performed and the issue of such
Bonds, together with all other indebtedness of the Bank, shall be within every debt and other limit
prescribed by the laws of the State.
(C) The Bank does hereby pledge to and agree 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 Bank to fulfill the terms of any
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I1
agreements made with Bondholders, or in any way impair the rights and remedies of such Holders 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.
(D) Upon failure of a Governmental Unit to make any principal or interest payment on the date
specified in, and as required by, the applicable Loan Agreement securing payment of the Municipal
Bonds, the Trustee shall immediately notify the Executive Director of the Bank who shall then take the
following actions:
(i) the Executive Director shall within two days of the Governmental Units failure to
make the Municipal Bonds Payment pursuant to the terms of the applicable Loan Agreement,
contact such Governmental Unit and request payment;
(ii) in the event payment is not made by the Governmental Unit pursuant to (i) above, the
Trustee shall make up such deficiencies from the Reserve Fund as provided for in Section 603(E)
of this Resolution;
(if) in the event payment is not made by the Governmental Unit pursuant to (i) above,
and the Reserve Fund is drawn upon to make up such deficiency pursuant to (ii) above, the
Executive Director shall initiate intercept proceedings with the applicable State agencies pursuant
to Section 917 of this Resolution;
(iv) in the event amounts collected pursuant to (iii) above are insufficient to replenish
amounts held in the Reserve Fund to the Reserve Fund Requirement, the Executive Director
shall contact the Governor of the State and the State legislature as set forth in Section 911(B) of
this Resolution; and
(v) if there remains a deficiency in the Reserve Fund after the Executive Director has
exhausted the requirements found in (i) through (iv) above, the Executive Director shall request a
loan from the Department of Revenue pursuant to AS 44.85.270(i) and provide for such loan to
be used to cause the amount in the Reserve Fund to satisfy the Reserve Fund Requirement
Section 907 - Accounts and Reports. (A) The Bank shall keep, or cause to be kept, proper books
of record and account in which complete and correct entries shall be made of its transactions relating to
all Municipal Bonds Payments, Municipal Bonds, the Fees and Charges and all funds and accounts
established by this Resolution, which shall at all reasonable times be subject to the inspection of the
Trustee or the Holders of an aggregate of not less than twenty-five per centum (25%) in principal amount
of Bonds then Outstanding or their representatives duly authorized in writing.
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(B) The Bank shall annually, on or before the last day of January in each year, file with the
Trustee a copy of an audit for the preceding Fiscal Year, accompanied by an Accountant's Certificate,
and an annual report setting forth in complete and reasonable detail: (a) its operations and
accomplishments; (b) its receipts and expenditures during such Fiscal Year in accordance with the
categories or classifications established by the Bank for its operating and capital outlay purposes; (c) its
assets and liabilities at the end of such Fiscal Year, including a schedule of its Municipal Bonds
Payments, Municipal Bonds, Fees and Charges and the status of reserve, funds and the funds and
accounts established by this Resolution; and (d) a schedule of its Bonds Outstanding and other
obligations outstanding at the end of such Fiscal Year, together with a statement of the amounts paid,
redeemed and issued during such Fiscal Year. A copy of each such annual report and Accountant's
Certificate shall be mailed promptly thereafter by the Trustee to each Bondholder who shall have filed his
name and address with the Bank for such purpose.
Section 908 - Personnel and Servicing of Programs. (A) The Bank shall at all times appoint,
retain and employ competent personnel for the purpose of carrying out its respective programs and shall
establish and enforce reasonable rules, regulations, tests and standards governing the employment of
such personnel at reasonable compensation, salaries, fees and charges and all persons employed by the
Bank shall be qualified for their respective positions.
(B) The Bank may pay to the respective State agency, governmental unit or political subdivision
of the State from the Operating Fund such amounts as are necessary to reimburse the respective State
agency, governmental unit or political subdivision of the state for the reasonable costs of any services
performed for the Bank.
Section 909 - Waiver of Laws. The Bank shall 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 law now or at any time
hereafter in force which may affect the covenants and agreements contained in this Resolution or in any
Series Resolution or in the Bonds, and all benefit or advantage of any such law or laws is hereby
expressly waived by the Bank.
Section 910- Fees and Charges. The Bank shall establish, make, maintain and charge such
Fees and Charges to each Governmental Unit to which a Loan is made, and shall 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 monies which, together with such Governmental
Unit's Allocable Proportion of other monies available under the provisions of this Resolution, and other
monies available therefor, including any 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 paragraph (3) of Section 603, will be
at least sufficient
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended) Page 44
(a) To pay, as the same become due, the Governmental Unit's Allocable Proportion of the
Administrative Expenses of the Bank; and
(b) To pay, as the same become due, the Governmental Unit's Allocable Proportion of the fees
and expenses of the Trustee and Paying Agents.
The Bank shall provide the Trustee with a schedule of the Fees and Charges to he paid by each
Governmental Unit, and of each revision thereof, and shall require each Governmental Unit to make
payment of the Fees and Charges required to be paid by it directly to the Trustee. The Trustee shall
promptly advise the Bank of each and every failure of a Governmental Unit to make payment of Fees and
Charges when due in accordance with the applicable schedule.
Section 911 - Administration of Reserve . (A) The Bank shall establish and maintain the
Reserve Fund in accordance with the provisions of this Resolution. All monies and securities held in the
Reserve Fund shall be used, disbursed and applied only in accordance with the provisions of this
Resolution and for no other purpose. Monies and securities held in the Reserve Fund shall not be
withdrawn therefrom at any time in such amount as would reduce the amount in such Fund to an amount
less than the Required Debt Service Reserve except as otherwise provided in this Resolution.
(B) The Bank shall cause the Chairman of the Board of Directors of the Bank annually, before
each January 30, to make and deliver to the Governor of the State and to the legislature his certificate
71 stating the amount, if any, required to restore the Alaska Municipal Bond Bank Reserve Fund to the
amount of the Required Debt Service Reserve and a copy of such certificate shall be promptly delivered
by the Bank to the Trustee. Monies received by the Bank from the State pursuant to such a certification,
in accordance with the provisions of Section 44.85.270(g) of the Act shall, to the extent such certification
was occasioned by the fact that the amount in the Reserve Fund was less than the Required Debt
Service Reserve, be deposited in the Reserve Fund, as required by paragraph (D) of Section 603.
(C) The Bank shall annually submit to the State a budget request for an appropriation to cause,
if necessary, amounts held in the Reserve Fund to equal the Reserve Fund Requirement (Amendment:
Effective August 19, 2009)
Section 912- Issuance of Additional Obligations. (A) The Bank shall not subsequent to the
issuance of the initial Series of Bonds under this Resolution create or permit the creation of or issue any
obligations or create any additional indebtedness which will be secured by a charge and lien on the
Municipal Bonds and the Municipal Bonds Payments or which will be payable from the Debt Service Fund
or the Reserve Fund, except that additional Series of Bonds may be issued from time to time pursuant to
a Series Resolution subsequent to the issuance of the initial Series of Bonds under this Resolution on a
parity with the Bonds of such initial Series of Bonds and secured by an equal charge and lien on the
ALAKS.A MUNICPAL BOND BANK
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Municipal Bonds and the Municipal Bonds Payments and payable equally and ratably from the Debt
Service Fund and Reserve Fund for the purposes of (i) making Loans to Governmental Units, (ii) making
payments into the Interest Account, (it) making payments into the Reserve Fund, (iv) funding of Notes
theretofore issued by the Bank for any purposes for which Bonds may have been issued, and (v) subject
to the provisions and limitations of Section 203, the refunding of any Bonds then Outstanding, under the
conditions and subject to the limitations in this Section 912 provided.
(B) No additional Series of Bonds shall be issued subsequent to the issuance of the initial Series
of Bonds under this Resolution unless:
(1) the aggregate principal amount of Bonds and Notes of the Bank 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;
(2) there is at the time of the issuance of such additional Bonds no deficiency in the amounts
required by this Resolution or any Series Resolution to be paid into the Debt Service Fund and into the
Reserve Fund;
(3) 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, shall not be less than the Required Debt Service Reserve; and
(4) the maturities of, or Sinking Fund Installments for, the additional Bonds then being issued
representing Loan Obligations, unless such additional Bonds are being issued to refund Outstanding
Bonds in accordance with the provisions of Section 203, shall 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.
(C) The Bank expressly reserves the right to adopt one or more other general obligation 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 created pursuant to this Resolution.
Section 913 - Loan Agreement Provisions. No Loan shall be made by the Bank from the
proceeds of the sale of Bonds, and no Bonds shall be issued by the Bank for the purpose of providing
funds with which to make a Loan, unless the Loan Agreement under which such Loan is to be made shall
comply with, and no Bonds shall be issued by the Bank to fund Notes or to refund Bonds unless the Loan
Agreement under which the Loan was made from the proceeds of such Notes or Bonds, shall also comply
with, the following terms, conditions, provisions and limitations:
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General Obligation Bond Resolution (Amended)
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(a) The Governmental Unit which is a party to such Loan agreement must be a Governmental
Unit as defined by the Resolution and the Loan Agreement must be executed in accordance with existing
laws;
(b) The Governmental Unit, prior to or simultaneously with the issuance of Bonds of the Bank
issued to make a Loan to the Governmental Unit, shall issue Municipal Bonds which are valid obligations
of the Governmental Unit as required by the Act;
(c) The Municipal Bonds Interest Payments to be made by the Governmental Unit under such
Loan Agreement shall be not less than the interest payments the Bank is required to make on the Loan
Obligation and shall be scheduled by the Bank in such manner and at such times (notwithstanding the
dates of payment as stated in the Municipal Bonds) as to provide funds sufficient to pay interest on the
Loan Obligation as the same becomes due;
(d) The Municipal Bonds Principal Payments to be made by the Governmental Unit under such
Loan Agreement shall be scheduled by the Bank in such manner and at such times (notwithstanding the
dates of payment as stated in the Municipal Bonds) as to provide funds sufficient to pay the principal of
the Loan Obligation as the same matures;
(e) The Governmental Unit shall be obligated to pay Fees and Charges to the Bank at the times
and in the amounts which will enable the Bank to comply with the provisions of Section 910;
171
(f) The Governmental Unit shall agree that in the event the amounts referred to in paragraphs (c)
and (d) are not paid by it to the 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 shall be withheld from such
Governmental Unit and paid over directly to the Trustee acting under the General Obligation Bond
Resolution and that the said agreement shall be full warrant, authority and direction to make such
payment to any official of the State responsible for such payment upon notice to such official by the Bank
as provided in the Act:
(g) The Bank shall not sell and the Governmental Unit shall 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 in the event of any such sale or
redemption of such Municipal Bonds, the same shall be in an amount not less than the aggregate of (i)
the principal amount of the Loan Obligation so to be redeemed, (ii) the interest to accrue on the Loan
Obligation so to be redeemed to the next redemption date thereof not previously paid, (iii) the applicable
premium, if any, payable on the Loan Obligation so to be redeemed, and (iv) the costs and expenses of
the Bank in effecting the redemption of the Loan Obligation so to be redeemed; provided, however, that in
the event the Loan Obligation has been refunded and the Refunding Bonds therefor were issued in a
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
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principal amount in excess of or less than the Loan Obligation remaining unpaid at the date of issuance of
such Refunding Bonds, the amount which the Governmental Unit 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 Obligation has been refunded and the interest the Bank is required to pay on the
Refunding Bonds therefor is less than the interest that the Bank was required to pay on the Loan
Obligation, the amount which the Governmental Unit shall be obligated to pay or the Bank shall receive
under item (U) above shall be the amount of interest to accrue on such Refunding Bonds Outstanding.
(h) The Governmental Unit shall give the Bank at least fifty (50) days' notice of intention to
redeem its Municipal Bonds.
Section 914- Modification of Loan Agreement Terms. The Bank shall not consent to the
modification of, or modify, the rate or 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; provided, however, that, in the event the Loan
Obligation is being or has been refunded and the Refunding Bonds therefor are in a principal amount in
excess of or less than the principal amount of the Bonds refunded, the Bank may consent to the
modification of and modify the Loan agreement relating to such Loan and the Municipal Bonds evidencing
the same, and the Municipal Bonds Payments to be made thereunder so long as such Municipal Bonds
Payments are sufficient in amount and payable at the times required for the payment of the principal of
and interest on such Refunding Bonds, and further provided, however, that, in the event the Loan
Obligation has been refunded and the interest the Bank is required to pay on the Refunding Bonds issued
for the purpose of refunding such original Bonds is less than the interest the Bank was required to pay on
such original Bonds refunded by the Bank, the Municipal Bonds Interest Payments to be made by the
Governmental Unit in respect of such Loan may be reduced so that the amounts required to be paid shall
be sufficient to pay interest on such Refunding Bonds Outstanding.
Section 915- Sale of Municipal Bonds by Bank. The Bank shall not sell any Municipal Bonds
except as provided in subsection (g) of Section 913.
Section 916- Disposition of the Proceeds of Sale or Redemption of Municipal Bonds. In the
event Municipal Bonds or other obligations securing a Loan shall be sold by the Bank or redeemed by the
Governmental Unit in accordance with terms of the applicable Loan Agreement, the Bank shall, upon
such sale by the Bank or redemption by the Governmental Unit, deposit the proceeds of such sale or
redemption, except an amount thereof equal to the costs and expenses of the Bank in effecting the
redemption of the Bonds to be redeemed, into the applicable sub-account or sub-accounts in the
Redemption Account and shall apply the same to the purchase, retirement or redemption of the
ALA KNA MUNICPAL BOND BANK
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Page 48
appropriate Bonds in accordance with the provisions of this Resolution. The balance in such applicable
sub-account or sub-accounts of such proceeds of sale or redemption of Municipal Bonds after the
redemption of the Bonds to be redeemed shall be deposited in the Operating Fund.
Section 917 - Enforcement of Municipal Bonds. The Bank shall 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 evidencing Loans made by the Bank,
including the prompt collection, and the giving of notice to the Commissioner of Revenue, Commissioner
of Commerce, Community and Economic Development and the 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 Governmental Unit in the payment of its Municipal Bonds Payment and
shall promptly transfer any such monies, upon receipt thereof, to the Trustee and, in such event, or if
such monies are paid directly to the Trustee, the Trustee shall deposit any such monies 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 shall have been made up by the Reserve Fund
pursuant to paragraph (5) of Section 603, in the Reserve Fund to the extent of such deficiencies.
Section 918- Continuing Disclosure; Bankruptcy. (A) The Bank hereby covenants and agrees
that it will comply with and carry out all the provisions of each Continuing Disclosure Certificate.
Notwithstanding any other provision of this Resolution, failure of the Bank to comply with any Continuing
Disclosure Certificate shall not be considered an Event of Default, and any Bondholder may take such
) actions only as may be provided in such Continuing Disclosure Certificate.
(B) The Bank hereby covenants and agrees that it will notify the Rating Agencies then rating the
Bonds of any change in the Act which would permit it or require it to declare bankruptcy under the
Bankruptcy Code.
Section 919- Tax Covenants. The Bank shall not knowingly take or cause any action to be taken
which would cause interest on any Bonds to become taxable for federal income tax purposes. The Bank
shall at all times do and perform all acts and things necessary or desirable, including, but not limited to,
complying with the rebate provisions of Section 148 of the Code, as applicable, and complying with the
provisions of any letter of instructions from bond counsel, in order to assure that interest paid on Bonds
shall, for purposes of federal income taxation, be excludable from the gross income of the recipients
thereof and exempt from taxation. The Bank shall not permit at any time or times any proceeds of any
Bonds or any amounts held hereunder to be used, directly or indirectly, in a manner which would result in
the exclusion of any Bond from the treatment afforded by subsection (a) of Section 103 of the Code.
ARTICLE X
SERIES RESOLUTION AND SUPPLEMENTAL RESOLUTIONS
ALAKSA MUNICPAL BOND BANK
General Obligello,, Bend Resolution (Amended)
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Section 1001 - Modification and Amendment without Consent. Notwithstanding any other
provisions of this Article X, or Article XI, the Bank may adopt at any time or from time to time Series
Resolutions or Supplemental Resolutions for any one or more of the following purposes, and any such
Series Resolution or Supplemental Resolution shall become effective in accordance with its terms upon
the filing with the Trustee of a copy thereof certified by an Authorized Officer:
(A) To provide for the issuance of a Series of Bonds pursuant to the provisions of this Resolution
and to specify and determine such matters and things referred to in Article II of this Resolution and to
prescribe the terms and conditions pursuant to which such Bonds may be issued, paid or redeemed;
(B) To add to the covenants and agreements of the Bank for the purpose of further securing the
payment of the Bonds, provided such additional covenants and agreements are not contrary to or
inconsistent with the covenants and agreements of the Bank contained in this Resolution;
(C) To prescribe further limitations and restrictions upon the issuance of Bonds and the incurring
of indebtedness by the Bank which are not contrary to or inconsistent with the limitations and restrictions
thereon theretofore in effect;
(D) To surrender any right, power or privilege reserved to or conferred upon the Bank by the
terms of this Resolution, provided that the surrender of such right, power or privilege is not contrary to or
inconsistent with the covenants and agreements of the Bank contained in this Resolution;
(E) To confirm as further assurance any pledge under and the subjection to any lien, claim or
pledge created or to be created by the provisions of this Resolution of the Municipal Bonds and Municipal
Bonds Payments or of any other monies, securities or funds;
(F) To modify any of the previsions of this Resolution or any previously adopted Series
Resolution in any other respect; provided that such modifications shall not be effective until after all
Bonds of any Series of Bonds Outstanding as of the date of adoption of such Series Resolution or
Supplemental Resolution shall cease to be Outstanding, and all Bonds issued under such modified
resolutions shall contain a specific reference to the modifications;
(G) To cure any ambiguity or defect or inconsistent provision in this Resolution or to insert such
provisions clarifying matters or questions arising under this Resolution as are necessary or desirable in
the event any such modifications are not contrary to or inconsistent with this Resolution as theretofore in
effect.
Section 1002- Supplemental Resolutions Effective with Consent of Bondholders. The provisions
of this Resolution may also be modified or amended at any time or from time to time by a Supplemental
Resolution, with the consent of Bondholders in accordance with and subject to the provisions of Article XI
ALAKSA MUNIOPAL BOND BANK
General Obligation Bond Resolution (Amended)
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which Supplemental Resolution, upon the filing with the Trustee of a copy thereof, certified by an
Authorized Officer and upon compliance with the Article XI, shall become fully effective in accordance
with its terms as provided in said Article.
Section 1003- General Provisions Relating to Series Resolutions and Supplemental Resolutions.
