07KODIAK ISLAND BOROUGH ALAsKA
VERIFICATION REPORT FOR THE
DEFEASANCEOF THE
LONG-TERMCARECEÑTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
CAUSEY DEMGENMOORE i.c
Certifed PubIic Accountants and Consultants
CAUSEY DEMGENMOORE RC
Certified Public Accountantsand Consultants
1125 Seventeenth StreetSuite 1450
Denver Colorado80202-2025
Telephone 303296-2229
Facsimile 303 296-3731
www.causeycpas.com
November 22 2016
Alaska Municipal BondBank Westem Financial Group LLC
333 Willoughby Avenue 3300 NW lSS Avenue 270
Juneau Alaska 99811 Portland Oregon 97229
Kodiak Island Borough Foster Pepper PLLC
710 Mill Bay Road 1111 Third Avenue Suite 3400
Kodiak Alaska 99615 Seattle Washington 98101
We have completed our engagement to verif the mathematical accuracy of the computations
relating tothe adequacy of cash plus U.S Treasury Securitiesto be heid in escrow to pay the debt
service requirements of the Long-Term CareCenter Revenue Bonds 2013 Providence Kodiak
Island Medical Center those bonds described in Exhibit B-1 herein referred to as the Defeased
Bonds issued by the Kodiak Island Borough Alaska herein referred to as the Borough and
the yield on the escrowed securities We express no opinion as to the attainability of thc assumptions
underlying the computations or the tax-exempt status of the Defeased BondsOur verification was
performed solely on the schedules of proposed transactions provided by Westem Financial Group
LLC In the course of our engagement to verify the mathematical aceuracy of the computations in
the schedules provided to us we prepared Exhibits through attached heretoand made part
hereof
The seope of our engagement consisted of performing the procedures described herein These
procedures were performed in manner that we deem to be appropriate
The accompanying exhibits of proposed transactions were prepared on thebasis of assumptions
underlying the computations and iii accordance with the procedures described herein We did not
independently confirm the information used with outside parties
OUR UNDERSTANDINGOF TÍIE TRANSACTION
On November 22 2016 the Borough intendsto use portion of available funds together with
contribution to be made from thedebt servicereserve fund associated with the Defeased Bonds to
purchase U.S Treasury Securities and to provide cash that will be placed into an escrow account to
defease the Defeased Bonds
The Trustee will pay the debt service requirements of the Defeased Bondson each scheduled
payment date through and ineluding June 2018 will redeem those Defeased Bonds maturing
onJune 2025 through and including June 2030 at redemption price equal to 100%of par on
June 2018 which is the first optional redemption date forthis portion of the Defeased Bonds
will continue to pay the debt service requirements of those Defeased Bonds maturing on June
CAUSEY
Kodiak Island Borough
Noveinber 22 2016
Page
2024 andJune 2031 through and including June2033 on each scheduled payment date from
December2018 through and including June2023and will redeemthoseDefeased Bonds
maturing on June 2024 and June 2031 through and including June 2033 at redemption
price equal to 100%of par on June 2023 which is the first optional redemption date for this
portion of the Defeased Bonds The interest requirement due on the Defeased Bonds on December
2016 will be paid from sources outside of the escrowaccount
ESCROW ACCOUNT TRANSACTIONS
We verified the mathematical accuracy of the accompanying calculations of the escrow account
transactions proposed to defease the Defeased Bonds
The presently outstanding debt service requirements of the Defeased Bonds will be satisfied by the
purchase of U.S Treasury Securities as described in Exhibit A-2 plus $0.35 in cash The securities
and cash will be placed in an irrevocable escrow accountandheid therein until the Defeased Bonds
are redeemed as previously described
We read copy ofExhibit of the Loan Agreement for the Defeased Bonds insofar as these
obligations are described with respect to principal amounts interest rates maturity dates and
redemptionprovisions We assumed this document to be accurate ah debt service payments on the
Defeased Bonds to be current as of November 22 2016 We compared the aboye information set
forth in this docurnent with the related information contained in the schedules provided to us and
found the information to be consistent
We compared the subscribed interestrates of the U.S Treasury Securities State andLocal
Government Series to be purchased and placed in escrow with the maximum ahlowable interest
rates as published in the SLGS Daily RateTable by the Bureau of the FiscalService for
November 14 2016 andfound the subscribed ratesto be less than or equal to the maximum
allowable ratesthat were in effect on the subscription date for each applicable maturity date
Based on the procedures and information set forth aboye the computationsprovided to usand
represented in Exhibits through B-which indicatethatthesecurities andcash proposed to be
placed in escrow by the Borough will produce the amounts necessary to provide for the tiniely
payment of the proposed debt payment scheduleon the Defeased Bonds are mathematically correct
YIELD ON THE INVESTMENT 114 THEESCROWEJ OBLIGATIONS
We verified the mathematical accuracy of the accompanying computation of the yield on the
investment in the escrowed U.S Treasury Securities based on anassurned settlernent date of
