Tab_137STRADLING YUCCA CARLSON & RAUTH
CALIFORNIA A PROFESSIONAL CORPORATION
NEWPORT BEACH
ATTORNEYS AT LAW SACRAMENTO
SAN DIEGO
800 FIFTH AVENUE, SUITE 4100 SAN FRANCISCO
SEATTLE, WA 98104 SANTA BARBARA
SANTA MONICA
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WASHINGTON
SEATTLE
November 3, 2016
City of Ketchikan
Ketchikan, Alaska
Alaska Municipal Bond Bank
Juneau, Alaska
Re: City of Ketchikan, Alaska, Port Revenue Refunding Bond, 2016 -
$28,565,000
Ladies and Gentlemen:
We have acted as bond counsel to the City of Ketchikan, Alaska (the "City"), and have
examined a certified transcript of the proceedings taken in the matter of the issuance by the City of
its Port Revenue Refunding Bond, 2016, dated the date hereof, in the total principal amount of
$28,565,000 (the "Bond"). The Bond refunds by exchange the City's Port Revenue Bond, 2006,
dated July 26, 2006 (the "Refunded Bond"). The Refunded Bond was issued pursuant to Ordinance
No. 06.1549 and Resolution No. 06-2171 of the City and sold to the Alaska Municipal Bond Bank
(the "Bond Bank") pursuant to a Loan Agreement dated as of July 1, 2006, between the City and the
Bond Bank (the "Loan Agreement").
The Bond is issued pursuant to Ordinance No. 06-1549, as amended by Ordinance No. 16-
1828, passed by the City Council on October 6, 2016 (together, the "Bond Ordinance"), and
Resolution No. 16-2636 of the City Council adopted on September 15, 2016 (the "Bond Resolution,"
and, together with the Bond Ordinance, the "2016 Bond Legislation"). The terms of the Bond are
established under an Amendatory Loan Agreement dated October 18, 2016, between the Bond Bank
and the City (the "2016 Loan Agreement"), which authorizes the exchange of the Bond for the
Refunded Bond. Capitalized terms not otherwise defined in this opinion have the meanings given
such terms in the 2016 Bond Legislation.
In connection with the opinions expressed below, we have examined executed originals, or
copies certified or otherwise identified to our satisfaction, of the Bond, the Loan Agreement, the
2016 Bond Legislation, and the 2016 Loan Agreement. As to questions of fact material to our
opinion, we have relied upon representations of the City contained in the 2016 Bond Legislation, the
2016 Loan Agreement, 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. We have
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Alaska Municipal Bond Bank
November 3, 2016
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assumed the authenticity of all documents, the genuineness of all signatures and that such documents
have been or will be duly authorized, executed and delivered by the Bond Bank, as appropriate.
Based on the foregoing, we are of the opinion, under existing law, that:
The City is duly organized and legally existing under the laws of the State of Alaska.
2. The Bond has been legally issued and constitutes a valid and binding special
obligation of the City, both principal thereof and interest thereon being payable solely out of a special
fund of the City known as the City of Ketchikan Port Revenue Bond Fund (the "Bond Fund"), except
to the extent that the enforcement of the rights and remedies of the owner of the Bond may be limited
by laws relating to bankruptcy, insolvency, moratorium, reorganization or other similar laws of
general application affecting the rights of creditors, by the application of equitable principles, and by
the exercise of judicial discretion.
3. By the 2016 Bond Legislation, the City has obligated and bound itself to set aside and
pay into the Bond Fund and the accounts therein, from money in the Port Revenue Fund, the various
amounts required by the 2016 Bond Legislation to be paid into and maintained in the Bond Fund and
the accounts therein, all within the times provided by the 2016 Bond Legislation.
4. The amounts so pledged to be paid out of the Port Revenue Fund into the Bond Fund
and accounts therein are a prior lien and charge upon all the money in the Port Revenue Fund
superior to all other charges of any kind or nature except the Costs of Maintenance and Operation
and equal in rank to any charges that may be made on money in the Port Revenue Fund to pay and
secure the payment of any Future Parity Bonds. The City has reserved the right to issue Future Parity
Bonds on the terms and conditions set forth in the 2016 Bond Legislation.
5. The Bond has been duly authorized and executed by the City and is issued in full
compliance with the provisions of the Constitution and laws of the State of Alaska and the 2016
Bond Legislation.
6. The 2016 Loan Agreement has been duly authorized, executed, delivered by, and
(assuming due authorization, execution and delivery by the Bond Bank) constitutes a binding
agreement of the City, enforceable in accordance with its terms, except to the extent that the
enforcement of the rights and remedies of the Bond Bank may be subject to the laws of bankruptcy,
insolvency, moratorium, reorganization or other similar laws of general application affecting the
rights of creditors, by the application of equitable principles and the exercise of judicial discretion.
7. Interest on the Bond is excludable from gross income for federal income tax
purposes, except for interest on any Bond for any period during which such Bond is held by a
"substantial user" of the facilities financed by the Bond, or by a "related person" within the meaning
of Section 147(a) of the Internal Revenue Code of 1986, as amended (the "Code"); however, interest
on the Bond is an item of tax preference for purposes of the federal alternative minimum tax imposed
on individuals and corporations. The opinion set forth in the preceding sentence is subject to the
condition that the City comply with all requirements of the Code that must be satisfied subsequent to
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Alaska Municipal Bond Bank
November 3, 2016
Page 3
the issuance of the Bond in order that the interest thereon be, and continue to be, excludable from
gross income for federal income tax purposes. The City has covenanted to comply with all such
requirements. Failure to comply with certain of such requirements may cause interest on the Bond to
be included in gross income for federal income tax purposes retroactively to the date of issuance of
the Bond.
8. Interest on the Bond is not included in taxable income for purposes of the 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.
The City has not designated the Bond as a "qualified tax-exempt obligation" within the
meaning of Section 265(b)(3) of the Code.
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.
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 Bonds, 2016 Series Three, and we express no opinion relating thereto.
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.
Very truly yours,
STRADLING YOCCA CARLSON & RAUTH, P.C.
I) .
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