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November 3, 2016
Municipality of Skagway
Skagway, Alaska
Alaska Municipal Bond Bank
Juneau, Alaska
Re: Municipality of Skagway, Alaska, General Obligation Refunding Bond, 2016 -
$3,335,000
Ladies and Gentlemen:
We have acted as bond counsel to the Municipality of Skagway, Alaska (the
"Municipality"), and have examined a certified transcript of the proceedings taken in the matter
of the issuance by the Municipality of its General Obligation Refunding Bond, 2016, dated as of
the date hereof, in the total principal amount of $3,335,000 (the "Bond"). The Bond refunds by
exchange the Municipality's General Obligation Bond, 2008, dated July 30, 2008 (the "Refunded
Bond"), issued pursuant to Ordinance No. 08-11 of the Municipality (the "Bond Ordinance").
The Bond is issued pursuant to the Bond Ordinance and Resolution No, 15-bR of the
Assembly adopted on March 19, 2015 (the "Resolution," and, together with the Bond Ordinance,
the "Bond Legislation"). The Municipality entered into a loan agreement (the "Loan
Agreement") with the Alaska Municipal Bond Bank (the "Bond Bank") dated July 1, 2008, for
the sale of the Refunded Bond to the Bond Bank, The terms of the Bond are established under
an Amendatory Loan Agreement dated as of October 18, 2016, between the Bond Bank and the
Municipality (the "Amendatory 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 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 Municipality 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 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.
Municipality of Skagway, Alaska
Alaska Municipal Bond Bank
November 3, 2016
Page 2
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 Municipality, 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 Municipality 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 Municipality 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 Municipality 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 Municipality and is
issued in full compliance with the provisions of the Constitution and laws of the State of Alaska
and the legislation of the Municipality 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 Municipality, enforceable in accordance with its terms, except to the
extent that the Loan Agreement purports to require the Municipality to indemify the Bond Bank
and 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. 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 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 corporations. The opinion set forth in the preceding sentence is subject to the
condition that the Municipality 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 the interest thereon be, and continue to be, excludable from gross income for federal
income tax purposes. The Municipality has covenanted to comply with all applicable
Municipality of Skagway, Alaska
Alaska Municipal Bond Bank
November 3, 2016
Page 3
requirements. Failure to comply with certain of such covenants 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. 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 Municipality 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 and Refunding Bonds, 2016 Series Three and General Obligation and
Refunding Bonds, 2016 Series Four (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,
K&L GATES LLP
500045010 vi