This Resolution shall not be modified or amended in any respect except as provided in and in accordance
with and subject to the provisions of this Article X and Article XI. Nothing contained in this Article X or
Article XI shall affect or limit the rights or obligations of the Bank to adopt, make, do, execute or deliver
any resolution, act or other instrument pursuant to the provisions of Section 904 or the right or obligation
of the Bank to execute and deliver to the Trustee or any Paying Agent any instrument which elsewhere in
this Resolution it is provided or permitted to be delivered to the Trustee or any Paying Agent
A copy of every Series Resolution and Supplemental Resolution adopted by the Bank when filed
with the Trustee shall be accompanied by a Counsel's Opinion stating that such Series Resolution or
Supplemental Resolution has been duly and lawfully adopted in accordance with the provisions of this
Resolution, is authorized or permitted by this Resolution and is valid and binding upon the Bank and
enforceable in accordance with its terms (subject, as to enforcement of remedies, to applicable
bankruptcy, reorganization, insolvency, moratorium, or other laws affecting creditor's rights generally from
time to time in effect).
The Trustee is hereby authorized to accept delivery of a certified copy of any Series Resolution or
I'll Supplemental Resolution permitted or authorized pursuant to the provisions of this Resolution and to
00 make all further agreements and stipulations which may be contained therein, and, in taking such action,
the Trustee shall be fully protected in relying on Counsel's Opinion that such Series Resolution or
Supplemental Resolution is authorized or permitted by the provisions of this Resolution.
No Series Resolution or Supplemental Resolution changing, amending or modifying any of the
rights or obligations of the Trustee or of any Paying Agent may be adopted by the Bank without the
written consent of the Trustee or Paying Agent affected thereby.
ARTICLE XI
AMENDMENTS
Section 1101 - Powers of Amendment Any modification or amendment of this Resolution and of
the rights and obligations of the Bank and of the Holders of the Bonds, in any particular, may be made by
a Supplemental Resolution, with the written consent given as hereinafter provided in Section 1102, (a) of
the Holders of at least two-thirds in principal amount of the Bonds Outstanding at the time such consent is
given, or (b) 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
ALAKSA MUNJCPAL BOND BANK
General ObII5io,, Bond Resolution (Amended) Page 51
Series so affected and Outstanding at the time such consent is given; provided, however, that such
modification or amendment shall not (i) permit 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) or a reduction in the principal amount or the Redemption Price thereof or in the rate of
interest thereon, or (iii) a reduction of the percentage of the Holders of which is required to effect any
such modification or amendment, or (iv) permit the creation of any lien prior to or on a parity with the lien
created by this Resolution (except in the manner provided by this Resolution) or deprive the Holders of
the Bonds of the lien created by this Resolution, without the consent of the Holders of all the Bonds
Outstanding or of the Series of Bonds affected by such modification or amendment For the purposes of
this Section, a Series shall be deemed to be affected by a modification or amendment of this Resolution if
the same adversely affects or diminishes the rights of the Holders of Bonds of such Series.
Section 1102- Consent of Bondholders. (A) The Bank may at any time adopt a Supplemental
Resolution making a modification or amendment permitted by the provisions of Section 1101, to take
effect when and as provided in this Section. A copy of such Supplemental Resolution (or brief summary
thereof or reference thereto), together with a request to Bondholders for their consent thereto, shall be to
by, or on behalf of, the Bank's to Bondholders . Such Supplemental Resolution shall not be effective
unless and until there shall have been filed with the Trustee (a) the written consents of Holders of the
percentages of Outstanding Bonds specified in Section 1101 and (b) a Counsel's Opinion stating that
such Supplemental Resolution has been duly and lawfully adopted and filed by the Bank in accordance
with the provisions of this Resolution, is authorized or permitted hereby and is valid and binding upon the
Bank and enforceable in accordance with its terms, and (H) a notice shall have been mailed as hereinafter
provided in this Section.
(B) The consent of a Bondholder to any modification or amendment shall be effective only if
accompanied by proof of the holding, at the date of such consent, of the Bonds with respect to which
such consent is given, which proof shall be such as is permitted by Section 813. A certificate or
certificates by the Trustee filed with the Trustee that it has examined such proof and that such proof is
sufficient in accordance with Section 813 shall be conclusive that the consents have been given by the
Holders of the Bonds described in such certificate or certificates of the Trustee. Any such consent shall
be binding upon the Holder of the Bonds giving such consent and upon any subsequent Holder of such
Bonds and of any Bonds issued in exchange therefor (regardless of whether such subsequent Holder
thereof has notice thereof) unless such consent is revoked in writing by the holder of such Bonds giving
such consent or a subsequent holder thereof by filing with the Trustee, prior to the time when the written
statement of the Trustee hereinafter provided for in this Section is filed, such revocation and, if such
Bonds are transferable by delivery, proof that such Bonds are held by the signer of such revocation in the
manner permitted by Section 813. The fact that a consent has not been revoked may likewise be proved
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General Obligation Bond Resolution (Amended) Page 52
by a certificate of the Trustee filed with the Trustee to the effect that no revocation thereof is on file with
the Trustee.
(C) At any time after the Holders of the required percentages of Bonds shall have tiled their
consents to the Supplemental Resolution, the Trustee shall make and file with the Bank and the Trustee a
written statement that the Holders of such required percentages of Bonds have filed such consents. Such
written statement shall be conclusive that such consents have been so filed. At any time thereafter
notice, stating in substance that the Supplemental Resolution adopted by the Bank on a stated date, a
copy of which is on file with the Trustee, has been consented to by the Holders of the required
percentages of Bonds and will be effective as provided in this Section, may be given to Bondholders by
the Bank by mailing such notice to Bondholders at least once not more than ninety days (90) after the
Holders of the required percentages of Bonds shall have filed their consents to the Supplemental
Resolution and the written statement of the Trustee hereinabove provided for is filed. The Bank shall file
with the Trustee proof of the publication of such notice and, if the same shall have been mailed to
Bondholders, of the mailing thereof. A record, consisting of the papers required or permitted by this
Section to be tiled with the Trustee, shall be proof of the matters therein stated. Such Supplemental
Resolution making such amendment or modification shall be deemed conclusively binding upon the Bank,
the Fiduciaries and the Holders of all Bonds at the expiration of forty (40) days after the filing with the
Trustee of the proof of the first publication of such last mentioned notice, except in the event of a final
decree of a court of competent jurisdiction setting aside such Supplemental Resolution in a legal action or
I1 equitable proceeding for purpose commenced within such forty day period; except that any Fiduciary and
the Bank during such forty day period and any such further period during which any such action or
proceeding may be pending shall be entitled in their absolute discretion to take such action, or to refrain
from taking such action, with respect to such Supplemental Resolution as they may deem expedient
Section 1103- Modifications by Unanimous Consent The terms and provisions of this Resolution
and the rights and obligations of the Bank and of the Holders of the Bonds may be modified or amended
in any respect upon the adoption and filing with the Trustee by the Bank of a copy of a Supplemental
Resolution certified by an Authorized Officer and the consent of the Holders of all of the Bonds then
Outstanding, such consent to be given as provided in Section 1102, except that no notice to Bondholders
either by mailing or publication shall be required provided, however, that no such modification or
amendment shall change or modify any of the rights or obligations of the Trustee or Paying Agents
without the tiling with the Trustee of its written assent thereto in addition to the consent of Bondholders.
Section 1104 - Mailing and Publication. Any provision in this Article for the mailing of a notice or
other document to Bondholders shall be fully complied with if it is mailed postage prepaid only (i) to each
registered owner of Bonds then Outstanding at his address, if any, appearing upon the registry books of
ALAKSA MUNICPAL BOND BANK
General Obligation Bond Resolution (Amended)
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the Bank, (ii) to each Holder of any Bond payable to bearer who shall have filed with the Trustee an
address for notices, and (iii) to the Trustee.
Section 1105 - Exclusion of Bonds. Bonds owned or held by or for the account of the Bank shall
not be deemed Outstanding for the purpose of consent or other action or any calculation of Outstanding
Bonds provided for in this Resolution, and the Bank shall not be entitled with respect to such Bonds to
give any consent or take any other action provided for in this Resolution. At the time of any consent or
other action taken under this Resolution, the Bank shall furnish the Trustee a certificate of an authorized
Officer, upon which the Trustee may rely, describing all Bonds so to be excluded.
Section 1106 - Notation on Bonds. Bonds delivered after the effective date of any action taken as
in Article X or XI provided may, and if the Trustee so determines, shall, bear notation by endorsement or
otherwise in form approved by the Bank and the Trustee as to such action, and in that case upon demand
of the Holder of any Bond Outstanding at such effective date and upon presentation of his Bond for such
purpose at the corporate trust office of the Trustee suitable notation shall be made on such Bond by the
Trustee as to any such action. If the Bank or the Trustee shall so determine, new Bonds so modified as
in the opinion of the Trustee and the Bank to conform to such action shall be prepared and delivered, and
upon demand of the Holder of any Bond then Outstanding shall be exchanged, without cost to such
Bondholder, for Bonds of the same Series and maturity then Outstanding, upon surrender of such Bonds.
ARTICLE XII
DEFAULTS AND REMEDIES
Section 1201 - Trustee to Exercise Powers of Statutory Trustee. The Trustee shall be and
hereby is vested with all of the rights, powers and duties of a trustee appointed by Bondholders pursuant
to Section 44.85.310 and 320 of the Act and the right of Bondholders to appoint a trustee pursuant to
Section 44.85.310 and 320 of the Act is hereby abrogated pursuant to Section 44.85.220(18) of the Act.
Section 1202 - Events of Default. Each of the following events is hereby declared an "Event of
Default," that is to say; if
(a) the Bank shall default in the payment of the principal or Redemption Price of, Sinking Fund
Installment for, or interest on, any Bond when and as the same shall become due whether at maturity or
upon call for redemption, or otherwise; or
(b) the Bank shall fail or refuse to comply with the provisions of Section 44.85.270(9) of the Act,
or such amounts as shall be certified by the Chair of the Bank to the Governor and to the Legislature
pursuant to such provisions of the Act shall not be appropriated and paid to the Bank prior to the
termination of the then current State fiscal year; or
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(c) the Bank shall fail or refuse to comply with the provisions of the Act, other than as provided in
(b) above, or shall default in the performance or observance of any other of the covenants, agreements or
conditions on its part in this Resolution, any Series Resolution, any Supplemental Resolution, or in the
Bonds contained, and such failure, refusal or default shall continue for a period of forty-five (45) days after
written notice thereof by the Trustee or the Holders of not less than twenty-five per centum (25%) in
principal amount of the Outstanding Bonds.
Provided, however, that an Event of Default shall not be deemed to exist under the provisions of
this paragraph (c) upon the failure of the Bank to make and collect Fees and Charges required to be
made and collected by the provisions of this Resolution or upon the failure of the Bank to enforce any
obligation undertaken by a Governmental Unit pursuant to a Loan Agreement including the making of the
stipulated Municipal Bonds Payment so long as the Bank may otherwise be directed by law and so long
as the Bank shall be provided with monies 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 shall become due during the period for which the Bank shall be 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
Section 1203 - Remedies. (A) Upon the happening and continuance of any Event of Default
specified in paragraph (a) of Section 1202, the Trustee shall proceed, or upon the happening and
continuance of any Event of Default specified in paragraphs (b) and (c) of Section 1202, the Trustee may
proceed, and upon the written request of the Holders of not less than twenty-five per centum (25%) in
principal amount of the Outstanding Bonds shall 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, shall deem most effectual to protect and enforce such rights:
(1) 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 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 Bank to carry out
any other covenant or agreement with Bondholders and to perform its duties under the Act;
(2) by bringing suit upon the Bonds;
(3) by action or suit in equity, require the Bank to account as if it were the trustee of an express
trust for the Holders of the Bonds;
(4) 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;
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(B) Upon the occurrence of an Event of Default under Section 1202(a), unless the principal of all
the Bonds shall have already become due and payable, the Trustee, by notice in writing to the 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, shall, in accordance with the provisions of the Act, 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 shall become and shall be immediately due and
payable, anything in this Resolution or in the Bonds contained to the contrary notwithstanding.
This provision, however, is subject to the condition that if, at any time after the principal of the
Bonds shall have been so declared due and payable, and before any judgment or decree for the payment
of the monies due shall have been obtained or entered, the Bank shall deposit with the Trustee a sum
sufficient to pay all principal on the Bonds matured prior to such declaration and all matured installments
of interest (if any) 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) shall have been made good or cured to the satisfaction
of the Trustee or provision deemed by the Trustee to be adequate shall have been made therefor, then,
and in every such case, 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; but no such
rescission and annulment shall extend to or shall affect any subsequent default, or shall impair or exhaust
any right or power consequent thereon.
(C) In the enforcement of any remedy under this Resolution, the Trustee shall be entitled to sue
for, enforce payment on and receive any and all amounts then or during any default becoming, and at any
time remaining, due from the Bank for principal, Redemption Price, interest or otherwise, under any
provision of this Resolution or a Series Resolution or of the Bonds, and unpaid, with interest on overdue
payments at the rate or rates of interest specified in such Bonds, together with any and all costs and
expenses of collection and of all proceedings hereunder and under such Bonds, without prejudice to any
other right or remedy of the Trustee or of the Bondholders, and to recover and enforce a judgment or
decree against the Bank for any portion of such amounts remaining unpaid, with interest, costs and
expenses, and to collect from any monies available for such purpose, in any manner provided by law, the
monies adjudged or decreed to be payable.
Section 1204- Priority of Payments After Default During the continuance of an Event of Default,
in the event that the funds held by the Trustee and Paying Agents shall be insufficient for the payment of
interest and principal or Redemption Price then due on the Bonds, such funds (other than funds held for
the payment or redemption of particular Bonds which have theretofore become due at maturity or by call
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for redemption) and any other monies received or collected by the Trustee acting pursuant to the Act and
this Article XII, after making provision for the payment of any expenses necessary in the opinion of the
Trustee to protect the interests of the Holders of the Bonds, and for the payment of the charges and
expenses and liabilities incurred and advances made by the Trustee or any Paying Agents in the
performance of their respective duties under this Resolution, shall be applied as follows:
(a) Unless the principal of all of the Bonds shall have become or have been declared due and
payable,
FIRST: To the payment to the persons entitled thereto of all installments of interest then
due in the order of the maturity of such installments, together with interest on overdue
installments of interest and, if the amount available shall not be sufficient to pay in full any
installment, then to the payment thereof ratably, according to the amounts due on such
installment, to the persons entitled thereto, without any discrimination or preference; and
SECOND: To the payment to the persons entitled thereto of the unpaid principal or
Redemption Price of any Bonds which shall have become due, whether at maturity or by call for
redemption, in the order of their due dates and, if the amounts available shall not be sufficient to
pay in full all the Bonds due on any date, then to the payment thereof ratably, according to the
amounts of principal or Redemption Price due on such date, to the persons entitled thereto,
without any discrimination or preference.
(b) If the principal of all of the Bonds shall have become or have been declared due and payable,
to the payment of the principal and interest then due and unpaid upon the Bonds together with interest on
overdue installments of interest without preference or priority of principal over interest or of interest over
principal, or of any installment of interest over any other installment of interest, or of any Bond over any
other Bond, ratably, according to the amounts due respectively for principal and interest, to the persons
entitled thereto without any discrimination or preference except as to any difference in the respective
rates of interest specified in the Bonds.
Whenever monies are to be applied by the Trustee pursuant to the provisions of this Section
1204, such monies shall be applied by the Trustee at such times, and from time to time, as the Trustee in
its sole discretion shall determine, having due regard to the amount of such monies available for
application and the likelihood of additional money becoming available for such application in the future;
the deposit of such monies with the Paying Agents, or otherwise setting aside such monies in trust for the
proper purpose, shall constitute proper application by the Trustee: and the Trustee shall incur no liability
whatsoever to the Bank, to any Bondholder or to any other person for any delay in applying any such
monies, so long as the Trustee acts with reasonable diligence, having due regard for the circumstances,
and ultimately applies the same in accordance with such provisions of this Resolution as may be
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applicable at the time of application by the Trustee. Whenever the Trustee shall exercise such discretion
in applying such monies, it shall fix the date (which shall be an interest payment date unless the Trustee
shall deem another date more suitable) upon which such application is to be made and upon such date
interest on the amounts of principal to be paid on such date shall cease to accrue. The Trustee shall give
such notice as it may deem appropriate for the fixing of any such date. The Trustee shall not be required
to make payment to the Holder of any unpaid Bond unless such Bond shall be presented to the Trustee
for appropriate endorsement or for cancellation if fully paid. Interest on overdue installments of interest
shall be equal to the rate on the Bond as to which the interest installment is overdue.
The provisions of this Section 1204 are in all respects subject to the provisions of Section 902.
Section 1206- Termination of Proceedings. In case any proceeding taken by the Trustee on
account of any Event of Default shall have been discontinued or abandoned for any reason, then in every
such case the Bank, the Trustee and the Bondholders shall be restored to their former positions and
rights hereunder, respectively, and all rights, remedies, powers and duties of the Trustee shall continue
as though no such proceeding had been taken.
Section 1206- Bondholders' Direction of Proceedings. Anything in this Resolution to the contrary
notwithstanding, the Holders of the majority in principal amount of the Bonds then Outstanding shall have
the right by an instrument or concurrent instruments in writing executed and delivered to the Trustee, to
direct the method of conducting all remedial proceedings to be taken by the Trustee hereunder, provided
that such direction shall not be otherwise then in accordance with law or the provisions of this Resolution,
and that the Trustee shall have the right to decline to following any such direction which in the opinion of
the Trustee would be unjustly prejudicial to Bondholders not parties to such direction.
Section 1207 - Limitation on Rights of Bondholders. No Holder of any Bond shall have any right
to institute any suit, action, mandamus or other proceeding in equity or at law hereunder, or for the
protection or enforcement of any right under this Resolution or any right under law unless such Holder
shall have 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 twenty-five per
centum (25%) in principal amount of the Bonds then Outstanding shall have made written request of the
Trustee after the right to exercise such powers or right of action, as the case may be, shall have occurred,
and shall have afforded the Trustee a reasonable opportunity either to proceed to exercise the powers
herein granted or granted under the law or to institute such action, suit or proceeding in its name and
unless, also, there shall have been offered to the Trustee reasonable security and indemnity against the
costs, expenses and liabilities to be incurred therein or thereby and the Trustee shall have refused or
neglected to comply with such request within a reasonable time: and such notification, request and offer
of indemnity are hereby declared in every such case, at the option of the Trustee, to be conditions
precedent to the execution of the powers under this Resolution or for any other remedy hereunder or
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under law. It is understood and intended that no one or more Holders of the Bonds hereby secured shall
have any right in any manner whatever by his or their action to affect, disturb or prejudice the security of
this Resolution, or to enforce any right hereunder or under law with respect to the Bonds or this
Resolution, except in the manner herein provided, and that all proceedings at law or in equity shall be
instituted, had and maintained in the manner herein provided and for the benefit of all Holders of the
Outstanding Bonds. Notwithstanding the foregoing provisions of this Section or any other provisions of
this Article XII, the obligation of the Bank shall be absolute and unconditional to pay the principal or
Redemption Price of and interest on the Bonds to the respective Holders thereof at the respective due
dates thereof, and nothing herein shall affect or impair the right of action, which is absolute and
unconditional, of such Holders to enforce such payment.
