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kMAH\I DJ h I OV\/I PC. 1907.56186 1W OrYl
November 3, 2016
Mayor and Members of the City Council
City of Bethel
300 State Highway
Bethel, Alaska 99559
Alaska Municipal Bond Bank
State Office Building, 11th Floor
333 Willoughby
Juneau, Alaska 99811
RE: City of Bethel, Alaska
$2,000,000 Lease Revenue Refunding Bond, 2016
Ladies and Gentlemen:
We have served as bond counsel to the City of Bethel, Alaska (the "City"), and
have examined a transcript of proceedings taken in the matter of the issuance by the
City of its Lease Revenue Refunding Bond, 2016 (the "Bond") in the total principal
amount of $2,000,000. The Bond refunds a portion of the City's Lease Revenue Bond,
2007 (Alaska Municipal Bond Bank Loan) (the "Refunded Bond"), issued pursuant to
Ordinance No. 07-148 (the "Bond Ordinance").
The Bond is issued pursuant to Ordinance No. 16-28 of the City approved
October 11, 2016 (the "Ordinance," and together with the Bond Ordinance, the "Bond
Legislation"). The City entered into a loan agreement (the "Loan Agreement") with the
Alaska Municipal Bond Bank (the "Bond Bank") dated July 1, 2007 for the sale of the
Refunded Bond. The terms of the Bond are established by an Amendatory Loan
Agreement dated as of October 18, 2016, between the Bond Bank and the City (the
"Amendatory Loan Agreement").
As to questions of fact material to our opinion and in connection with the
issuance of the Bond, we have relied on representations of the City contained in the
Bond Legislation, the Loan Agreement, the Amendatory Loan Agreement, and the
federal tax certificate of the City dated the date hereof (the "Tax Certificate"), and in the
certified proceedings and other certifications of public officials and others furnished to
us without undertaking to verify the same by independent investigation.
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
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events occurring after the date hereof. We have not undertaken to determine, or to
inform any person, whether any such actions or events are taken or do occur. 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) by any
parties other than the City and the due and legal execution and delivery thereof by any
parties other than the City. Furthermore, we have assumed compliance with the
covenants and agreements contained in the Ordinance and the Tax Certificate,
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 Bond to be included in gross income for federal income tax purposes. We call
attention to the fact that the rights and obligations under the Bond, the Ordinance and
the Amendatory Loan Agreement may be subject to bankruptcy, insolvency,
reorganization, arrangement, fraudulent conveyance, moratorium and other laws
relating to or affecting creditors' rights generally and to the application of equitable
principles.
Based upon the foregoing, we are of the opinion, as of this date and under
existing law, that:
1. The City is duly organized legally existing under the laws of the State of
Alaska.
2. The Bond has been duly authorized, executed, and issued in accordance with
law, including the Ordinance, and constitutes a valid and special obligation of
the Issuer payable and enforceable in accordance with its terms and the
terms of the Ordinance.
3. The Amendatory Loan Agreement has been duly authorized, executed and
delivered by the City and is a valid and binding agreement of the City
enforceable in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting the enforcement of creditors' rights generally, general principals
of equity, or the exercise of judicial discretion in appropriate cases.
4. Interest on the Bond is excludable from gross income for federal income tax
purposes, and is not an item of tax preference for purposes of determining the
federal alternative minimum tax imposed on individuals and corporations;
however, interest on the Bond is taken into account in determining adjusted
current earnings for the purpose of computing the alternative minimum tax
imposed on certain corporation. The opinion set forth in the preceding
sentence is subject to the condition that the City comply with all requirements
of the Internal Revenue Code of 1986, as amended (the "Code"), that must be
satisfied subsequent to the issuance of the Bond in order that interest thereon
be, or continue to be, excludable from gross income for federal income tax
purposes. The City has covenanted to comply with all applicable
requirements. Failure to comply with certain of such requirements may cause
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the inclusion of interest on the Bond in gross income for federal income tax
purposes to be retroactive to the date of issuance of the Bond.
5. Interest on the Bond is not included in taxable income for purposes of Alaska
income tax imposed on corporations. Interest on the Bond may be indirectly
subject to the Alaska alternative minimum tax imposed on corporations to the
extent that interest on the Bond is subject to the federal alternative minimum
tax.
Except as stated herein, we express no opinion regarding any other federal, state
or local tax consequences arising with respect to ownership of the Bond.
This opinion is given as of the date hereof and we assume no obligation to
update, revise or supplement this opinion to reflect any facts or circumstances that may
hereafter come to our attention or any changes in law that may hereafter occur.
We have not been engaged nor have we undertaken to review the accuracy,
completeness or sufficiency of the official statement or other offering material related to
the Bond Bank's General Obligation and Refunding Bonds, 2016 Series Three and
General Obligation and Refunding Bonds, 2016 Series Four (AMT).
Sincerely,
JERMAIN DUNNAGAN & OWENS, P.C.
(0065961 7)