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Tab_146STRADLING YOCCA CARLSON & RAUTH A PROFESSIONAL CORPORATION CALIFORNIA NEWPORT BEACH ATTORNEYS AT LAW SACRAMENTO SAN DIEGO 800 FIFTH AVENUE, SUITE 4100 SAN FRANCISCO SEATTLE, WA 98104 SANTA BARBARA SANTA MONICA TELEPHONE 206.829.3000 COLORADO FACSIMILE DENVER NEVADA REND WASHINGTON SEATTLE November 3, 2016 City of Ketchikan Ketchikan, Alaska Alaska Municipal Bond Bank Juneau, Alaska Re: City of Ketchikan, Alaska General Obligation Bond, 2016 (Harbor Improvements) - $1,765,000 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 General Obligation Bond, 2016 (Harbor Improvements), in the principal amount of $1,765,000, dated November 3, 2016 (the "Bond"). The 2016 Bond is issued pursuant to Ordinance No. 12-1697 of the City passed by the City Council on April 5, 2012, and approved by the voters at an election held in the City on June 26, 2012, and Resolution No. 16-2635 adopted by the Council on September 15, 2016 (collectively, the "Bond Legislation"), to provide funds to finance improvements to the harbor facilities of the City. Pursuant to the Bond Legislation, the City has entered into a loan agreement with the Alaska Municipal Bond Bank (the "Bond Bank"), dated October 18, 2016, for the sale of the Bond to the Bond Bank (the "Loan Agreement"). Capitalized terms not otherwise defined in this opinion have the meanings given such terms in the Bond Legislation. The Bond is subject to prepayment as provided in the Loan Agreement. Regarding questions of fact material to our opinion, we have relied on representations of the City in the Bond Legislation and Loan Agreement and in the certified proceedings and on other certifications of public officials and others furnished to us without undertaking to verify the same by independent investigation. Based on the foregoing, we are of the opinion that, under existing law: 1. The Bond has been legally issued and constitutes a valid and binding general obligation of the City, except to the extent that the enforcement of the rights and remedies of the DOCSSF/132976v21200661-0030 City of Ketchikan, Alaska Alaska Municipal Bond Bank November 3, 2016 Page 2 owner of the Bond may be limited by laws relating to bankruptcy, reorganization, insolvency, moratorium 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. 2. By the Bond Legislation, the City has covenanted that, unless the principal of and interest on the Bond are paid from other sources, it will make annual levies of property taxes without limitation as to rate or amount, and in amounts sufficient, together with other legally available revenues, to pay such principal and interest as the same shall become due. The full faith, credit and resources of the City are irrevocably pledged for the annual levy and collection of such property taxes and for the prompt payment of such principal and interest. The City is duly organized and legally existing under the laws of the State of Alaska; 4. The Bond has been duly authorized and executed by the City and are issued in full compliance with the provisions of the Constitution and laws of the State of Alaska and the legislation of the City relating thereto; 5. The Loan Agreement has been duly authorized, executed, delivered by, and (assuming due authorization, execution and delivery by the Bond Bank) constitutes a valid and 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 under the Loan Agreement may be subject to the laws of bankruptcy, insolvency, moratorium, reorganization or other similar laws of general application affecting the rights of creditors. the application of equitable principles, and the exercise of judicial discretion. 6. 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 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. 7. The City has not designated the Bond as a "tax-exempt obligation" within the meaning of Section 265(b)(3) of the Code. 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. DOCSSF/132976v2/2OO66-003O City of Ketchikan, Alaska Alaska Municipal Bond Bank November 3, 2016 Page 3 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 (except to the extent, if any, stated in the official statement), 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. DOCS SF/ I32976v2/200661-0030