Section 1208- Possession of Bonds by Trustee Not Required. All rights of action under this
Resolution or under any of the Bonds, enforceable by the Trustee, may be enforced by it without the
possession of any of the Bonds or the production thereof on the trial or other proceeding relative thereto,
and any such suit, action or proceeding instituted by the Trustee shall be brought in its name for the
benefit of all the Holders of such Bonds, subject to the provisions of this Resolution.
Section 1209- Remedies Not Exclusive. No remedy herein conferred upon or reserved to the
Trustee or to the Holders of the Bonds is intended to be exclusive of any other remedy or remedies, and
each and every such remedy shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity, or by statute.
Section 1210 - No Waiver of Default. No delay or omission of the Trustee or of any Holder of the
Bonds to exercise any right or power accruing upon any default shall impair any such right or power or
shall be construed to be a waiver of any such default or an acquiescence therein; and every power and
remedy given by this Resolution to the Trustee and the Holders of the Bonds, respectively, may be
exercised from time to time and as often as may be deemed expedient
Section 1211 - Notice of Event of Default The Trustee shall give to the Bondholders notice of
each Event of Default hereunder known to the Trustee within ninety (90) days after knowledge of the
occurrence thereof, unless such Event of Default shall have been remedied or cured before the giving of
such notice; provided that, except in the case of default in the payment of the principal or Redemption
Price of or interest on any of the Bonds, or in the making of any payment required to be made into the
Debt Service Fund or the Reserve Fund, the Trustee shall be protected in withholding such notice if and
so long as the board of directors, the executive committee, or a trust committee of directors or responsible
officers of the Trustee in good faith determines that the withholding of such notice is in the interests of the
Bondholders. Each such notice of Event of Default shall be given by the Trustee by mailing written notice
thereof: (1) to all registered Holders of Bonds, as the names and addresses of such Holders appear upon
the books for registration and transfer of Bonds as kept by the Trustee; (2) to such Bondholders as have
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filed their names and addresses with the Trustee for that purpose; and (3) to such other persons as is
required by law.
ARTICLE Xlii
DEFEASANCE
Section 1301 - Defeasance. (A) If the Bank shall pay or cause to be paid to the Holders of the
Bonds, the principal and interest and Redemption Price, if any, to become due thereon, at the times and
in the manner stipulated therein and in this Resolution, and also shall pay or cause to be paid all other
sums payable hereunder by the Bank, including any amounts payable to the United States, then the
pledge of any revenues and assets hereby pledged and all other rights granted hereby shall, at the
election of the Bank (evidenced by a certificate of an Authorized Officer filed with the Trustee, signifying
the intention of the Bank to discharge all such indebtedness and this Resolution and any Supplemental
Resolution), and notwithstanding that any Bonds shall not have been surrendered for payment, be
discharged and satisfied. In such event, the Trustee shall, upon the written request of the Bank, execute
and deliver to the Bank all such instruments as may be desirable to evidence such discharge and
satisfaction and the Fiduciaries shall pay over or deliver to the Bank all moneys or securities held by them
pursuant to this Resolution which are not required for the payment or redemption of Bonds not theretofore
surrendered for such payment or redemption.
(B) If funds shall have been set aside and shall be held intrust by Fiduciaries for the payment of
principal, interest and Redemption Price (through deposit by the Bank of funds for such payment or
redemption or otherwise) at the maturity or upon the date upon which such Bonds have been duly called
for redemption thereof, such Bonds shall be deemed to have been paid within the meaning and with the
effect expressed in subsection (A) of this Section. All Outstanding Bonds shall, prior to the maturity or
redemption date thereof, be deemed to have been paid within the meaning and with the effect expressed
in subsection (A) of this Section if (i) in case any of said Bonds are to be redeemed on any date prior to
their maturity, the Bank shall have given to the Trustee in form satisfactory to it irrevocable instructions to
publish as provided in Article IV notice of redemption on said date of such Bonds, (ii) there shall have
been deposited with the Trustee either funds in an amount which shall 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 defeased and the principal of and the interest on which when due will
provide moneys which, together with the moneys, if any, deposited with the Trustee at the same time,
shall be sufficient in the opinion of an Accountant delivered to the Trustee, to pay when due the principal
or Redemption Price, if any, and interest due and to become due on said Bonds on any date prior to the
redemption date or maturity date thereof, as the case may be, (iii) in the event said Bonds are not by their
terms subject to redemption within the next succeeding sixty (60) days, the Bank shall have given the
Trustee in form satisfactory to it irrevocable instructions to mail a notice to the Holders of such Bonds that
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the deposit required by (ii) above has been made with the Trustee and that said Bonds are deemed to
have been paid in accordance with this Section and stating such maturity or redemption date upon which
moneys are to be available for the payment of the principal or Redemption Price, if any, of said Bonds
and (iv) a Counsel's Opinion stating that all conditions precedent to the satisfaction and discharge of this
Resolution have been complied with, the defeasance complies with the terms of this Resolution, and the
defeasance will not adversely affect the tax status of the Bonds. Neither Investment Securities or moneys
deposited with the Trustee pursuant to this Section nor principal or interest payments on any such
Investment Securities shall be withdrawn or used for any purpose other than, and shall be held in trust
for, the payment of the principal or Redemption Price, if any, of and interest on said Bonds; provided that
any cash received from such principal or interest payments on such Investment Securities deposited with
the Trustee, if not then needed for such purpose, shall, to the extent practicable, be reinvested in
Investment Securities maturing at times and in amounts sufficient to pay when due the principal or
Redemption Price, if any, and interest to become due on said Bonds on and prior to such redemption
date or maturity date thereof, as the case may be, and interest earned from such reinvestments shall be
paid over to the Bank, as received by the Trustee, free and clear of any trust, lien or pledge.
(C) If, through the deposit of moneys by the Bank or otherwise, the Fiduciaries shall hold,
pursuant to this Resolution, moneys sufficient to pay the principal and interest to maturity on all
Outstanding Bonds or to pay, in the case of Bonds in respect of which the Bank shall have taken all
action necessary to redeem prior to maturity, the Redemption Price and interest to such redemption date,
I'll then at the written request of the Bank all moneys held by any Paying Agent shall be paid over to the
Trustee and, together with other moneys held by it hereunder, shall be held by the Trustee for the
payment or redemption of Outstanding Bonds.
(D) Anything in this Resolution to the contrary notwithstanding, any moneys held by a Fiduciary
in trust for the payment and discharge of any of the Bonds which remain unclaimed for one year after the
date when all of the Bonds have become due and payable, either at their stated maturity dates or by call
for earlier redemption, if such moneys were held by the Fiduciary at such date, or for one year after the
date of deposit of such moneys if deposited with the Fiduciary after the said date when all of the Bonds
became due and payable, shall be repaid by the Fiduciary to the Bank, as its absolute property and free
from trust, and the Fiduciary shall thereupon be released and discharged.
(E) The references in this section to "Investment Securities described in clause (1) of the
definition thereof" shall include only direct and general obligations of the United States which are not-
callable prior to the scheduled maturity in the related escrow deposit agreement where the Outstanding
Bonds to be deemed to be paid upon the deposit thereof are insured by a municipal bond insurance
company licensed and authorized to issue the policy in the State.
ARTICLE XIV
MISCELLANEOUS
Section 1401 - Preservation and Inspection of Documents. All documents received by the
Trustee or any Paying Agent under the provisions of this Resolution or any Series Resolution shall be
retained in its possession and shall be subject at all reasonable times to the inspection of the Bank, the
Trustee or any Paying Agent and, after written request received by the Trustee at least live business days
prior to the date of inspection, by any Holder of live percent in principal amount of any Series of
Outstanding Bonds, and their agents and representatives, any of whom may make copies thereof.
Section 1402- Parties of Interest. Nothing in this Resolution or in any Series Resolution adopted
pursuant to the provisions hereof, expressed or implied, is intended to or shall be construed to confer
upon or to give to any person or party other than the Bank, Trustee, Paying Agents and the Holders of the
Bonds, remedies or claims under or by reason of this Resolution or any Series Resolution or any
covenants, conditions or stipulations thereof; and all covenants, stipulations, promises and agreements in
this Resolution and any Series Resolution contained by or on behalf of the Bank shall be for the sole and
exclusive benefit of the Bank, Trustee and Paying Agents and the Holders from time to time of the Bonds.
Section 1403- No Recourse Under Resolution or on Bonds. All covenants, stipulations,
promises, agreements and obligations of the Bank contained in this Resolution shall be deemed to be the
covenants, stipulations, promises, agreements and obligations of the Bank and not of any member, officer
or employee of the Bank in his individual capacity, and no recourse shall be had for the payment of the
principal or Redemption price of or interest on the Bonds or for any claim based thereon or on this
Resolution against any member, officer or employee of the Bank or any natural person executing the
Bond.
Section 1404- Severability. If any one or more of the covenants, stipulations, promises,
agreements or obligations, provided in this Resolution on the part of the Bank, Trustee or any Paying
Agent to be performed should be determined by a court of competent jurisdiction to be contrary to law,
then such covenant or covenants, stipulation or stipulations, promise or promises, agreement or
agreements, obligation or obligations shall be deemed and construed to be severable from the remaining
covenants, stipulations, promises, agreements and obligations herein contained and shall in no way affect
the validity of the other provisions of this Resolution.
Section 1405 - Headings. Any headings preceding the texts of the several Articles and Sections
hereof, and any table of contents or marginal notes appended to copies hereof, shall be solely for
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convenience of reference and shall not constitute a part of this Resolution, nor shall they affect its
meaning, construction or effect.
Section 1406- Conflict. All resolutions or parts of resolutions or other proceedings of the Bank in
conflict herewith be and the same are repealed insofar as such conflict exists.
Section 1407- Governing Law. This Resolution and the Bonds shall be construed in accordance
with, and governed by, the laws of the State of Alaska.
Section 1408 - Effective Date. This Resolution shall take effect immediately upon its adoption.
ALAKSA MUNJCPAL BOND BANK
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.I1
i.)
JI
ALASKA MUNICIPAL BOND BANK
RESOLUTION NO. 2013-02
FIRST SUPPLEMENTAL RESOLUTION AUTHORIZING MODIFICATIONS
TO THE 2005 GENERAL OBLIGATION BOND RESOLUTION
OF THE ALASKA MUNICIPAL BOND BANK
WHEREAS, the Board of Directors of the Alaska Municipal Bond Bank (the
"Bank) by Resolution 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 August 19, 2009 (the "Resolution"), has created and established an issue
of Bonds of the Bank; and
WHEREAS, the Resolution authorizes the issuance of said Bonds in one or more
series pursuant to a Series Resolution authorizing each such series; and
WHEREAS, the Resolution authorizes modifications of any of the provisions of
the Resolution provided that such modifications shall not be effective until all Bonds of
any Series of Bonds Outstanding as of the date of such Supplemental Resolution shall
cease to be Outstanding; and
WHEREAS, it has been determined to be in the best interests of the Bank to
make certain modifications to the Resolution; and
WHEREAS, it is the purpose of this First Supplemental Resolution to modify the
terms of the Resolution as follows: (I) to authorize the Trustee to release to the 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 require the
Trustee to withdraw earnings and profits realized in the Reserve Fund, and to provide
such amounts to the Bank, 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 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 Resolution,
includes the consent of an underwriter or purchaser of a Series of Bonds at the time
such Bonds are issued:
WHEREAS, in order to provide for the modifications to the Resolution, the Bank
has authorized the delivery of this First Supplemental Resolution;
BE IT RESOLVED BY THE BOARD OF DIRECTORS OF THE ALASKA
MUNlCIPAL BOND BANK AS FOLLOWS:
AwAa'Fsf .ti.'pptcmniet Reestatio:J
First SLpplemen1l Resolution No, 2013-02 Pa ge S
R.I,,1icr, 2015. iMr,5i,,g 2005 GSR).00c2
ARTICLE I
AUTHORITY AND DEFINITIONS
Sectjofl 101 - First Supplemental Resolution.
This First Supplemental Resolution (the "Supplemental Resolution') is adopted in
accordance with the provisions of the Resolution and pursuant to the authority
contained in the Act.
Section 102 -Definitions,
In this Supplemental Resolution, unless otherwise defined herein, all capitalized
terms herein shall have the same meanings, respectively, as such terms are given in
Article I of the Resolution.
(1) "Effective Date" means the date this Supplemental Resolution is adopted
by the Bank.
ARTICLE II
MODIFICATIONS TO THE RESOLUTION
Section 201 —Authority to ModIfYthe Resolution.
The Resolution, at Section 1001(F), authorizes the modification of any of the
provisions of the Resolution, effective only after all Bonds of any Series of Bonds
Outstanding as of the date of adoption of such Supplemental Resolution shall cease to
be Outstanding, and all Bonds issued thereafter shall contain a specific reference to the
modifications.
Section 202- Modifications.
(a) Reduction of Required Debt Service Reserve. This Supplemental
Resolution authorizes the Trustee to release to the Bank amounts held in the Reserve
Fund which exceed the Reserve Fund Requirement whenever there is a reduction in the
Required Debt Service Reserve. The Bank agrees that any amounts released to it shall
be used in a manner which will not adversely impact the tax exempt status of any Bonds
issued pursuant to the terms of the Resolution. The Trustee shall have no duty or
obligation to monitor or determine whether the Bank's use of funds released from the
Reserve Fund adversely impacts the tax exempt states of any Bonds.
Sections 604(C)(1) and 607 of the Resolution are hereby modified as set forth on
Schedule A-i hereto, effective after all Bonds issued prior to the Effective Date shall
cease to be Outstanding and satisfaction of the requirements set forth in Section 203
hereof.
(b) Withdrawal of Income and Interest Earned, and Profits Realized in the
Reserve Fund. Section 603(C) of the Resolution authorizes the Trustee to withdraw
from the Reserve Fund amounts derived from income or interest earned and profits
realized and to pay to the Bank such amounts on or before December 31 of each year
subject to certain condition set forth therein.
This Supplemental Resolution modifies Section 603(C) to require that income or
interest earned and profits realized from investments in the Reserve Fund be withdrawn
by the Trustee and paid to the Bank on or before June 30 of each year.
Section 603(C) of the Resolution is hereby modified as set forth in Schedule A-2
hereto, effective after all Bonds issued prior to the Effective Date shall cease to be
Outstanding and satisfaction of the requirements set forth in Section 203 hereof.
(c) Powers of Amendment. Section 1101 of the Resolution authorizes
modifications to, and amendments of, the Resolution subject to, among other things, the
written consent of the Bondholders of at least two-thirds in principal amount of the
Bonds Outstanding at the time such consent is given.
71 This Supplemental Resolution modifies Section 1101 of the Resolution to allow
modifications to, and amendments of, the Resolution, subject to the remaining
requirements set forth in Section 1101, effective upon the written consent of
Bondholders of at least two-thirds in principal amount of Bonds then Outstanding.
Section 203 - Effective Date.
The modifications of the Resolution as set forth in this Article II shall take effect
upon (i) the filing with the Trustee of a copy of this Supplemental Resolution adopted by
the Bank, certified by an Authorized Officer, (ii) the Bonds of each Series Outstanding
as of the Effective Date of this Supplemental Resolution shall cease to be Outstanding,
and (iii) the delivery to the Trustee of an Opinion of Counsel as required by Section
1003 of the Resolution. In addition, Bonds issued after the Effective Date shall include
language specifically referring to this Supplemental Resolution and the modifications to
the Resolution authorized herein.
ARTICLE Ill
MISCELLANEOUS
Section 304 - Chairman and Executive Director.
The Chairman and the Executive Director are each hereby authorized to execute
all documents and to take any action necessary or desirable to carry out the provisions
of this Supplemental Resolution.
Section 305 - Effective Date.
This Supplemental Resolution is hereby approved and adopted by the Bank this
19th day of February, 2013, which shall be the Effective Dote as defined herein,
Section 1101 of the Resolution is hereby modified as set forth in Schedule A-3
hereto, effective after all Bonds issued prior to the Effective Date shall cease to be
Outstanding and satisfaction of the requirements set forth in Section 203 hereof.
(d) Consent of Underwriters or Purchasers of Bonds. This Supplemental
Resolution modifies Article XI of the Resolution by adding Section 1107, providing that
for all purposes of Article XI and Article X of the Resolution, an underwriter or purchaser
of a Series of Bonds may consent to a modification of, or amendment to, the Resolution
as Bondholder of such Bonds at the time such Series of Bonds is issued.
Article Xl of the Resolution is hereby modified as set forth on Schedule A-4
hereto, effective after all Bonds issued prior to the Effective Dale shall cease to be
Outstanding and satisfaction of the requirements set forth in Section 203 hereof.
AMSSfFirst Supplemp.qital RemJJScn
First Supplemental Resolution No. 201 3-02 Page 3
Reak.jie, m13.02 teeS-S 2005 c,BR).r.a-s
AWRA-irst Sopp/ernenta! RasofttJon
First Supplomentl Resplutiou, No. 2013-02 Page 4
1,05&'37S2SS3ltSmaILre',StlpplrmentrI 5m2(utiofl 201302 (ModiSeg 2005 GBFl.fleS
MODIFICATION TO THE RESOLUTION
SCHEDULE A-1
Release of Amounts Held in the Reserve Fund
[Strike-out = deletions: double underscore = insertions.]
Section 604(C)(1) of the Resolution is hereby modified to read as follows:
(C) The Trustee shall establish in the Redemption Account
a separate sub-account for the Bonds of each Series Outstanding.
(1) Any monies deposited into the Redemption Account
from any source other than pursuant to Secdon 607 or Section 916
shall be applied to the purchase or redemption of Bends in a
manner to be determined by the Bank in accordance with Article LV,
Any-monies-depesited-into-the Reden on-Aecew# purcuont to
Seetion-607 -elnell--be-appiied -4e-4he-puce4ase-ar redemption of
SCHEDULE A-2
Modification to Section 603(C) - Withdrawals from the Reserve Fund
[Strike-out = deletions: double underscore = insertions.]
Section 603(C) of the Resolution is hereby modified to read as follows:
(C) On or before December 31 ,)uy3Oof each year, after complying with the
provisions of paragraphs (1) and (2) above to the extent required by such date, the
Trustee shall withdraw from the Reserve Fund, any amount remaining therein derived
from income or interest earned and profits realized by the Reserve Fund due to the
investment thereof, and pay over said amount to the Bank for deposit in 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 Required Debt Service Reserve.
