Tab_244STRADLING 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
COLORADO
DENVER
NEVADA
RENO
WASHINGTON
SEATTLE
November 3, 2016
City and Borough of Sitka
Sitka, Alaska
Alaska Municipal Bond Bank
Juneau, Alaska
Re: City and Borough of Sitka, Alaska, General Obligation Refunding Bond, 2016 -
$2,385,000
Ladies and Gentlemen:
We have acted as bond counsel to the City and Borough of Sitka, 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 Refunding Bond, 2016, dated the date hereof, in the total principal amount
of $2,385,000 (the "Bond"). The Bond refunds by exchange the City's General Obligation
Refunding Bond, 2007, dated January 31, 2007 (the "Refunded Bond"), which amended and
refunded by exchange the City's General Obligation Bond, 1999. The Refunded Bond was issued
pursuant to Ordinance No. 99-1525 and Resolution Nos. 99-731 and 2006-31 of the City (together,
the "Bond Ordinance").
The Bond is issued pursuant to the Bond Ordinance and Resolution No. 2016-15 of the
Assembly adopted on September 13, 2016 (the "Resolution," 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 as of April 1, 1999, as amended by an
Amendatory Loan Agreement dated as of January 1, 2007, for the sale of the Refunded Bond to the
Bond Bank. 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 those terms in the Resolution.
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 Bond Ordinance, the
Resolution, the Loan Agreement and the Amendatory Loan Agreement. As to questions of fact
material to our opinion, we have relied upon representations of the City contained in the Resolution,
the Amendatory 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
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City and Borough of Sitka, Alaska
Alaska Municipal Bond Bank
November 3, 2016
Page 2
investigation. We have 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.
From such examination it is our opinion, as of this date and under existing law, that:
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
holder and 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 heretofore or hereinafter enacted to the extent constitutionally applicable and that their
enforcement may also be subject to the exercise of judicial discretion in appropriate cases.
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.
3. 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 is 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 Amendatory 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.
6. Under existing statutes, regulations, rulings and judicial decisions, 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 calculating the federal alternative minimum tax imposed on individuals
and corporations. It should be noted that, with respect to corporations, such interest may be included
as an adjustment in the calculation of alternative minimum taxable income, which may affect the
alternative minimum tax liability of corporations.
The City has not designated the Bond as a "tax-exempt obligation" under Section 265(b)(3)
of the Code.
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City and Borough of Sitka, Alaska
Alaska Municipal Bond Bank
November 3, 2016
Page 3
7. 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 opinions expressed herein as to the exclusion from gross income of interest on the Bond
are based on certain representations of fact and certifications made by the City and are subject to the
condition that the City comply with all requirements of the Code that must be satisfied subsequent to
issuance of the Bond to assure that interest on the Bond will not become includable in gross income
for federal income tax purposes. Failure to comply with those requirements of the Code may cause
interest on the Bond to be included in gross income for federal income tax purposes retroactive to the
date of issuance of the Bond. The City has covenanted to comply with all such requirements.
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 and Refunding 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 CARL SON & RAUTH, P.C.
(••J.
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