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Tab_190W.VA"K1 .juj Joseph N. Levesque Shane E. Levesque, Of Counsel November 3, 2016 3380 C Street, Suite 202 Anchorage, Alaska 99503 Phone: (907) 261-8935 Fax: (206) 309-0667 Website: levesquelawgroup.com Kodiak Island Borough, Alaska Alaska Municipal Bond Bank Re: Kodiak Island Borough, Alaska $4,905,000 General Obligation School Refunding Bond, 2016 We have served as co-bond counsel to Kodiak Island Borough, Alaska (the "Borough"), in connection with the issuance of the above-referenced bond (the "Bond"), and in that capacity have examined such law and such certified proceedings and other documents as we have deemed necessary to render this opinion. As to matters of fact material to this opinion, we have relied upon representations contained in the certified proceedings and other certifications of public officials furnished to us, without undertaking to verify the same by independent investigation. The Bond is issued by the Borough pursuant to Resolution No. FY2017-10 (the "Bond Resolution"), under and in accordance with the Constitution and laws of the State of Alaska and the ordinances and resolutions of the Borough. We have not been engaged to review and thus express no opinion concerning the completeness or accuracy of any official statement, offering circular or other sales or disclosure material relating to the issuance of the Bond or otherwise used in connection with the Bond or the Alaska Municipal Bond Bank General Obligation and Refunding Bonds, 2016 Series Three (the "Bond Bank Bonds"), a portion of the proceeds of which are being used to acquire the Bond, or otherwise used in connection with the Bond or the Bond Bank Bonds. Under the Internal Revenue Code of 1986, as amended (the "Code"), the Borough is required to comply with certain requirements after the date of issuance of the Bond in order to maintain the exclusion of the interest on the Bond from gross income for federal income tax purposes, including, without limitation, requirements concerning the qualified use of Bond proceeds and the facilities financed or refinanced with Bond proceeds, limitations on investing gross proceeds of the Bond in higher yielding investments in certain circumstances and the arbitrage rebate requirement to the extent applicable to the Bond. The Borough has covenanted in the Bond Resolution to comply with those requirements, but if the Borough fails to comply with those requirements, interest on the Bond could become taxable retroactive to the date of issuance of the Bond. We have not undertaken and do not undertake to monitor the Borough's compliance with such requirements. I YA *!Q1IJ WXIIJcJRSJJJ]'L741FJW Kodiak Island Borough Alaska Municipal Bond Bank- November 3, 2016 Page 12 Based upon the foregoing, as of the date of initial delivery of the Bond to the purchaser thereof and full payment therefor, it is our opinion that under existing law: 1. The Borough is a duly organized and legally existing municipal corporation under the laws of the State of Alaska. 2. The Amendatory Loan Agreement between the Borough and the Alaska Municipal Bond Bank dated as of October 18, 2016, relating to the Bond, has been duly authorized, executed and delivered by the Borough and is a valid and binding obligation of the Borough, enforceable against the Borough in accordance with its terms, except only to the extent that enforcement of payment may be limited by bankruptcy, insolvency or other laws affecting creditors' rights and by the application of equitable principles and the exercise of judicial discretion in appropriate cases. 3. The Bond has been duly authorized and issued by the Borough and is issued in full compliance with the provisions of the Constitution and laws of the State of Alaska and the ordinances and resolutions of the Borough relating thereto. 4. The Bond constitutes a valid and binding general obligation of the Borough payable from annual ad valorem taxes to be levied without limitation as to rate or amount on all of the taxable property within the Borough, except only to the extent that enforcement of payment may be limited by bankruptcy, insolvency or other laws affecting creditors' rights and by the application of equitable principles and the exercise of judicial discretion in appropriate cases. 5. Assuming compliance by the Borough after the date of issuance of the Bond with applicable requirements of the Code, the interest on the Bond is excluded from gross income for federal income tax purposes and is not an item of tax preference for purposes of the alternative minimum tax applicable to individuals; however, while interest on the Bond also is not an item of tax preference for purposes of the alternative minimum tax applicable to corporations, interest on the Bond received by corporations is to be taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations, interest on the Bond received by certain S corporations may be subject to tax, and interest on the Bond received by foreign corporations with United States branches may be subject to a foreign branch profits tax. 6. Interest on the Bond is free from taxation by the State of Alaska except for transfer, estate and inheritance taxes, and except to the extent interest on the Bond received by corporations and taken into account in the computation of adjusted current earnings for purposes of the alternative minimum tax applicable to corporations may affect the corresponding provisions of the State of Alaska corporate income tax. I '1*Iø1UJ W.VA'LC1 (S1IJ I IS Kodiak Island Borough Alaska Municipal Bond Bank November 3, 2016 Page 13 We express no opinion regarding any other federal or state tax consequences of receipt of interest on the Bond. This opinion is given as of the date hereof, and we assume no obligation to 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 bring to your attention the fact that the foregoing opinions are expressions of our professional judgment on the matters expressly addressed and do not constitute guarantees of result. No attorney-client relationship has existed or exists between our firm and the Alaska Municipal Bond Bank in connection with the Bond or by virtue of this letter. Respectfully submitted, LEVESQUE LAW GROUP, LLC Joseph N. Levesque