71
Bank in a000rnance with Article IV.
Section 607 of the Resolution is hereby modified to read as follows:
Section 607 - Reduction of Required Debt Service Reserve,
Whenever the Debt Service Reserve is reduced and the
amount on deposit in the Reserve Fund exceeds wf the Required
Debt Service Reserve iw reducet the Trustee sb11, wety upon the
written request of the Bank signed by an Authorized Officer, shall
withdraw such excess amounts from.asy-emeaets-en-4cpocit in the
Reserve Fund and prcsdde ths.. pDJt with such. arnountsJLeQan
in the
Redemption -Aeeouet-any-amevet est- exeeednag the amount--of
such reduction of-the Required Debt-Service Reserve The amount
to be withdrawn from the Reserve Fund in each instance pursuant
to the provisions of this paragraph shall be determined by the Bank
and the amount thereof certified to the Trustee in writing signed by
an Authorized Officer, Lhesnkagraes_thet any amounts released
to it oursuant to this Section 607 shall be used in a manner which
Vi l riot athiery Air paotJhe tax exempt statusof an.,Bcrnds issued
AMB B/General Ohligsiierr cad Flerunndinlg asave, 2013 Series One
Series Resolution No. 2013-51 Page A-i
15LO742DX1rEIeIsrSppImwtaI H Ir.Len unrarn e0d14jina2nu GRI(lIJsr
AMBF/Gefc*O11 ObtiwfioJJ and Refunding Braids, 2013 Series Oils
Series: Resolution No. 2013-01 Pegs A-2
HeG742DOC1sRssnhltis,='.sUrrIrmsflthI Resr,Intiun 2015C2 lModif/rnc sros
SCHEDULE A-4
SCHEDULE A-3
Consent of Underwriter or Purchaser Modification
Modification to Section 1101 Powers of Amendment
[Strike-out= deletions; double underscore = insertions.]
[Strike-out = deletions; double underscore insertions.]
Section 1101 of the Resolution is hereby modified to read as follows: follows; Article Xl of the Resolution is modified by addition of Section 1,107 to read as
T1
00
Section 1101 - Powers of Amendment. Any modification or
amendment of this Resolution and of the rights and obligations of
the Bank and of the Holders of the Bonds, in any particular, may be
made by a Supplemental Resolution, with the written consent given
as hereinafter provided in Section 1102, (a) of the Holders of at
least two-thirds in principal amount of the Bonds therLOutatanding
at-the--time sueri-eansent-is given, or (b) 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 then
Outstanding at the ime-seeh-eensent-ie-given; provided, however,
that such modification or amendment shall not (i) permit a change
in the terms of redemption or maturity of the principal of any
Outstanding Bond or of any installment of interost thereon or
Sinking Fund Installment therefor, (ii) or a reduction in the principal
amount or the Redemption Price thereof or in the rate of interest
thereon, or (iii) a reduction of the percentage of the Holders of
which is required to effect any such modification or amendment, or
(iv) permit the creation of any lien prior to or on a parity with the lien
created by this Resolution (except in the manner provided by this
Resolution) or deprive the Holders of the Bonds of the lien created
by this Resolution, without the consent of the Holders of all the
Bonds Outstanding or of the Series of Bonds affected by such
modification or amendment For the purposes of this Section, a
Series shall be deemed to be affected by a modification or
amendment of this Resolution if the same adversely affects or
diminishes the rights of the Holders of Bonds of such Series.
Section 1107 - Undeiwiter or Purchaser as B dholder of Bonds.
For aiLpurposea of this Article Xi and of Article X. on underwriter or
purchaser of a Series of Bonds may consent to an amendment of
this Resolution as .a Bo.r:idhoidrof such Bonds a..the .me such
of Bonds is iu
AMS 810 cnesl Oefqation and Rsfuading Bands. 2013 Satan One
Series Resolution Na. 3013-01
I annc 72nC1IR olutic.ns'.Sups!emerw RnI,LIon 2511-32(Modifying 201211135)00013
ASfBBJGrraciil Obligation and Rclunding Bands. 2013 &r)bs 0110
Page A-S Series Resolution No. 201341 Fs A-4
I:'0ecs'.3742SD010RinnIu0ons'SuppemenI Reads-jon 5011-02 <1.1e1ing 2105 119R).000a
APPENDIX G
STATE OF ALASKA
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 2016 Series Three and
Four Bonds, the Bond Bank also maintains a Reserve Fund as additional security for the payment of the
Bonds. The Bond Bank is required under the Act to seek annual appropriations from the Legislature to
replenish the Reserve Fund if needed. Starting in fiscal year 2009 and continuing through fiscal year
2017, the Bond Bank has also obtained annual appropriations of 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 State's General Fund. See "SECURITY AND SOURCES OF
PAYMENT FOR THE BONDS - 2005 General Bond Resolution Reserve Fund" and "Government Budgets
and Appropriations."
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 increased approximately 10.6 percent
between fiscal year 2005 and fiscal year 2015. 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 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.
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.
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There are 19 organized boroughs in Alaska and 144 cities, 49 of which are located within an
organized borough and 95 of which are located within the unorganized borough. Of these, 15 boroughs
and 21 cities impose property taxes and 107 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 years 2015 and 2016. 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. Although approximately 75 percent (in
fiscal year 2015) of unrestricted State General Fund revenues arose from the oil and gas sector, more than
25 percent of the State's employment is derived from government. Tourism represents approximately
11 percent of the State's economy with seafood representing approximately 10 percent. The State's
population is estimated to have increased 10.6 percent from fiscal year 2005 to fiscal year 2015 (Alaska
Department of Labor and Workforce Development, Research & Analysis; August 2016). The State's
major exports are oil, seafood (primarily salmon, halibut, cod, pollock and crab), coal, gold, silver, zinc
and other minerals.
The State also makes a significant amount of revenue from investment earnings. Approximately
two percent of the State's unrestricted General Fund revenue in fiscal year 2015 was attributable to
investment earnings, and 41 percent of the State's restricted revenue in fiscal year 2015 was attributable
to investment earnings. See Table 4.
The Department of Revenue - Tax Division (the "Tax Division") produces a semi-annual revenue
sources book. The Fall Revenue Sources Book is the comprehensive annual forecast released in late
November or early December, and the Spring Revenue Sources Book is an annual, partial update of the
Fall forecast. The State is in the process of compiling revenue information for fiscal year 2016.
Additionally, the State has implemented a new statewide accounting system beginning with data for fiscal
year 2016. As part of this upgrade, new reporting structures are being developed to compile and report
revenue received during the year. Final revenue information for fiscal year 2016, as well as revised
revenue forecasts, will be available in early December 2016 in the Fall 2016 Revenue Sources Book.
Currently, the most recent complete revenue data is for fiscal year 2015, and the most recent revenue
forecast comes from the Spring 2016 revenue forecast, which was released in April 2016.
The State forecasted in the Spring 2016 Revenue Sources Book that general purpose unrestricted
revenues in fiscal year 2016 will be $1,336.8 million, compared to $2,256.5 million of actual general
purpose unrestricted revenue in fiscal year 2015, with the reduction primarily driven by a projected
$39.99 price of oil per barrel for fiscal year 2016 (a $9.59 decrease in price per barrel from the Fall 2015
forecast and a $32.59 decrease in the actual average price per barrel, $72.58, in fiscal year 2015). The
Spring 2016 Revenue Sources Book also includes the State's forecast for a slightly lower price of oil
($38.89 for fiscal year 2017, compared to $39.99 for fiscal year 2016) and general purpose unrestricted
revenues for fiscal year 2017 of $1,246.5 million. Although actual fiscal year 2016 revenue is not yet
compiled, the actual average oil price for the fiscal year, $43 per barrel, is slightly higher than forecast.
Forecast information is derived from a number of sources and is based upon a variety of
assumptions, many of which themselves are based upon other forecasts and assumptions and most of
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which are not within the State's control. Actual budgets, plans and results may differ materially from the
plans, budgets and results described herein. As described herein, with recent decreases in oil prices and
production, the State's unrestricted revenue available for General Fund appropriation declined in fiscal
year 2016 and is forecast to decline in fiscal year 2017. Although petroleum-related revenue remains the
largest source of unrestricted revenue for the State's General Fund, increased use of currently restricted
revenues, which are significantly greater than unrestricted petroleum-related revenue, together with
potential sources of new revenues and potential expenditure reductions, are being considered. See
"Government Budgets and Appropriations" and "Revenue Forecasts."
Oil and Gas Revenues. The State's unrestricted General Fund revenues are 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 ("TAPS") (including the
terminal at Valdez) and the field production systems at Prudhoe Bay. The assessed value of all existing
properties subject to this tax was $27.7 billion as of January 1, 2016, $28.6 billion as of January 1, 2015,
$27.4 billion as of January 1, 2014, $28.6 billion as of January 1, 2013, and $24.5 billion as of January 1,
2012. See "Litigation — Oil and Gas Tax Litigation."
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.
Local governments also may levy a property tax on oil and gas properties at individual mill rates
up to 20 mills using the assessed values determined by the State. Taxpayers receive a credit against the
State oil and gas property tax for property taxes paid to municipalities on such property up to the amount
of State tax that would otherwise be due. Effective July 1, 2014, the State increased one of the limits on
the total amount of taxes that may be levied by local governments if the mill rate is less than 20 mills. Of
the $572.4 million of property taxes collected in fiscal year 2015 on oil and gas property in the State, the
State's share was approximately $125.2 million. In the Spring 2016 Revenue Sources Book, the State
forecasts income from the oil and gas property tax to be approximately $133.9 million in fiscal year 2016
and $118.3 million in fiscal year 2017.
Revenue from oil and gas property taxes is deposited in the General Fund; settlement payments
received by the State after a property tax assessment dispute, however, are deposited in the Constitutional
Budget Reserve Fund (the "CBRF"). See "Government Funds - The Constitutional Budget Reserve
Fund."
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 is a significant source of revenue and in many years is the State's
single largest source of revenue. The production tax is levied differently based upon the type of
production (oil vs. gas) and the geographical location (North Slope vs. Cook Inlet, the State's two
producing petroleum basins).
For North Slope and export gas, the tax uses the concept of "Production Tax Value" ("PTV"),
which is 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 oil prices exceed $25 per barrel.
Several tax credits and other mechanisms are available for North Slope oil production to provide
incentives for additional production of oil. A per-taxable-barrel credit is available, which is reduced
progressively from $8 per barrel to $0 at wellhead values between $80 per barrel and $150 per barrel.
This credit cannot be applied against the gross minimum tax. This results in a flattening of the production
tax revenue decline at prices lower than $80 per barrel. An additional incentive applies for qualifying new
production areas on the North Slope. The so-called "Gross Value Reduction" (the "GVR") permits a
company to exclude 20 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 that have not been discovered or developed. 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 against the
minimum tax. Effective January 1, 2017, the GVR is available for only seven years of production and
ends early if Alaska North Slope ("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 point of production. Currently there is only a very small amount of gas that is technically export
gas, sold for field operations in federal offshore leases. However this tax rate would apply to a major gas
export project.
For the North Slope, a Net Operating Loss ("NOL") credit in the amount of 35 percent of losses
is available. This credit can be carried forward to a future tax liability or in some cases transferred or
refunded by the State.
For Cook Inlet oil production, the tax rate is 35 percent of PTV. Prior to January 1, 2017, the tax
is limited to a maximum of zero dollars per barrel; after January 1, 2017, the tax will be limited to a
maximum of $1.00 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 million 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.
As an incentive for new exploration, companies without tax liability against which to apply credits may
apply for a refund of the value of most of the credits, subject to appropriation. In fiscal year 2015, the
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State paid $628 million to companies claiming such credits, and in fiscal year 2016, the State paid
$498 million. For fiscal year 2017, only $30 million was appropriated for payments of such credits. Using
the Spring 2016 Revenue Sources Book forecast, as adjusted by House Bill 247 and the final fiscal year
2017 budget, the State estimates that approximately $1.175 billion in outstanding tax credits will be
eligible for refund in fiscal year 2018. Payments of these credits are subject to appropriation.
All unrestricted revenue generated by the oil and gas production taxes ($4.6 billion in fiscal year
2011, $6.1 billion in fiscal year 2012, $4.1 billion in fiscal year 2013, $2.6 billion in fiscal year 2014,
$0.4 billion in fiscal year 2015, and projected in the Spring 2016 Revenue Sources Book at $0.15 billion
in fiscal year 2016 and $0.07 billion in fiscal year 2017) 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 in the Constitutional Budget Reserve Fund. See Table 1.
Oil and Gas Royalties, Rents and Bonuses. In fiscal year 2016, approximately 99 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 up to 20 percent and some also include a net profit-share
production agreement. Although other leasing alternatives are available under statute, they have not been
used in the past. 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 higher-of contract prices received by the producers, net of transportation charges). If the State takes 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. As described below, much of State
royalty revenue from production on State land is restricted revenue that is not 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,
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 federal government requires that such revenue be
used as described below. The State also receives revenues from federal royalties and bonuses on all other
federal lands located within State borders and federal royalties and lease bonuses and rents from certain
federal waters at rates negotiated on a field by field basis. This revenue too is treated as federal revenue
and is restricted. See "Use of Restricted Petroleum Revenue."
Table 1 summarizes the sources and uses of oil and other petroleum-related revenue for fiscal
years 2006 through 2015 and does not include fiscal years 2016 and 2017, described above.
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Table 1
Sources and Initial Applications of Oil and Other Petroleum-Related Revenue
Fiscal Years Ended June 30, 2006 - 2015
($ millions)
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Oil Revenue to
the General Fund
Property Tax $ 54.5 $ 65.6 $ 81.5 $ 111.2 $ 118.8 $ 110.6 $ 111.2 $ 99.3 $ 128.1 $ 125,2
Corporate
Income Tax 661.1 594,4 605.8 492.2 446.1 542,1 568,8 434.6 316.6 94.8
Production Tax. 1,199.5 2,208.4 6,822,6 3,112,0 2,871.0 4,552.9 6,146.1 4,050,3 2,598.2 389.7
Royalties
(including
bonuses rents
and interest) (1)(2) 1,784.1 1,613.0 2,446.1 1,465.6 1,477.0 1,843.3 2,031.7 1,767.8 1,712.4 1,078.2
Subtotal..............$3,699.2 $4,481.4 $9,956.0 $5,181.0 $4,912.9 $7,048.9 $8,857.8 $6,352.0 $4,755.3 $1,687.9
Oil Revenue to
Other Funds
Royalties to the
Permanent Fund
and School
Fund (1)(2) $ 611.5 $ 545.6 $ 850.5 $ 670.8 $ 707,2 $ 870.9 $ 919.6 $ 855.9 $ 786.2 $ 518,3
Tax settlements
to CBRF 43.7 101.9 476.4 202.6 552.7 167.3 102.1 176.6 141.4 149.0
NPR-A royalties,
rents and
bonuses (3) 4.5 12.8 5.2 14.8 213 3.0 4.8 36 63 3.2
Subtotal 659.7 660.3 1,332.1 888.2 1,281,2 1,041.2 1,026.5 1,036.1 934.4 670.5
$4,358.9 $5,141.7 $11,288.1 $6,069.2 $6,194.1 $8,090.1 $9,884.3 $7,388.1 $5,689.7 $2,358.4
Total Oil Revenue ________ ________ ________ ________ ________ ________
(1) Net of deposits in the Permanent Fund and the Constitutional Budget Reserve Fund, 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. See
"Government Funds - The Alaska Permanent Fund."
(2) Includes proceeds of royalties taken in-kind.
(3) By federal statute, the State receives 50 percent of federal revenues from oil and gas lease sales located in the
NPR-A.
Source: State ofAlaska Department of Revenue.
Corporate Income Tax. The State levies a corporate income tax on Alaska taxable net income of
companies doing business in Alaska (other than insurance companies that pay premium tax and other than
S corporations and limited liability companies). 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,
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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
Constitutional Budget Reserve Fund.
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 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, and
miscellaneous revenues. A number of these non-oil tax, license and fee revenue (but not investment
income and federal revenue) are shared with municipalities. In the Spring 2016 Revenue Sources Book,
the State reported that in fiscal year 2015 unrestricted revenue unrelated to petroleum production
(excluding investment income and federal revenue) was $520.7 million and forecast that unrestricted
revenue unrelated to petroleum production would be $516.7 million in fiscal year 2016 and
$506.4 million in fiscal year 2017. 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.
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 $2.4 billion in fiscal year
2013, $2.5 billion in fiscal year 2014 and $2.5 billion in fiscal year 2015. The State forecasts in the Spring
2016 Revenue Sources Book restricted federal revenue of approximately $3.5 billion for fiscal year 2016.
The forecast represents total budgeted spending authority for federal receipts, and actual federal receipts
typically are less than forecast. 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 most often are transferred to the State on a reimbursement basis, and all transfers are
subject to audit.
Investment Revenues. The State earns unrestricted and restricted investment earnings from a
number of internal funds. Two primary sources of investment income for the State are two
constitutionally-mandated funds, the Permanent Fund and the Constitutional Budget Reserve Fund. The
Permanent Fund had an unaudited fund balance (principal and the earnings reserve) of approximately
$52.8 billion as of June 30, 2016. The Permanent Fund had a fund balance of $52.8 billion as of June 30,
2015, $51.2 billion as of June 30, 2014, $44.8 billion as of June 30, 2013, and $40.3 billion as of June 30,
2012. The Constitutional Budget Reserve Fund had an unaudited fund balance of approximately
$7.3 billion as of June 30, 2016. The Constitutional Budget Reserve Fund had a fund balance of
approximately $10.1 billion as of June 30, 2015, $12.8 billion as of June 30, 2014, $11.6 billion as of
June 30, 2013, and $10.6 billion as of June 30, 2012. The Earnings Reserve Account balance in the
Permanent Fund 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 Constitutional Budget Reserve Fund is available for appropriation with a three-fourths vote of each
house of the Legislature, and as described below, the State borrows from the Constitutional Budget
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Reserve Fund 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. All fiscal year 2016 values are
unaudited and use best information available at this time. See "Government Funds - The Constitutional
Budget Reserve Fund" and "- The Alaska Permanent Fund."
The State has also in the past received the earnings on the Statutory Budget Reserve Fund (the
"SBRF"). This fund has a current balance of zero, and had a balance of $288 million as of June 30, 2015,
$2.8 billion as of June 30, 2014, and $4.7 billion as of June 30, 2013. These earnings are considered
General Fund unrestricted revenue, and in October 2015 the remaining balance in the Statutory Budget
Reserve Fund was transferred to the General Fund. See "Government Funds - The Statutory Budget
Reserve Fund."
The Constitutional Budget Reserve Fund had an estimated fund balance of approximately
$7.3 billion as of June 30, 2016. The Constitutional Budget Reserve Fund had a fund balance of
approximately $10.1 billion as of June 30, 2015, $12.8 billion as of June 30, 2014, $11.6 billion as of
June 30, 2013 and $10.6 billion as of June 30, 2012. The balance of the Constitutional Budget Reserve
Fund is available for appropriation with a three-fourths vote of each house of the Legislature, and as
described below, the State borrows from the Constitutional Budget Reserve Fund 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. See "Government Funds - The Constitutional Budget Reserve Fund" and
"- The Alaska Permanent Fund."
In addition to investment income from the above-described funds, the State receives investment
income (including interest paid) from investment of other unrestricted funds ($47.9 million in fiscal year
2015, $130.2 million in fiscal year 2014, $28.1 million in fiscal year 2013, $107.8 million in fiscal year
2012, and $96.3 million in fiscal year 2011). See "Government Funds."
Major Components of State Revenues. Table 2 summarizes the sources of unrestricted and
restricted revenues available to the State in fiscal years 2006 through 2015.
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Table 2
Total State Government Revenue by Major Component
Fiscal Years Ended June 30, 2011 - 2015
($ millions)
2011 2012 2013 2014 2015
Revenue Source
Unrestricted
Oil Revenue.............$ 7,048.9 $ 8,857.8 $ 6,352.0 $ 4,755.3 $ 1,687.9
Non-Oil Revenue 527.7 519.6 548.4 508.5 520.7
Investment Earnings 96.3 107.8 28,1 130,2 47.9
Subtotal....................$ 7,672.9 $ 9,485.2 $ 6,928.5 $ 5,394.0 $ 2,256.5
Restricted
Oil Revenue ' .........$ 1,041.2 $ 1,062.5 $ 1,036.1 $ 934.4 $ 670.5
Non-Oil Revenue 473.6 452.7 485.0 473.5 491.2
Investment Earnings 7,928.5 144.3 4,977,8 7,927.7 2,603.4
Federal Revenue 2,407.9 2,455.5 2,383.2 2,511.9 2,512.7
Subtotal ........ .......... ..11,851.2 4,079.0 8,882.1 11,847.5 6,277,8
$19,524.2 $13,564.2 $15,810.6 $17,241.5 $ 8,534.3
Total .........................
(1) "Restricted Oil Revenue" includes oil revenue for NPR-A Rents, Royalties, and Bonuses shared by the federal
government. In fiscal year 2015 this equaled $3.2 million.
Source: State ofAlaska Department of Revenue,
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 its Constitution and
statutes and also 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."
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. The Governor's budget must be
made public and be submitted to the Legislature by December 15. In accordance with AS 37.07.020(b),
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the Governor also is 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 April of each year.
See "State Revenues" above and Table 3, "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 Constitution also
prohibits the dedication to a special purpose of the proceeds of "any State tax or license," with the
exception of dedications required by federal law, mandated by the State Constitution or in existence prior
to statehood.
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. 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 freezes,
lay-offs and furloughs and restrictions on non-core operating expenses. As described below, General
Fund revenues and operating and capital expenditures have been declining since fiscal year 2015 and
declines in operating and capital expenditures have included use of administrative restrictions on
spending. See "Public Debt and Other Obligations of the State."
As shown in Table 3, State Unrestricted General Fund Revenue has diminished from $5.39 billion
in fiscal year 2014 to $2.26 billion in fiscal year 2015, to a projected $1.34 billion in fiscal year 2016 and
a projected $1.25 billion in fiscal year 2017. In response to the diminished State revenue forecasts,
Governor Walker proposed a reduction in unrestricted General Fund State operating budget spending of
9 percent and a reduction in the capital budget of more than 80 percent for fiscal year 2016. The
Legislature increased the operating budget reduction to more than 12 percent. Governor Walker
additionally issued an Administrative Order to limit or stop State spending on State "Mega Projects"
including the Juneau Access road, the Knik Arm Crossing, the Susitna Hydroelectric project, a small
diameter in-State gas pipeline project, and a proposed State road to the Ambler Mining District. The
Governor subsequently discontinued State spending on the Knik Arm Crossing and Susitna Hydroelectric
projects.
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The Governor's proposed fiscal year 2017 budget included additional declines in unrestricted
General Fund State operating budget expenditures and a capital budget comparable to the capital budget
in fiscal year 2016. On May 18, 2016, the second regular session of the 29th Legislature reached the
constitutional time limit and adjourned. On May 19, 2016 the Governor issued an executive proclamation
calling the Legislature into special session starting on May 23, 2016, to consider both budget bills as well
as other bills previously introduced related to increasing revenues and decreasing expenditures of the
State, On May 31, 2016, the Legislature approved a fiscal year 2017 operating and capital budget,
authorizing $4,417.4 million of spending. At the same time, the Legislature supplemented the fiscal year
2016 budget with $642.1 million of appropriations consisting of $430.0 million in oil and gas tax credits,
$92.0 million of capital expenses, $30.1 million of agency operating expenses, and $90.0 million for
retirement system funding. The proposed level of spending results in a projected $642.1 million increase
in the deficit in fiscal year 2016 and a $3,171.4 million deficit in fiscal year 2017. The budget bills were
transmitted to the Governor on June 20, 2016, and on June 29, 2016, the Governor signed the budgets and
exercised his line-item veto authority to reduce the fiscal year 2017 appropriations by approximately
$1.29 billion. The reductions consisted of $190 million to State government, K-12 education (including
the School Debt Reimbursement Program) and the University of Alaska, $430 million of oil and gas tax
credits, and $665 million to the October 2016 Permanent Fund dividend distribution, reducing the fiscal
year 2016 dividend to $1,022 (cutting the dividend in half, the first time the statutory formula was not
followed). The vetoes were not overridden during the fifth special session that began on July 11, 2016 and
adjourned on July 18, 2016. See "Government Funds."
The Unrestricted General Fund deficit was $3.9 billion in fiscal year 2015 (which was managed
by using transfers from the Statutory Budget Reserve Fund and by eliminating the forward funding of
K-12 education). The Unrestricted General Fund deficit for fiscal year 2016 was previously projected to
be $3.7 billion, to be managed by a draw on reserves. If proposed amendments to the fiscal year 2016
budget had not been vetoed (or if the Governor's vetoes had been overridden), the draw on the State's
reserves would have been close to $4.5 billion.
As part of his fiscal year 2017 budget, Governor Walker introduced ten bills as part of a
comprehensive plan to modify how revenue of the State is accounted for, to increase user fees and
charges, increase taxes, diminish certain waivers, credits and deductions, and to implement new taxes.
The bill with the most impact was the Alaska Permanent Fund Protection Act that would shift the
Permanent Fund to a sovereign wealth model. On June 6, 2016, the Legislature approved the first of these
bills, House Bill 247, reducing State oil and gas tax credits. Although the remaining bills were not passed,
Governor Walker has indicated his intention to introduce again a comprehensive set of fiscal reform bills
when the 30th Legislature convenes in January 2017.
Appropriations for Debt and Appropriations for Subject-to-Appropriation Obligations. The
Governor's proposed 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 proposed 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, as well as the School Debt Reimbursement Program and Capital Project
Reimbursement Program for reimbursement to local governments for debt payments on certain general
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obligation bonds issued by local governments for school construction and certain other limited projects,
and for State "moral obligation" debt, 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 Constitutional Budget Reserve Fund, 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
federal indices, in population and inflation since July 1, 1981. For fiscal year 2016, the appropriations
limit was approximately $10.7 billion and is estimated to be approximately $10.2 billion for fiscal year
2017.
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. For fiscal year 2015, restricted revenue for deposit in reserves exceeded unrestricted
revenue by $3.7 billion. 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 Constitutional Budget Reserve Fund. State revenue restricted for deposit in the Permanent
Fund and the Constitutional Budget Reserve Fund is available for appropriation as prescribed by the
constitutional provisions described below.
Current State funding options available on a statutory basis include unrestricted revenue of the
General Fund, use of the earnings or the principal balance of the Statutory Budget Reserve Fund,
borrowing restricted earnings revenue or principal balance from the Constitutional Budget Reserve Fund,
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 Constitutional
Budget Reserve Fund may be accessed with a majority vote of the Legislature following a year-over-year
revenue decline, or in any year by a three-quarters vote of both houses of the Legislature. A simple
majority vote is needed to appropriate from the Statutory Budget Reserve Fund and from the Permanent
Fund Earnings Reserve.
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.
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One method that the State deploys to provide fiscal stability is forward funding or endowing
programs. One particularly notable example is the method that has been used to fund K-12 education.
From fiscal year 2009 through fiscal year 2016, more than $1 billion of the State's current year revenue
was set aside annually in the Public Education Fund to pre-fund the State's projected contribution to K-12
education for the succeeding fiscal year. 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. The Governor used his
line-item veto to eliminate the State's fiscal year 2017 contribution.
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 55 subfunds and "cash pools" within the General
Fund to account for funds allocated to particular purposes or reserves, including the Constitutional Budget
Reserve Fund, the Statutory Budget Reserve Fund, an Alaska Capital Income Fund, and a debt retirement
fund. In terms of long-term and short-term financial flexibility, the Constitutional Budget Reserve Fund
and the Statutory Budget Reserve Fund (subfunds within the General Fund) are 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 Constitutional Budget Reserve Fund. The State
Constitution provides that other than money required to be deposited in the Permanent Fund, all money
received by the State after July 1, 1990 as a result of the termination, through settlement or otherwise, of
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 Constitutional Budget Reserve
Fund. Money in the Constitutional Budget Reserve Fund may be appropriated (i) for any public purpose,
upon the affirmative vote of three-fourths of the members of each house of the Legislature; or (ii) 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 Constitutional Budget Reserve Fund is repaid,
excess money in the General Fund at the end of each fiscal year must be deposited in the Constitutional
Budget Reserve Fund.
The fiscal year 2015 capital budget approved by the Legislature included a $3 billion transfer
from the Constitutional Budget Reserve Fund to the Public Employees Retirement System and Teachers
Retirement System. The Public Employees Retirement System received $1 billion and the Teachers
Retirement System received $2 billion.
The State historically has borrowed from the Constitutional Budget Reserve Fund 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
year 2015, the Legislature last appropriated funds from the Constitutional Budget Reserve Fund in fiscal
year 2005. As of June 30, 2009, the balance owed by the General Fund to the Constitutional Budget
Reserve Fund for draws prior to 2005 was completely repaid.
The estimated balance in the Constitutional Budget Reserve Fund as of June 30, 2016, was
approximately $7.3 billion, including estimated earnings of $138.3 million. As of June 30, 2015, the
balance was approximately $10.1 billion, with estimated earnings of approximately $197.7 million; as of
June 30, 2014, the balance was approximately $12.8 billion, with earnings of approximately $1.0 billion;
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and as of June 30, 2013, the balance was approximately $11.6 billion, with earnings of approximately
$618.1 million.
The Statutory Budget Reserve Fund. The Statutory Budget Reserve Fund has existed in the
State's accounting structure since 1986, and as for most of the years it has existed, the Statutory Budget
Reserve Fund is not expected to have a balance for at least the next several years. When funded, the
Statutory Budget Reserve Fund is available for use for legal purposes with a simple majority vote of the
Legislature and with approval by the Governor. If the unrestricted amount available for appropriation in
the fiscal year is insufficient to cover General Fund appropriations, the amount necessary to balance
revenue and General Fund appropriations or to prevent a cash deficiency in the General Fund was
appropriated from the Statutory Budget Reserve Fund to the General Fund. For fiscal year 2015, this
resulted in a year-end transfer from the Statutory Budget Reserve Fund to the General Fund of
approximately $2.5 billion. As of June 30, 2015, the Statutory Budget Reserve Fund held approximately
$288 million. The market value of the Statutory Budget Reserve Fund as of October 31, 2015 was zero
due to transfers to the General Fund for expenditures. Any earnings on the Statutory Budget Reserve
Fund 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 February 21, 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 Alaska Permanent Fund
by the Alaska Permanent Fund Corporation, 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. For fiscal year 2016, State oil and mineral revenues
deposited in the Permanent Fund were $284 million compared to $600 million in fiscal year 2015 and
$779 million in fiscal year 2014. In addition to these constitutionally and statutorily mandated transfers to
the Permanent Fund prior to fiscal year 2006, the Legislature has made special appropriations from the
State's General Fund to the Permanent Fund several times, totaling in the aggregate approximately
$2.7 billion as of June 30, 2016.
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 earnings reserve
of the Permanent Fund, first for dividends to qualified Alaska residents and then for inflation-proofing.
Between 1982 and 2016, $24.4 billion of dividends ($2,072 per person in fiscal year 2015) were paid to
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Alaska residents and $16.2 billion of Permanent Fund income has been added to principal for inflation
proofing purposes; for fiscal year 2015, the inflation proofing transfer was $624 million, up from the
fiscal year 2014 amount of $546 million. For fiscal year 2016, the dividend was reduced to $1,022 per
person, and there was no appropriation and therefore no transfer for inflation-proofing. In addition to the
statutorily directed inflation proofing transfers, the Legislature has made special appropriations from the
earnings reserve account of the Permanent Fund to the principal balance of the Permanent Fund, totaling
approximately $4.2 billion as of June 30, 2016.
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, estimated at approximately $44.2 billion as of
June 30, 2016, down from approximately $45.6 billion as of June 30, 2015, may not be spent without
amending the State Constitution. The earnings reserve portion of the Permanent Fund, estimated at
approximately $8.6 billion as of June 30, 2016, up from approximately $7.2 billion as of June 30, 2015,
may be spent with a simple majority vote of the Legislature. The estimated Permanent Fund balance as of
June 30, 2016 was approximately $52.8 billion.
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,
et al.). The total of the settlements and retained income thereon, as of June 30, 2016, is approximately
$424 million. Earnings on the settlements are excluded from the dividend calculation 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. Funds in the Alaska Capital Income Fund and interest
thereon, estimated at approximately $18.1 million as of June 30, 2016, down from approximately
$24.0 million as of June 30, 2015, are unrestricted and have been appropriated for capital expenditures.
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Table 3
State of Alaska
Available Funds and Recurring and Discretionary General Fund Expenditures
Fiscal Years Ended June 30, 2011 —2015
FORECAST FOR Fiscal Years Ending June 30, 2016 - 2017
($ millions)
Permanent ANS Oil
General Recurring & Unrestricted Ending SBRF Ending CBRF Fund Production
Purpose Discretionary Revenue Reserves Reserves Earnings Forecasts
Unrestricted General Fund Surplus! Available Available Reserve Oil Price (thousands
Fiscal Revenue Expenditures (Deficit) Balance Balance Balance Forecasts of barrels
Year ($ mil)(') ($ mil)(') ($ mu) ($ mil) ($ mil)(') ($ mu)(6) ($/barrel) per day)
2004 $ 2,346 $ 2,319 $ 26 $ - $ 2,064.2 $ 859.3 $ 32,36 973.8
2005 3,189 2,646 543 - 2,235.7 1,439.9 44.85 911.3
2006 4,200 3,247 953 - 2,267,1 2,584.8 62.12 839.7
2007 5,159 4,272 886 - 2,549.0 4,132.0 61.60 734.2
2008 10,749 5,473 5,256 1,000.0 5,601.0 4,969.0 96,51 715,4
2009 5,831 6,000 (169) 1,000.0 7,114.4 440.6 68.34 692,8
2010 5,515 4,995 520 1,000.0 8,664.0 1,209.8 74.90 642.6
2011 7,673 6,355 1,318 1,247.5 10,330.0 2,307,8 94.49 599.9
2012 9,485 7,252 2,233 2,682,6 10,642.4 2,080.6 112.65 579.3
2013 6,929 7,455 (526) 4,711.4 11,564.4 4,053.8 107,57 531,6
2014 5,394 7,314 (1,920) 2,791.1 12,779.7 6,211.3 107.57 531.1
2015 2,257 4,760 (2,503)() 288.0 10,101.4 7,162.4 72.58 501,5
Projected
2016(7) 1,292.8 5,213.4 (3,920.6) - 6,469,0 8,570.0 43.18 514.4
2017 1,186.5 4,364.4 (3,177.9) - 3,290.9 8,984.0 38.89 507.1
2018 1,346,3 4,400.0 (3,053.7) - 237,2 9,514.0 43.79 488.8
2019 1,445.9 4,400.0 (2,954.1) - - 7,505.1 48.89 484.4
2020 1,522.6 4,400.0 (2,877.4) - 5,466.7 54.48 454.1
2021 1,605.5 4,400.0 (2,794.5) - -. 3,505,2 60.29 418.6
(1) State of Alaska Department of Revenue - Tax Division. Fiscal year 2016 forecast based on Spring 2016 Revenue Sources
Book, and SLA2016 Enacted Fiscal Summary released by the Office of Management and Budget July 1, 2016.
(2) This table represents one possible scenario using unaudited information available for fiscal year 2016, enacted budget
information for fiscal year 2017, and general revenue and expenditure projections as of the Spring 2016 Revenue Sources
Book release. General Fund expense projections are held constant at approximately the same authorization to spend as the
enacted fiscal summary released by the Office of Management and Budget on July 1, 2016. Projections in the plan do not
represent a commitment by the Administration to propose spending or generate revenue at a particular level in fiscal year
2016, fiscal year 2017 or any future year. The forecasts show that unanticipated budget shortfalls during the period could be
filled primarily through use of reserve funds; however, other fiscal tools including spending reductions would likely be used
in addition to, or in lieu of, reserve funds.
(3) Includes net transfer from the Statutory Budget Reserve Fund to the General Fund reconciled at the release of the fiscal year
2013 through fiscal year 2015 CAFR.
(4) The Statutory Budget Reserve Fund was used to balance the fiscal year 2015 deficit, with $288 million remaining at
June 30, 2015, per the State of Alaska Fiscal Year 2015 CAFR. In fiscal year 2016, the remaining balance in the Statutory
Budget Reserve Fund was transferred to the General Fund. Any net draw forecast for fiscal year 2016 depicts a use of the
Constitutional Budget Reserve Fund, after depletion of the remaining Statutory Budget Reserve Fund balance. Actual
funding source to balance any forecasted budget shortfall shown in the table may differ.
(5) The Constitutional Budget Reserve Fund available balance represents the historical market values and the projected fiscal
year 2016 through 2019 market values based on the Spring 2016 Revenue Sources Book. Forecasted fiscal year-end asset
balances do not include forecasted amounts for investment earnings and tax and royalty settlements.
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(6) Fiscal year 2016 Permanent Fund Earnings Reserve Balance is an unaudited value as of June 30, 2016. Fiscal year 2017
through 2019 Permanent Fund Earnings Reserve Balance uses mid-case projections as of Alaska Permanent Fund
Corporation's June 30, 2016 Monthly Financial Report, and forecasts available at this time. The anticipated deficit for fiscal
year 2019 reflects a projected appropriation from the Permanent Fund Earnings Reserve to balance the State budget;
however, Alaska Permanent Fund Corporation's forecasted net change to the assigned balance has not been adjusted for a
draw from the fund. Includes estimated draw from the Permanent Fund Earnings Reserve Balance in the amount of
$2.7 billion in fiscal year 2019,
(7) All forecasts and projections derived from the Spring 2016 Revenue Sources Book, with best unaudited information
available at that time for fiscal year 2016. Oil Price Forecast and ANS Oil Production Forecast have been updated with
preliminary estimates for fiscal year 2016 and are subject to change.
Source: State ofAlaska Department of Revenue.
Revenue Forecasts
The State regularly prepares revenue forecasts for planning and budgetary purposes. Table 4
provides a summary of the State's most recent forecasts for revenues subject to appropriation from fiscal
year 2016 through 2021. As noted, the State has customarily restricted certain revenue sources each fiscal
year by practice. Such revenue is nonetheless available for appropriation (although the State has never
previously appropriated such restricted revenue).
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 will next update its forecast in December 2016.
See "Government Funds" for a description of some of the actions the State can take when revenues prove
to be lower than expected.
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Table 4
State of Alaska Revenues Subject to Appropriation
Forecast Summary for Fiscal Years 2016 through 2021 1)
(millions)
Petroleum Revenue
Unrestricted General Fund
Royalties to Alaska Permanent Fund
beyond 25% dedication 2
Tax and Royalty Settlements to CBRF
Subtotal Petroleum Revenues
Non-Petroleum Revenue
Unrestricted General Fund
Designated General Fund
Royalties to Alaska Permanent Fund
beyond 25% dedication'
Tax and Royalty Settlements to CBRF
Subtotal Non-Petroleum Revenues
Investment Revenue
Unrestricted General Fund
Designated General Fund
Constitutional Budget Reserve Fund
Alaska Permanent Fund - Realized
Earnings
Subtotal Investment Revenues
Revenue Adjustments, Carryforward and
Re-appropriations
Total Revenue Subject to
Appropriation
Unrestricted General Fund Revenue
Additional Revenue Available/Subject
to Appropriation
2016 2017 2018 2019 2020 2021
$801.1 $ 704.7 $ 787.5 $ 872.7 $ 938.9 $1,007.5
38.9 37.8 43.1 54.5 58.3 55.1
100.0 100.0 100.0 100.0 100.0 100.0
$ 940.0 $ 842.5 $ 930.6 $1,027.2 $1,097.3 $1,162.6
$ 516.7 $ 506.4 $ 514.8 $ 520.7 $ 522.6 $ 528.4
323.9 329.7 330.0 330.3 330.6 331.0
2.4 2.2 2.4 2.4 2.3 2.3
0.1 0.1 0.1 0.1 0.1 0.1
$ 843.1 $ 838.4 $ 847.3 $ 853.5 $ 855.6 $ 861.8
$ 19.0 $ 35.4 $ 44.0 $ 52.6 $ 61.1 $ 69.7
(6.6) 36.7 36.7 36.7 36.7 36.7
54.8 67.0 5.0 0.0 0.0 0.0
2,055.9 2,501.1 2,501.1 2,501.1 2,501.1 2,501.1
$2,123.1 $2,640.2 $2,586.8 $2,590.4 $2,598.9 $2,607.5
($ 44.1) ($ 59.9) - - - -
$3,862.1 $4,261.2 $4,364.6 $4,471.0 $4,551.8 $4,631.8
$1,292.8 $1,186.5 $1,346.3 $1,445.9 $1,522.6 $1,605.5
$2,569.3 $3,074.7 $3,018.3 $3,025.1 $3,029.2 $3,026.3
(1) This figure 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.
Source: State ofAlaska Department of Revenue.
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 a School Debt Reimbursement Program and Capital Project Debt
Reimbursement Program. These programs do not constitute indebtedness of the State but do provide,
annually on a subject-to-appropriation basis, financial support for general obligation bonds of State
agencies and local governments.
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
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sufficient funds for this purpose. $744.2 million of general obligation bonds were outstanding as of
June 30, 2015. See "Summary of Outstanding Debt" and Tables 5 through 7.
On November 6, 2012, voters approved $453,499,200 in general obligation bonds for the purpose
of design and construction of State transportation projects. To date, the State has obtained
$343,150,957.77 in funding to satisfy the $435,499,200 authorization, leaving $110,348,242.23 of
unissued authority.
The following other debt and debt programs of the State were outstanding as of June 30, 2015,
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 general obligation bonds of the State, and they must be
authorized by law, ratified by the voters and approved by the State Bond Committee. These bonds are
known as "double-barrel bonds" because there are two distinct forms of security behind the bonds. The
principal source of payment is the revenue stream generated by payments on the mortgage loans made
from bond proceeds. Additional security to bondholders is provided by the general obligation pledge of
the State to make the required debt service payments in the event that pledged revenues from mortgage
repayments are insufficient. Approximately $56.9 million of State guaranteed debt was outstanding as of
June 30, 2015. On November 7, 2010 the voters approved an additional $600 million of State guaranteed
veterans mortgage bonds, and the total current unissued authorization is $694.6 million. In July 2016, the
AHFC issued $50 million aggregate principal amount of State-guaranteed bonds to purchase additional
mortgage loans and to refund a portion of the guaranteed bonds that remained 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. Voter approval of such debt is not required.
State supported debt includes lease-purchase financing obligations (including lease revenue capital lease
bonds and certificates of participation issued by lessors of facilities used by the State) and the share of
municipal general obligation bonds issued for school construction and other capital projects that is
reimbursable by the State on a subject to appropriation basis under the School Debt Reimbursement
Program and Capital Project Reimbursement Program. Approximately $1,206.0 million of State
supported debt was outstanding as of June 30, 2015. As of June 30, 2015, the State was obligated on
$30.8 million of lease purchase financing obligations and $244.0 million of capital lease bonds. As of
June 30, 2015, the State was reimbursing local municipalities on the debt service of $895.4 million of
bonds under the School Debt Reimbursement Program and $35.8 million of bonds under the Capital
Project Reimbursement Program.
House Bill 23 was approved in the 2014 Legislative Session authorizing the issuance of up to
$300 million of State supported toll revenue bonds for the purpose of partially funding a bridge from
Anchorage to the Matanuska-Susitna Borough across Knik Arm. In addition to the State supported toll
revenue bonds, the bill authorized the State to enter into a maximum sized TIFIA Loan and contemplated
the appropriation of additional Federal Highway Administration funds to the project. Toll collections
were to be pledged to the TIFIA Loan first and the State toll revenue bonds second. Based on projected
cash flows the State expected to pay debt service on the State toll revenue bonds using annual State
appropriations. The project was on hold pursuant to Administrative Order 271 and was discontinued in
July 2016.
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State Moral Obligation Debt. State moral obligation debt consists of bonds issued by certain
State agencies or authorities that are secured, in part, by a debt service reserve fund benefited by a
discretionary replenishment provision that permits, but does not legally obligate, the Legislature to
appropriate 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). State moral obligation 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 State moral obligation debt are: Alaska Aerospace Development Corporation
("AADC"), which has not issued any debt; Alaska Energy Authority ("AEA"); AHFC; the Alaska
Industrial Development and Export Authority ("AIDEA"); the Bond Bank; and Alaska Student Loan
Corporation ("ASLC"). Approximately $1,200.4 million of State moral obligation debt was outstanding
as of June 30, 2015.
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 the University of
Alaska. This type of debt includes Sportfish Revenue Bonds, International Airports Revenue Bonds,
various University Revenue Bonds and Notes and Toll Facilities Revenue Bonds. A total of
$693.0 million of revenue bonds, including $174.4 million of University of Alaska Revenue Bonds, Notes
and Contracts, $31.3 million of Sportfish Revenue Bonds and $487.3 million of Airport Revenue Bonds
were outstanding as of June 30, 2015.
State Agency Debt. State agency debt is secured by revenues generated from the use of bond
proceeds or the 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, guarantees, or
moral obligation pledges. As of June 30, 2015, there was $493.8 million aggregate principal amount of
State agency debt outstanding, consisting of $16.9 million AHFC obligations; $10.4 million Bond Bank
Coastal Energy Bonds payable to the National Oceanic and Atmospheric Administration; $119.9 million
Alaska Railroad Notes; and $346.6 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, 2015, the total principal amount outstanding
of State agency collateralized or insured debt was approximately $2,218.1 million, consisting of
approximately $2,083.4 million issued by AHFC and $134.7 million issued by AIDEA.
Future State Supported Pension Obligation Bonds. Through the Alaska Pension Obligation
Bond Corporation (the "Corporation"), a public corporation created in 2008 within the DOR, the State is
authorized to issue up to $5.0 billion of bonds and/or enter 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 statutes enacted in 2008 to make
supplemental contributions to the State retirement system defined benefit plans to reduce the plans'
unfunded actuarial liabilities, and on September 26, 2016, the Board of Directors of the Corporation
authorized the Corporation to issue up to $3.5 billion of pension obligation bonds to finance for the State
a portion of its required contributions to the Public Employees' Retirement System and the Teachers'
Retirement System. The issuance of pension obligation bonds will be subject to market conditions and to
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a number of statutory requirements. If issued, the bonds would be payable from payments to be made by
the State, acting by and through the Department of Administration, the administrator of the Public
Employees' Retirement System and the Teachers' Retirement System, subject to annual appropriation by
the Legislature.
On October 3, 2016, the Corporation distributed a preliminary official statement pertaining to
$2,352,980,000 (preliminary, subject to change) aggregate principal amount of the Corporation's Pension
Obligation Bonds, Series 2016 (Taxable) (the "Corporation Bonds"), that was supplemented on
October 12, 2016. The Corporation has announced that it expects to sell the Corporation Bonds on or
about October 26, 2016, and to close the Corporation Bonds on or about November 2, 2016.
Summary of Outstanding Debt. Table 5 lists, by type, the outstanding State-related debt as of
June 30, 2015. In March 2016, the State issued $134.8 million aggregate principal amount of General
Obligation Bonds, Series 2016 to refinance the State's 2015A General Obligation Bond Anticipation
Notes. On In June 2016, the State issued $128.3 million aggregate principal amount of General
Obligation Bonds, Series 2016B, to fund various transportation projects. Other categories of debt have not
been compiled beyond June 30, 2015.
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Table 5
State of Alaska Debt and State-Related Debt by Type as of June 30, 2015
($ millions)
Total Debt Service to
Principal Outstanding Interest to Maturity Maturity
State Debt
State of Alaska General Obligation Bonds $ 753.8 $ 274.0 $ 1,027.8
State Supported Debt
State Supported Debt Authorized by Law
Capital Leases 244.0 121.1 365.1
Lease-Purchase Financings 30.8 11.5 42.3
State Reimbursement of Municipal Debt
School Debt Reimbursement 895.4 300.6 1,196.0
Capital Projects 35.8 14,7 50.5
Total State Supported Debt 1,206.0 447.9 1,653.9
State Guaranteed Debt
Alaska Housing Finance Corporation State Guaranteed Bonds
(Veterans Mortgage Program) 56.9 37.7 94.6
State Moral Obligation Debt
Alaska Municipal Bond Bank:
1976, 2005 & 2010 General Resolution General Obligation Bonds 940.9 471.2 1,412.1
Alaska Energy Authority:
71.2 14.1 85.3 Power Revenue Bonds #1 through #6
Alaska Student Loan Corporation:
4.6 72.8 Student Loan Revenue Bonds 68.2
Education Loan Backed Notes 120,1 1.7 121.8
Student Capital Project Revenue Bonds - - -
Total State Moral Obligation Debt 1,200.4 491.6 1,692.0
State Revenue Debt
Sportfish Revenue Bonds 31.3 7.6 38.9
International Airports Revenue Bonds 487.3 215.5 702.8
University of Alaska Debt
University of Alaska Revenue Bonds 132.2 41.2 173.4
University Lease Liability and Notes Payable 41.0 18.4 59.4
Installment Contracts 1.2 0.1 1.3
Total University of Alaska Debt 174.4 59.7 234,1
Total State Revenue and University Debt 693.0 275.2 968.2
State Agency Debt
Alaska Housing Finance Corporation
16.9 N/A 16.9 Commercial Paper
Alaska Municipal Bond Bank Coastal Energy Loan Bonds 10.4 2.4 12.8
Alaska Railroad 119,9 19.9 139.8
Northern Tobacco Securitization Corporation
2006 Tobacco Settlement Asset-Backed Bonds 346.6 394.9 741,5
Total State Agency Debt 493.8 417.2 911.0
State Agency Collateralized or Insured Debt
Alaska Housing Finance Corporation
Collateralized Home Mortgage Bonds & Mortgage Revenue Bonds:
2002 Through 2011 (First Time Homebuyer Program) 852.5 477.6 1,330.1
General Mortgage Revenue Bonds II- 2012 129.1 67.4 196.5
Government Purpose Bonds 1997 & 2001 128.2 33.9 162.1
State Capital Project Bonds, 2002-2011 202.2 76.3 278.5
State Capital Project Bonds, 11 2012-2014 771.4 300.9 1,072.3
Alaska Industrial Development and Export Authority:
Revolving Fund Bonds 64.7 21.8 86.5
Power Revenue Bonds, First Series (SneEisham Hydro Project) 70.0 42.5 112.5
Total State Agency Collateralized or Insured Debt 2,218.1 1,020.4 3,238.5
Total State and State Agency Debt 6,622.0
Municipal Debt
School G.O. Debt 1,299.4 N/A N/A
Other G.O. Debt 1,095.5 N/A N/A
Revenue Debt 954.3 N/A N/A
Total Municipal Debt 3,349.2
Less: State Reimbursable Debt and Capital Leases (2) (1,175,2)
Less: Alaska Municipal Bond Bank Debt
included in Municipal Debt (927.7)
5,L'lO..)
87,868.3
Total Alaska Public Debt
(1) University debt owed to AHFC is double counted in detail, but eliminated from Total Alaska Public Debt.
(2) Reimbursable school G.O. debt is included in "State Supported Debt"; Capital Leases are included in "State Agency Collateralized or Insured Debt and
Municipal Debt"; State Reimbursement of Capital Projects is included in "University of Alaska Debt" and "Municipal Debt."
Sources: Annual reports and financial statements of AHFC, Bond Bank, AIDEA, AEA, University of Alaska. Alaska Railroad. Alaska International Airport System
and directly from agencies.
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General Fund Supported Obligations. General Fund support is pledged and required for only a
portion of the total outstanding Alaska Public Debt. General Obligation Bonds are unconditionally
supported, and Certificates of Participation and Capital Leases are subject-to-appropriation commitments
with associated obligations. The School Debt Reimbursement Program and Capital Project
Reimbursement Program provide discretionary annual payments to municipal issuers for qualified general
obligation bonds that are eligible by statute to participate in the programs. The State fully funded these
programs between fiscal year 1993 and fiscal year 2016. Tables 6 and 7 show the historical level of
support the State has provided from the General Fund for these outstanding obligations and the forecast
support required to retire the outstanding obligations. See "Recent Developments."
Table 6
State of Alaska
Debt Service on State Supported Debt
Fiscal Years Ended June 30, 1986 - 2015
($ millions)
Fiscal State University Lease I Capital School Debt Capital Project Total Debt
Year G.O. Revenue Debt Purchase Leases (1) Reimbursement (2) Reimbursements Service (3)
1986 $163.2 $1.8 $10.4 - $106.3 - $281.7
1987 154,9 1,8 11.2 - 115.8 - 283,7
1988 147.9 1.5 11.2 - 109.5 270.1
1989 135.5 2.2 11.7 - 110.2 - 259.6
1990 120.3 2.2 12.0 - 107.4 - 241.9
1991 95.5 2.7 12.0 - 116.3 - 226.5
1992 68.2 2.7 11.8 - 127.3 - 210.0
1993 59.7 3.7 11.2 - 124.9 - 199.5
1994 33,8 0,2 8,5 - 98.6 - 141.1
1995 22.9 0.2 10.2 - 93,7 - 127.0
1996 21,3 0,2 9.6 - 79,2 - 110.3
1997 16.5 0.2 9.5 - 62.5 - 88.7
1998 14.2 0.2 10.3 - 61.6 - 86.3
1999 8.8 0.2 15.5 - 62.0 - 86,5
2000 2.4 - 15.0 $ 3.5 64.4 - 85.3
2001 - - 12.8 3.5 52,1 - 68,4
2002 - - 12.4 8.8 54.1 - 75.3
2003 - - 11,9 8.8 52.0 - 72.7
2004 19,4 12.1 8.8 60,6 $ 0.3 101,2
2005 46.4 13.8 8,8 71.4 0.2 140.6
2006 45.7 - 13.2 8.6 81,1 2.2 150.8
2007 45.0 - 13.2 9.1 86.9 3.6 157.8
2008 44.4 - 11.1 11.8 91.1 4,2 162.7
2009 43.9 8.0 20.4 93.3 3.9 169.5
2010 48.9 - 8.0 29.6 95.8 5.2 187.5
2011 53.8 - 8.0 29.7 99.6 5.3 196.4
2012 78.8 - 7.5 29.1 100.9 5.8 222.1
2013 76.3 - 7.0 28.6 112.3 5.4 229.6
2014 76.2 - 1.8 28.7 109.8 5.5 222.0
2015 73.5 - 1.8 28.7 118.0 5.5 227.5
(1) Three facilities are financed with capital leases.
(2) See "Recent Developments."
(3) Totals may not foot due to rounding.
Source: State ofAlaska.
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Table 7
State of Alaska
Existing Debt Service on Outstanding State Supported Debt
Fiscal Years Ending June 30, 2016 - 2040
($ millions)
University
Fiscal State Revenue Lease! Capital School Debt Capital Project Total Debt
Year G.O. (1) Debt Purchase Leases (2) Reimbursement (3) Reimbursements Service (4)
2016 $61.3 - $4.7 $26.2 $111.4 $4.6 $208.2
2017 78.0 - 2.9 23.7 105.5 4.6 214.7
2018 85.2 - 2.9 23.7 101.1 4.6 217.5
2019 84.8 2.9 20.2 94.3 4.5 206.7
2020 73.3 - 2.9 20.2 90.0 4.5 190.9
2021 72.5 - 2.9 20.2 88.2 3.6 187.4
2022 62.0 - 2.9 20,2 76.3 3.6 165.0
2023 61,9 - 2,9 20.2 72,3 3.6 160.9
2024 61,7 - 2.9 20.2 61,2 3.6 149,6
2025 56.8 2.9 20.2 51.7 3.6 135.2
2026 56.6 - 2.9 20.2 40.4 2.8 122.9
2027 56,1 - 2.9 20.9 36.3 2.6 118.8
2028 55.6 - 2.9 20,9 33.6 2.2 115.2
2029 55.4 - 2.9 17.6 28.3 0.9 105.1
2030 55.5 - - 17,6 25.2 0,9 99,2
2031 43.8 - - 17.6 22.7 0.4 84.5
2032 43.7 - - 17.6 19,4 - 80.7
2033 43,6 - - 17.6 12.4 - 73.6
2034 43.5 - - - 9.9 - 53.4
2035 20.3 - - - -
- 20.3
2036 20.5 - - - -
- 20.5
2037 0.1 - - - -
- 0,1
2038 12.0 - - -
- 12.0
2039 - - - - - - -
2040 - - - - - - -
(1) State G.O. debt service is net of federal subsidies for interest expenses from 2016 through 2038, Includes debt
service on the State's 2016A General Obligation Bonds and 2016B General Obligation Bonds issued in fiscal
year 2016.
(2) A prison, a building and a parking garage have been financed with capital leases.
(3) Information as of June 30, 2015, provided by the Department of Education & Early Development. See "Recent
Developments."
(4) Fiscal Year 2016-2034 payments are estimated. Totals may not foot due to rounding.
Source.' State ofAlaska.
Recent Developments. In 2015, the Legislature passed a moratorium on all school debt
reimbursement agreements for municipal general obligation bond authorizations approved after January 1,
2015. See "State Debt Capacity." On June 29, 2016, the Governor signed the fiscal year 2017 budgets
transmitted by the Legislature and exercised his line-item veto authority to reduce the fiscal year 2017
appropriations by approximately $1.29 billion, including a 25 percent reduction in the School Debt
Reimbursement Program. See "Government Budgets and Appropriations - General Appropriations."
Payment History. The State has never defaulted on its bond obligations nor has it ever failed to
appropriate funds for any 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
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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 certificates of participation that are State supported. More
recently, the State has included more discretionary General Fund supported obligations and programs,
including the School Debt Reimbursement Program, the Capital Project Reimbursement Program and
certain capital leases. With the more inclusive funding, the State's policy allows the annual payments on
these items to range up to eight percent of unrestricted revenue. Access to the School Debt
Reimbursement Program was restricted during the 1990s due to State budgetary pressure. Beginning in
the early 2000s, and carrying through 2014, the program was generally available for any qualified
municipal project. In 2015, the Legislature passed a moratorium on State school debt reimbursement, and
the Alaska Department of Education and Early Development will not issue agreements to reimburse debt
from school bonds that voters approved after January 1, 2015, and before July 1, 2020. In addition, on
June 29, 2016, the Governor signed the fiscal year 2017 budgets transmitted by the Legislature and
exercised his line-item veto authority to reduce the fiscal year 2017 appropriations by approximately
$1.29 billion, including a 25 percent reduction in the School Debt Reimbursement Program.
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Table 8
State of Alaska
Debt Service on Outstanding Obligations to Unrestricted Revenues
Fiscal Years Ended June 30, 2011 -2015
FORECAST FOR Fiscal Years Ending June 30, 2016 - 2025
Unrestricted Total
Fiscal Revenues State G.O. State Supported Total School Debt Debt Service to
Year ($millions) Debt Service Debt Service State Debt Service Reimbursement Revenues
1986 3,075.5 5.3% 0.4% 5.7% 3.5% 9.2%
1987 1,799.4 8.6 0.7 9.3 6.4 15.8
1988 2,305.8 6.4 0,6 7,0 4.7 11.7
1989 2,186,2 6.2 0.6 6.8 5.0 11.9
1990 2,507.2 4.8 0.6 5.4 4.3 9.6
1991 2,986.6 3.2 0.5 3.7 3.9 7,6
1992 2,462.6 2.8 0.6 3.4 5,2 8.5
1993 2,352.0 2.5 0,6 3.2 5.3 8.5
1994 1,652.5 2.0 0.5 2.6 6.0 8.5
1995 2,082.9 1.1 0.5 1.6 4.5 6.1
1996 2,133.3 1.0 0.5 1.5 3.7 5.2
1997 2,494.9 0.7 0.4 1.1 2.5 3.6
1998 1,825.5 0.8 0.6 1.4 3.4 4.7
1999 1,348.4 0.7 1.2 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 5,831.2 0.8 0.6 1.3 1.6 2.9
2010 5,513.3 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 5,390.1 1.4 0.7 2.1 2.0 4.1
2015 2,257.3 3.3 1.6 4.8 5.2 10.1
Forecast
2016 1,593.0 3.8 2,2 6.1 7.0 13.1
2017 1,796.4 3.5 1.7 5.2 5.9 11,1
2018 2,021,0 3.1 1.5 4.7 5.0 9.7
2019 2,130.0 2.9 1.3 4.2 4.4 8.7
2020 2,111.3 2.4 1.3 3.8 4.3 8.0
2021 2,173.3 2.3 1.2 3.6 4.1 7.6
2022 2,131.8 1.9 1.3 3.2 3.6 6.7
2023 2,076.5 2.0 1.3 3.3 3.5 6.7
2024 2,060.6 2.0 1.3 3.3 3.0 6.3
2025 2,046.1 1.8 1.3 3.1 2.5 5.6
(1) Unrestricted revenue projection for fiscal years 2016 through 2025 is based on Fall 2015 Revenue Sources
Book. Debt Service is based on June 30, 2015 balances, not adjusted for cash defeasances.
Source.' State ofAlaska.
G-26
Litigation
At any given time, including the present, there are numerous civil actions filed by or pending
against the State, which could positively or negatively impact revenue sources or cash flow of the State. A
short description of such material litigation is provided below.
Oil and Gas Tax Litigation.
Administrative Litigation. There are a number of disputed tax assessments against oil and gas
corporations that are at the administrative level and thus confidential under AS 43.05.230(a). The
assessments involve the corporate income tax (AS 43.20) or the oil and gas production tax (AS 43.55).
Because the taxpayers, the tax years, and the amounts involved are confidential, a more detailed
description of the cases cannot be given. Due to the confidentiality statute and because the disputed tax
assessments are ongoing, the State cannot give an estimate of how much is expected to be eventually
recovered through settlement, the administrative proceedings, or adjudication. Moneys recovered are
required to be transferred to the Constitutional Budget Reserve Fund.
Litigation Pending Before the Alaska Superior Court and the Alaska Supreme Court.
Elf Aggregation. Five owners of working interests in certain participating areas of the Prudhoe
Bay Unit appealed DOR's January 12, 2005 decision aggregating participating areas of the Prudhoe Bay
Unit for purposes of calculating Economic Limit Factors used to determine production tax liability. On
October 13, 2012, the Office of Administrative Hearings granted DOR' s motion for summary judgment,
concluding that the aggregation decision did not constitute a regulation requiring compliance with the
Administrative Procedure Act. On January 9, 2013, these working interest owners appealed the Office of
Administrative Hearings decision to the State Superior Court. The Superior Court affirmed the Office of
Administrative Hearings decision in its entirety. The owners have appealed to the State Supreme Court
(S-15891). Briefing is complete and oral argument was held on February 17, 2016. This appeal is worth
several hundred million dollars in production tax revenues and interest. Any settlement on this appeal
would be deposited into the Constitutional Budget Reserve Fund.
Pipeline TariffLitigation.
The State is a party to TAPS tariff litigation matters before the Regulatory Commission of Alaska
(RCA) and the Federal Energy Regulatory Commission (FERC) regarding the TAPS carriers' inclusion in
the tariff rate of several hundred million dollars of imprudent expenditures made since 2004 on the TAPS
Strategic Reconfiguration (SR) project. The factual bases and legal standards for the SR imprudence
challenge are substantially the same at the RCA and FERC. After a concurrent hearing with the RCA and
FERC, the FERC Administrative Law Judge issued a favorable decision that removed these imprudent
costs from the carriers' rate base for 2009 and 2010, which will in turn lower tariff rates. The AL's
decision was recently upheld by the full FERC Commission. The RCA adopted the FERC decision on
February 29, 2016. The TAPS owners have filed petitions for review of the FERC decision before the
United States Court of Appeals for the D.C. Circuit. The impact of this decision would result in payment
to the State of additional royalties and production taxes for 2009 and 2010 of over $200 million. Tariff
filings for 2011 and forward were held in abeyance pending a decision on the 2009 and 2010 tariff issues,
but have recently been revived for settlement discussion and potential hearings. The result of these tariff
proceedings may require additional refunds of production taxes and royalties by the State, but the
amounts, if any, are unknown at this time.
G-27
Education and Public School Trust Matters.
Citizens Alliance Protecting School Lands v. State (Public School Trust). A non-profit
corporation organized to advocate for school lands issues filed suit for declaratory relief against the State
in April 2013. The complaint alleges numerous breaches of trust by the State respecting public school
trust lands. The Superior Court on January 20, 2015 granted the State summary judgment dismissing most
allegations including that the State has not obtained from the United States all school trust land
entitlements under the Alaska Statehood Act. The parties stipulated that the remaining claims involve
whether the Territory of Alaska before statehood breached trust duties to obtain more school trust lands,
whether the State is responsible for any breach by the Territory, and whether any of the State's defenses
apply. The State's second summary judgment motion to dismiss all remaining trust claims was granted on
March 2016 and final judgment in favor of the State was entered on April 14, 2016. An appeal has been
filed.
En vironmental Litigation.
State of Alaska v. Williams Alaska Petroleum, Inc. et al., Case No. 4FA-14-01544C1
Consolidated. This case involves litigation over environmental liabilities for the North Pole Refinery,
including sulfolane pollution of the North Pole drinking water aquifer. Defendant refinery operators have
asserted counterclaims seeking contribution from the State due to its role of lessor of the property during
27 out of 37 years the refinery operated.
Tort Claims,
The Attorney General's Office is involved in defending numerous tort claims asserted against the
State and agencies. No estimate can be given as to the likelihood or financial effect on the outcome of
such claims.
Medicaid Payment Rate Appeals.
The Attorney General's Office is involved in defending numerous Medicaid payment rate appeals
filed by providers. No estimate can be given as to the likelihood or financial effect on the outcome of such
appeals.
Employment Claims.
The Attorney General's Office is involved in defending numerous employment-related claims
filed by present or former employees. No estimate can be given as to the likelihood or financial effect on
the outcome of such claims.
Tobacco Company Litigation.
In 1998, Alaska was among 46 states that entered into a settlement of claims against the nation's
major tobacco companies. The companies agreed to pay $4.5 billion in 2000 with annual increases until
payments reach $9 billion in 2019 and each year thereafter. The State's share, based upon its
proportionate tobacco consumption, is about .034 percent of the yearly payment. This income stream is
indefinite as long as Americans continue to consume tobacco products.
The Legislature authorized the State to sell to the AHFC 80 percent of the State's annual
settlement income. AHFC 's purchase was financed through the issuance of revenue bonds by the
Northern Tobacco Securitization Corporation (the "NTSC"), a subsidiary the AHFC established and to
G-28
which the right to receive 80 percent of the settlement revenues was transferred. In 2006, NTSC issued
additional revenue bonds to refinance its purchase of the State's annual settlement income. The NTSC is
using the income stream to pay debt service on the bonds. When the bonds are paid, the settlement
income reverts to the State. The State used the bond proceeds to pay for a variety of construction and
maintenance projects including rural schools, ports and harbors.
The master settlement agreement provides for a payment adjustment mechanism that, when
triggered, could result in the impairment of the State's right to receive the remaining 20 percent of
revenue that is not pledged to the NTSC and the NTSC could suffer a revenue shortfall. This payment
adjustment mechanism has been triggered for the years 2003-2010. States that have diligently enforced
their qualifying statute are exempted from the application of this adjustment mechanism. In July 2010, an
arbitration commenced regarding which states "diligently enforced" their qualifying statutes in 2003.
During that arbitration, Alaska and 15 other states/territories received notice that the participating
manufacturers (tobacco companies that joined the master settlement agreement) no longer contested their
diligence, rendering those states exempt from the 2003 adjustment. Arbitration for the 2004 adjustment is
currently underway. The State believes it is exempt from the adjustment for 2004 and subsequent years.
The State continues to monitor and participate in this case.
Other Litigation or Threatened Litigation.
Legislative Information Office (LIO) Anchorage. The Legislative Affairs Agency (LAA) entered
into an agreement in 2013 with its landlord 716 West Fourth Avenue LLC (716) to renovate and expand
the existing LIO office in Anchorage and to extend the lease for the premises. A suit was brought in
Superior Court by a plaintiff claiming the lease extension was not in compliance with State procurement
law. In a March 2016 decision, the Superior Court entered a declaratory judgment finding the lease
invalid under State procurement law. A motion for reconsideration was denied by the Superior Court, and
neither LAA nor 716 filed an appeal.
During the 2016 legislative session, the Legislature considered purchasing the current LIO office
building and also considered leaving the LIO and purchasing or leasing another building in Anchorage.
The fiscal year 2017 budget includes an appropriation for the purchase of the other building, which the
Governor did not veto. On May 10, 2016, EverBank submitted a letter to the LAA contending that the
LAA may be in breach of contract if it does not fulfill its lease of the Lb. The bank asserts it loaned
$28,600,000 to the landlord (716) to finance renovations to the LIO building and in connection with that
lending agreement, the LAA entered into a subordination, non-disturbance and attornment agreement
(SNDA) with the landlord that the bank relied upon.
Permanent Fund Dividend Litigation. On September 16, 2016, three plaintiffs sued the State and
the Alaska Permanent Fund Corporation challenging the authority of the Governor to reduce
appropriations for the fall 2016 dividend by exercise of his constitutional line item veto power. Plaintiffs
contend that payment of the dividend is exempt from the appropriations and veto process under the
permanent fund amendment to the state constitution and the amount instead is dictated by a statutory
formula. The State will assert that dividends are not exempt from the constitutional requirements and that
appropriations are required to pay dividends. The Governor's veto reduced the appropriation for dividends
to $695,650,000 which will result in a dividend of slightly over one thousand dollars to eligible Alaska
residents. The plaintiffs contend that the amount that should have been made available for dividends is
approximately $1,362,000,000 which would have resulted in a dividend of approximately twice the
amount that will be paid based on the appropriation and veto. The complaint was filed in Superior Court.
On October 4, 2016, at the request of all parties, the Superior Court granted a joint motion for expedited
consideration.
G-29
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APPENDIX H
PROPOSED FORMS OF CONTINUING DISCLOSURE CERTIFICATES
[This page intentionally left blank.]
All Ii D II il tO]11,1 1111 11 Iii IEfl II K! tl1II i at I I I
Alaska Municipal Bond Bank (the "Issuer") executes and delivers this Continuing
Disclosure Certificate (the "Disclosure Certificate") in connection with the issuance of
$80,435,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016
Series Three (the "2016 Series Three Bonds") and $29,400,000 Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and
together with the 2016 Series Three Bonds, the "Bonds"). The Bonds are being issued under the
General Bond Resolution of the Bank 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 (the
"General Bond Resolution"), and Series Resolution No. 20 16-05 adopted on September 6, 2016
(the "Series Resolution," and together with the General Bond Resolution, the "Bond
Resolution"). 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 Rule 15c2-
1 2(b)(5).
Section 2. Definitions. In addition to the definitions set forth in the Bond Resolution,
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.
"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.
"Participating Underwriter" means any of the original underwriters of the Bonds required
to comply with the Rule in connection with the offering of the Bonds.
"Rule" means Rule 15c2-12(b)(5) adopted by the Securities and Exchange Commission
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
Fiscal Year ending June 30, 2017, 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) statistics
regarding Governmental Units similar to those found in Appendix D to the Official
H-i
Statement 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 Securities and Exchange Commission. 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, who has, or had, an amount of bonds equal to or greater than
ten percent (10%) of all outstanding loans 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.
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 events affecting the tax-exempt status of the
Bonds which include (i) the issuance by the Internal Revenue Service ("IRS") of
proposed or final determinations of taxability, (ii) Notices of Proposed Issues (IRS Form
570 1-TEB), (iii) other material notices or determinations with respect to the Bonds, and
(iv) other events affecting the tax status of the Bonds.
(6) Defeasances.
(7) Rating changes.
(8) Tender offers.
(9) Bankruptcy, insolvency, receivership or similar proceeding by the Issuer
or "obligated person."
H-2
(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) Nonpayment-related defaults.
(2) Modifications to rights of holders of the Bonds.
(3) Bond calls, other than mandatory, scheduled redemptions not otherwise
contingent on the occurrence of an event.
(4) Release, substitution or sale of property securing repayment of the Bonds.
(5) Other than in the normal course of business, the consummation of a
merger, consolidation, or acquisition involving an "obligated person," or the sale of all or
substantially all of the assets of the Issuer or "obligated person," or 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 in accordance with its terms.
(6) Appointment of a successor or additional trustee or the change in name of
the trustee for 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:
(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 Bond
Resolution.
H-3
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 Bond Resolution, 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 day of 2016.
ALASKA MUNICIPAL BOND BANK
DEVEN J. MITCHELL
Executive Director
H-4
J tTI11Si I 1 ii 11,11 1 1L1 DI IS)i I ILuI F 91,1115 I!Si D}tJ 9 DI I I ri 1S I
The City and Borough of Juneau, Alaska (the "Borough"), executes and delivers this
Continuing Disclosure Certificate (the "Disclosure Certificate") in connection with the issuance
of $80,435,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016
Series Three (the "2016 Series Three Bonds") and $29,400,000 Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and
together with the 2016 Series Three Bonds, 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 (the "General Bond Resolution"), and the Series Resolution No. 2016-05, adopted on
September 6, 2016 (the "Series Resolution," and together with the General Bond Resolution, the
"Bond Resolution"). The Borough covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate, The Borough 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). The Borough is an "Obligated Person" within the meaning of the
Rule.
Section 2, Definitions. In addition to the definitions set forth in the Bond Resolution,
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 Borough pursuant to, and as
described in, Section 3 of this Disclosure Certificate.
"Fiscal Year" means the fiscal year of the Borough (currently the 12-month period
ending June 30) as such fiscal year may be changed from time to time as required by State law
and the Borough's ordinances.
"Issuer" means the Alaska Municipal Bond Bank.
"MSRB" means the Municipal Securities Rulemaking Board.
"Participating Underwriter" means any of the original underwriters of the Bonds required
to comply with the Rule in connection with the offering of the Bonds.
"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 Fiscal Year ending June 30, 2017, and for so long as the Borough has outstanding with the
Issuer an amount of bonds equal to or greater than 10 percent of all bonds outstanding under the
General Bond Resolution as of the last day of the fiscal year of the Issuer (currently June 30), the
Borough will provide to the MSRB the following:
H-S
(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
the following annual financial information and operating data: (i) annual financial
statements for the Borough, prepared in accordance with generally accepted accounting
principles applicable to governmental entities, as such principles may be changed from
time to time and (ii) financial information generally of the type included in Appendix D
of the Official Statement relating to the Bonds.
Any or all of these items may be incorporated by specific reference to documents
available to the public on the internet website of MSRB or filed with the Securities and
Exchange Commission, The Borough 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
of the Borough may be submitted separately from the remainder of the Annual Report.
(b) If not provided as part of the Annual Report, then promptly upon their
public release, the audited financial statements of the Borough for each Fiscal Year,
prepared in accordance with generally accepted accounting principles applicable to
governmental entities, as such principles may be changed from time to time.
Section 4. Notice of Failure to Provide Information. The Borough 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. Termination of Reporting Obligation. The Borough's obligations under
this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or
payment in full of its loan obligation with the Issuer and as otherwise described in Section 3 of
this Disclosure Certificate.
Section 6. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the Borough may amend this Disclosure Certificate, provided that the
amendment meets each of the following conditions:
(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 Borough;
(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; and
(c) The Borough obtains an opinion of nationally recognized bond counsel to
the effect that the amendment will not adversely affect the Issuer's compliance with the
Rule or its continuing disclosure undertaking; and
(d) The Borough notifies and provides the Issuer and the MSRB with the
copies of the opinions and amendments.
H-6
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 Bond
Resolution.
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 7. Default. In the event of a failure of the Borough 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
Borough 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
Bond Resolution, and the sole legal remedy under this Disclosure Certificate in the event of any
failure of the Borough to comply with this Disclosure Certificate shall be an action to compel
specific performance.
Section 8. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the Borough, 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.
Section 9. Prior Compliance. The Borough is in compliance with all of its prior
undertakings pursuant to the Rule.
[SIGNATURE PAGE FOLLOWS]
H-7
DATED this day of 2016.
CITY AND BOROUGH OF JUNEAU.,
ALASKA
LOW
H-8
12 tS I1I 1 D 1k'4 IS I kISJ kEeI I) I!Si SJiLII i LII liii ($11 I
The Kenai Peninsula Borough, Alaska (the "Borough") executes and delivers this
Continuing Disclosure Certificate (the "Disclosure Certificate") in connection with the issuance
of $80,435,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016
Series Three (the "2016 Series Three Bonds") and $29,400,000 Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and
together with the 2016 Series Three Bonds, 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 (the "General Bond Resolution"), and the Series Resolution No. 2016-05, adopted on
September 6, 2015 (the "Series Resolution," and together with the General Bond Resolution, the
"Bond Resolution"). The Borough covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. The Borough 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). The Borough is an "Obligated Person" within the meaning of the
Rule.
Section 2. Definitions. In addition to the definitions set forth in the Bond
Resolution, 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 Borough pursuant to, and as
described in, Section 3 of this Disclosure Certificate.
"Fiscal Year" means the fiscal year of the Borough (currently the 12-month period
ending June 30) as such fiscal year may be changed from time to time as required by State law
and the Borough's ordinances.
"Issuer" means the Alaska Municipal Bond Bank.
"MSRB" means the Municipal Securities Rulemaking Board.
"Participating Underwriter" means any of the original underwriters of the Bonds required
to comply with the Rule in connection with the offering of the Bonds.
"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 Fiscal Year ending June 30, 2017, and for so long as the Borough has outstanding with the
Issuer an amount of bonds equal to or greater than 10 percent of all bonds outstanding under the
H-9
General Bond Resolution as of the last day of the fiscal year of the Issuer (currently June 30), the
Borough will provide to the MSRB, the following:
(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 the
following annual financial information and operating data: (i) annual financial statements for the
Borough, prepared in accordance with generally accepted accounting principles applicable to
governmental entities, as such principles may be changed from time to time and (ii) financial
information generally of the type included in Appendix D of the Official Statement relating to
the Bonds.
Any or all of these items may be incorporated by specific reference to documents
available to the public on the internet website of MSRB or filed with the Securities and
Exchange Commission. The Borough 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 of the
Borough may be submitted separately from the remainder of the Annual Report.
(b) If not provided as part of the Annual Report, then promptly upon their
public release, the audited financial statements of the Borough for each Fiscal Year, prepared in
accordance with generally accepted accounting principles applicable to governmental entities, as
such principles may be changed from time to time.
Section 4. Notice of Failure to Provide Information. The Borough 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. Termination of Reporting Obligation. The Borough's obligations under
this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or
payment in full of its loan obligation with the Issuer and as otherwise described in Section 3 of
this Disclosure Certificate.
Section 6. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the Borough may amend this Disclosure Certificate, provided that the
amendment meets each of the following conditions:
(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 Borough;
(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; and
(c) The Borough obtains an opinion of nationally recognized bond counsel to
the effect that the amendment will not adversely affect the Issuer's compliance with the Rule or
its continuing disclosure undertaking; and
H-lU
(d) The Borough notifies and provides the Issuer and the MSRB with the
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 Bond
Resolution.
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 7. Default. In the event of a failure of the Borough 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
Borough 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
Bond Resolution, and the sole legal remedy under this Disclosure Certificate in the event of any
failure of the Borough to comply with this Disclosure Certificate shall be an action to compel
specific performance.
Section 8. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the Borough, 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.
Section 9. Prior Compliance. The Borough is in compliance with all of its prior
undertakings pursuant to the Rule.
[SIGNATURE PAGE FOLLOWS]
H-li
DATED this day of 2016.
Craig C. Chapman
Finance Director
H-12
!S1 1Ji II S] &'A tO] SLO]i1 N ILSJ k[I I] I[SJ tO}111 1 LJ DI 1 N I (SJI N
The Kodiak Island Borough, Alaska (the "Borough") executes and delivers this
Continuing Disclosure Certificate (the "Disclosure Certificate") in connection with the issuance
of $80,435,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016
Series Three (the "2016 Series Three Bonds") and $29,400,000 Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and
together with the 2016 Series Three Bonds, 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 (the "General Bond Resolution"), and the Series Resolution No. 2016-05, adopted on
September 6, 2016 (the "Series Resolution," and together with the General Bond Resolution, the
"Bond Resolution"). The Borough covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. The Borough 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). The Borough is an "Obligated Person" within the meaning of the
Rule.
Section 2. Definitions. In addition to the definitions set forth in the Bond
Resolution, 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 Borough pursuant to, and as
described in, Section 3 of this Disclosure Certificate.
"Fiscal Year" means the fiscal year of the Borough (currently the 12-month period
ending June 30) as such fiscal year may be changed from time to time as required by State law
and the Borough's ordinances.
"Issuer" means the Alaska Municipal Bond Bank.
"MSRB" means the Municipal Securities Rulemaking Board.
"Participating Underwriter" means any of the original underwriters of the Bonds required
to comply with the Rule in connection with the offering of the Bonds.
"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 Fiscal Year ending June 30, 2017, and for so long as the Borough has outstanding with the
Issuer an amount of bonds equal to or greater than 10 percent of all bonds outstanding under the
H-13
General Bond Resolution as of the last day of the fiscal year of the Issuer (currently June 30), the
Borough will provide to the MSRB the following:
(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 the
following annual financial information and operating data: (i) annual financial statements for the
Borough, prepared in accordance with generally accepted accounting principles applicable to
governmental entities, as such principles may be changed from time to time and (ii) financial
information generally of the type included in Appendix D of the Official Statement relating to
the Bonds.
Any or all of these items may be incorporated by specific reference to documents
available to the public on the internet website of MSRB or filed with the Securities and
Exchange Commission. The Borough 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 of the
Borough may be submitted separately from the remainder of the Annual Report.
(b) If not provided as part of the Annual Report, then promptly upon their
public release, the audited financial statements of the Borough for each Fiscal Year, prepared in
accordance with generally accepted accounting principles applicable to governmental entities, as
such principles may be changed from time to time.
Section 4. Notice of Failure to Provide Information. The Borough 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. Termination of Reporting Obligation. The Borough's obligations under
this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or
payment in full of its loan obligation with the Issuer and as otherwise described in Section 3 of
this Disclosure Certificate.
Section 6. Amendment Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the Borough may amend this Disclosure Certificate, provided that the
amendment meets each of the following conditions:
(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 Borough;
(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; and
(c) The Borough obtains an opinion of nationally recognized bond counsel to
the effect that the amendment will not adversely affect the Issuer's compliance with the Rule or
its continuing disclosure undertaking; and
H-l4
(d) The Borough notifies and provides the Issuer and the MSRB with the
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 Bond
Resolution.
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 7. Default. In the event of a failure of the Borough 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
Borough 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
Bond Resolution, and the sole legal remedy under this Disclosure Certificate in the event of any
failure of the Borough to comply with this Disclosure Certificate shall be an action to compel
specific performance.
Section 8. Beneficiaries, This Disclosure Certificate shall inure solely to the benefit
of the Borough, 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.
Section 9. Prior Compliance, The Borough is in compliance with all of its prior
undertakings pursuant to the Rule.
[SIGNATURE PAGE FOLLOWS]
H-is
DATED this day of 2016.
Dora Cross
Finance Director
11-16
tI] ISJ1 1 1 I] 111TE1)h1 U 114114 1 0 1111, 1!SI IJØJ 1 5I1 DIMN I I
The City and Borough of Sitka, Alaska (the "Borough"), executes and delivers this
Continuing Disclosure Certificate (the "Disclosure Certificate") in connection with the issuance
of $80,435,000 Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016
Series Three (the "2016 Series Three Bonds") and $29,400,000 Alaska Municipal Bond Bank
General Obligation and Refunding Bonds, 2016 Series Four (the "2016 Series Four Bonds" and
together with the 2016 Series Three Bonds, 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 (the "General Bond Resolution"), and the Series Resolution No. 2016-05, adopted on
September 6, 2016 (the "Series Resolution," and together with the General Bond Resolution, the
"Bond Resolution"). The Borough covenants and agrees as follows:
Section 1. Purpose of the Disclosure Certificate. The Borough 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). The Borough is an "Obligated Person" within the meaning of the
Rule.
Section 2. Definitions. In addition to the definitions set forth in the Bond Resolution,
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 Borough pursuant to, and as
described in, Section 3 of this Disclosure Certificate.
"Fiscal Year" means the fiscal year of the Borough (currently the 12-month period
ending June 30) as such fiscal year may be changed from time to time as required by State law
and the Borough's ordinances.
"Issuer" means the Alaska Municipal Bond Bank.
"MSRB" means the Municipal Securities Rulemaking Board.
"Participating Underwriter" means any of the original underwriters of the Bonds required
to comply with the Rule in connection with the offering of the Bonds.
"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 Fiscal Year ending June 30, 2017, and for so long as the Borough has outstanding with the
Issuer an amount of bonds equal to or greater than 10 percent of all bonds outstanding under the
General Bond Resolution as of the last day of the fiscal year of the Issuer (currently June 30), the
Borough will provide to the MSRB the following:
H-17
(a) Not later than 210 days after the end of each Fiscal Year, i.e. not later than
January 26 after each current Fiscal Year, an Annual Report for the Fiscal Year. The
Annual Report shall contain or incorporate by reference the following annual financial
information and operating data: (i) annual financial statements for the Borough, prepared
in accordance with generally accepted accounting principles applicable to governmental
entities, as such principles may be changed from time to time and (ii) financial
information generally of the type included in Appendix D of the Official Statement
relating to the Bonds.
Any or all of these items may be incorporated by specific reference to documents
available to the public on the internet website of MSRB or filed with the Securities and
Exchange Commission. The Borough 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
of the Borough may be submitted separately from the remainder of the Annual Report.
(b) If not provided as part of the Annual Report, then promptly upon their
public release, the audited financial statements of the Borough for each Fiscal Year,
prepared in accordance with generally accepted accounting principles applicable to
governmental entities, as such principles may be changed from time to time.
Section 4. Notice of Failure to Provide Information, The Borough 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. Termination of Reporting Obligation. The Borough's obligations under
this Disclosure Certificate shall terminate upon the legal defeasance, prior redemption or
payment in full of its loan obligation with the Issuer and as otherwise described in Section 3 of
this Disclosure Certificate.
Section 6. Amendment; Waiver. Notwithstanding any other provision of this
Disclosure Certificate, the Borough may amend this Disclosure Certificate, provided that the
amendment meets each of the following conditions:
(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 Borough;
(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; and
(c) The Borough obtains an opinion of nationally recognized bond counsel to
the effect that the amendment will not adversely affect the Issuer's compliance with the
Rule or its continuing disclosure undertaking; and
(d) The Borough notifies and provides the Issuer and the MSRB with the
copies of the opinions and amendments.
H-18
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 Bond
Resolution.
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 7. Default. In the event of a failure of the Borough 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 perfonnance, to cause the
Borough 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
Bond Resolution, and the sole legal remedy under this Disclosure Certificate in the event of any
failure of the Borough to comply with this Disclosure Certificate shall be an action to compel
specific performance.
Section 8. Beneficiaries. This Disclosure Certificate shall inure solely to the benefit
of the Borough, 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.
[SIGNATURE PAGE FOLLOWS]
H-19
DATED this - day of 2016.
CITY AND BOROUGH OF SITKA,
ALASKA
IN
H-20
APPENDIX I
DTC AND ITS BOOK-ENTRY SYSTEM
1. The Depository Trust Company ("DTC"), New York, NY, will act as securities depository
for the 2016 Series Three and Four Bonds. The 2016 Series Three and Four 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 each Series of the 2016 Series Three and Four 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 2016 Series Three and Four Bonds under the DTC system must be made by or
through Direct Participants, which will receive a credit for the 2016 Series Three and Four Bonds on DTC's
records. The ownership interest of each actual purchaser of each 2016 Series Three and Four 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 2016 Series Three and Four 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 2016 Series Three and
Four Bonds, except in the event that use of the book-entry system for the 2016 Series Three and Four Bonds is
discontinued.
4. To facilitate subsequent transfers, all 2016 Series Three and Four 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 2016 Series Three and Four
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 actual Beneficial Owners of the 2016
Series Three and Four Bonds; DTC's records reflect only the identity of the Direct Participants to whose
I-i
accounts such 2016 Series Three and Four 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 2016 Series Three and Four Bonds may wish to take certain
steps to augment the transmission to them of notices of significant events with respect to the 2016 Series Three
and Four Bonds, such as redemptions, tenders, defaults, and proposed amendments to the 2016 Series Three
and Four Bond documents. For example, Beneficial Owners of 2016 Series Three and Four Bonds may wish
to ascertain that the nominee holding the 2016 Series Three and Four 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 2016 Series Three and Four
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 2016 Series Three and Four 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 2016 Series Three and Four Bonds are credited on the record date
(identified in a listing attached to the Omnibus Proxy).
8. Payments on the 2016 Series Three and Four 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 2016 Series
Three and Four 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, 2016 Series Three and Four 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, 2016 Series Three and Four Bond certificates
will be printed and delivered to DTC.
11. The information in this section 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.
1-2
APPENDIX J
FORM OF BOND INSURANCE POLICY
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FINANCIAL GUARANTY INSURANCE POLICY
National Public Finance Guarantee Corporation
Purchase, New York 10577
Policy No. [POLICY #]
National Public Finance Guarantee Corporation (the "Insurer"), in consideration of the payment of the premium and subject to the terms of this policy,
hereby unconditionally and irrevocably guarantees to any owner, as hereinafter defined, of the following described obligations, the full and complete
payment required to be made by or on behalf of the Issuer to [PAYING AGENT], [PAYING AGENT CITY & STATE] or its successor (the
"Paying Agent") of an amount equal to (i) the principal of (either at the stated maturity or by any advancement of maturity pursuant to a mandatory
sinking fund payment) and interest on, the Obligations (as that term is defined below) as such payments shall become due but shall not be so paid (except
that in the event of any acceleration of the due date of such principal by reason of mandatory or optional redemption or acceleration resulting from default
or otherwise, other than any advancement of maturity pursuant to a mandatory sinking fund payment, the payments guaranteed hereby shall be made in
such amounts and at such times as such payments of principal would have been due had there not been any such acceleration); and (ii) the
reimbursement of any such payment which is subsequently recovered from any owner pursuant to a final judgment by a court of competent jurisdiction
that such payment constitutes an avoidable preference to such owner within the meaning of any applicable bankruptcy law. The amounts referred to in
clauses (i) and (ii) of the preceding sentence shall be referred to herein collectively as the "Insured i\mosuts' Obligations" shall mean:
[PARAMOUNT]
[FIRST LINE OF LEGAL TITLEII
[SECOND LINE OF LEGAL TITLE]
[THIRD LINE OF LEGAL TITLE]
[FOURTH LINE OF LEGAL TITLE]
Upon receipt of telephonic or electronic notice, such notice subsequently confirmed in writing by registered or certified mail, or upon receipt of written
notice by registered or certified mail by the Insurer flom the Paying Agent or any owner of an Obligation the payment of an Insured Amount for which is
then due that such required payment has not been made the Insurer on the due date of such payment or within one business day after receipt of notice of
such nonpayment, whichever is later, will make a deposit of fluids, in an account with U.S. Bank Trust National Association, in New York, New York,
or its successor, sufficient for the payment of any such Insured Amounts which are then due. Upon presentment and surrender of such Obligations or
presentment of such other proof of ownership of the Obligations, together with any appropriate instruments of assignment to evidence the assignment of
the Insured Amounts due on the Obligations as are paid by the Insurer, and appropriate instruments to effect the appointment of the Insurer as agent for
such owners of the Obligations in any legal proceeding related to payment of Insured Amounts on the Obligations such instruments being in a form
satisfactory to U.S.Bank Trust National Association U.S. Bank Trust National Association shall disburse to such owners or the Paying Agent payment
of the Insured Amounts due on such Obligations less any amount held by the Paying Agent for the payment of such Insured Amounts and legally
available therefor. This policy does not insure against loss of any prepayment premium which may at any time be payable with respect to any
Obligation.
As used herein, the term "ov,mier shall mean the registered owner of any Obligation as indicated in the books maintained by the Paying Agent, the Issuer,
or any designee of the Issuer tbr such purpose. The term owner shall not include the Issuer or any party whose agreement with the Issuer constitutes the
underlying security for the Obligations.
Any service of process on the insurer may be made to the Insurer at its offices located at 1 Manhattanville Road, Suite 301, Purchase, New York 10577
and such service of process shall be valid and binding.
This policy is non-cancellable for any reason The premium on this policy is not refundable for any reason including the payment prior to maturity of the
Obligations.
IN WITNESS WHEREOF, the Insurer has caused this policy to be executed in facsimile on its behalf by its duly authorized officers, this [DAY] day of
[MONTH], [YEAR].
National Public Finance
Guarantee Corporation
STD-NATL,-1
10/14
Pagel of 4
President
Attest:
Secretary
J-1
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ALASKA MUNICIPAL BOND BANK • GENERAL OBLIGATION AND REFUNDING BONDs, 2016 SERIES THREE AND 2016 SERIES FouR (AMT)
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