November 22 2016 and purchase price of $4892769.00 For purposes of this calculationyield is
defined as therate of interest which using the assurnptions and procedures set forth herein
discountsthe cash receipts from the escrowed securitiesto an amount equal tothe purchase price of
the escrowed securities The computations were made using360-dayyear with interest
Kodlak Island Borough982837_1
Kodiak Island Borough
November 22 2016
Page
compounded semi-annually and were based on the dates the funds are to be received in the escrow
account and assume that al cash balances are not reinvested
Based upon the procedures and information set forth aboye the computationsprovided to us and
represented in Exhibit which indicatethatthe yield on the escrowed securities is 1.60874%are
mathernaticay correct
USE OF TUIS REPORT
Itis understood that this report is soely for the information of and assistance to the addressees
hereof in connection with the defeasance of the Defeased Bonds and is notto be used reied upon
circulated quoted or otherwise referred to for any other purpose without our written consent except
thatreference may be made tothe report in any closing documents pertaining tothe defeasance of
the Defeased Bonds the report may be used in its entirety as an exhibit to the escrow agreement
for the Defeased Bonds iii the report may be relied upon by Bond Counsel in connection with its
opinion concerning the Defeased Bonds iv the report may be reied upon by any rating agency or
bond insurer thatshall have rated or insured or that will rate or insurethe Defeased Bonds and
the report may be relied upon by the Trustee for the Defeased Bonds
The scope of our engagement is deemed by the addressees hereto to be sufficient toassist such
parties in evaluating the mathematical accuracy of the various computations cited aboye The
sufficiency of this scope solely the responsibility of the specified users of this report and should
not be taken to supplantany additional inquines or procedures thatthe users wouldundertake in
their consideration of the defeasance of the bonds reated tothetransactiondescribed herein We
make no representation regarding the sufficiency of the scope of this engagement This report should
not beused by any party who doesnot agree to the scope set forth herein and who does not take
responsibility for the sufficiency and appropriateness of such scope fortheir purposes
We haveno obligation to update this report because of events circumstances or transactions
occurringsubsequent tothedate of this report
Very truly yours
Co47 0474 1L/1
KodlakIsland Borougb982837_1
EXHIBIT
KODIAK ISLAND BOROIJGH ALASKA
DEFEASANCEOFTHE
LONG-TERMCARE CENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
ESCROW ACCOUNT CASH FLOW
AS OFNOVEMBER 22 2016
Cash
Receipts From Cash
U.S Treasury Disbursements
Securities From EscrowCash
Date Exhibit A-1 Exhibit Balance
Beginning
Balance $0.35
1-Jun-1 $270005.90$270006.25 0.00
01-Dec-17 96607.16 96606.25 0.91
01-Jun-1 2021606.23 2021606.25 0.89
01-Dec-1 50281.22 50281.25 0.86
01 -Jun-1 240281.01 240281.25 0.62
1-Dec-19 47431.39 47431.25 0.76
01-Jun-20 242431.14 242431.25 0.65
01-Dec-20 43531.53 43531.25 0.93
01-Jun-21 248530.72 24853 1.25 0.40
1-Dec-2 39431.26 39431.25 0.41
01-Jun-22 254430.99 254431.25 0.15
1-Dec-22 34056.43 34056.25 0.33
l-Jun-23 1589055.931589056.25 0.01
$5177680.91$5177681.25
EXHIBIT A-1
Page of2
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCE OFTRE
LONG-TERMCARE CENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
CASB RECEIPTS FROM THEESCROWED SECURITIES
AS OF NOVEMBER 222016
$236722.00 $65580.00$1990825.00 527961.00 5218095.00526434.008221595.00 524169.00$229341.00
0.590000%0.750000%0.850000%0.960000%1.090000%1.220000%1.330000%1.430000%1.530000%
Payment SLGS SLGS SLGS SLGS SLGSSLGS SLGSSLGS SLGS
Date 01-Jun-1701-Dec-17 01-Jun-1801-Dec-1801-Jun-19 01-Dec-1901-Jun-2001-Dec-2001-Jun-21
01-Jun-17 5237452.85 $258.02 58877.12 $140.81 $1247.07 5169.18 $1546.08 $18131 51840.74
01-Dec-17 65825.93 8461.01 134.21 1188.62 161.25 1473.61 172.81 1754.46
01-Jun-18 1999286.01 134.21 1188.62 161.25 1473.61 172.81 1754.46
01-Dec-18 28095.21 1188.62 161.25 1473.61 172.81 1754.46
01-Jun-19 219283.62 161.25 1473.61 172.81 1754.46
01-Dec-19 26595.25 1473.61 172.81 1754.46
01-Jun-20 223068.61 172.81 1754.46
01-Dec-20 24341.81 1754.46
O1-Jun-21 231095.46
01-Dec-21
1-Jun-22
01-Dec-22
01-Jun-23
$237452.85$66083.95$2016624.14 528504.44 5224096.55$27409.43$231982.74525559.98$245217.42
U.S Treasury Certificate of Indebtedness State and Local Government Series
U.S Treasury Note or Bond State and Local Government Series
KODIAK ISLAND BOROUGH ALASKA
DEFEASA1CEOFTHE
LONG-TERM CAItE CENTERREVENUE BONDS 2013
PRO VIDENCE KODIAK ISLAND MEDICAL CENTER
CASH RECEIPTS FROM TIJE ESCROWED SECURITIES
AS OF NOVEMBER 222016
$21996.00 $2371 75.00 $18852.001574024.00
1.630000%1.730000%1.830000%1.910000%Total
Payment SLGS SLGSSLGS SLGS Cash
Date 01-Dec-21 01-Jun-2201-Dec-2201-Jun-23 Receipts
01-Jun-17 $188.08 $2152.46 $180.98 15771.20 $270005.90
01-Dec-17 179.27 2051.56 172.50 15031.93 96607.16
01-Jun-18 179.27 2051.56 172.50 15031.93 2021606.23
01-Dec-18 179.27 2051.56 172.50 15031.93 50281.22
01-Jun-19 179.27 2051.56 172.50 1503 1.93 240281.01
01-Dec-19 179.27 205 1.56 172.50 1503 1.93 4743 1.39
01-Jun-20 179.27 2051.56 172.50 15031.93 242431.14
01-Dec-20 179.27 2051.56 172.50 15031.93 43531.53
01-Jun-21 179.27 2051.56 172.50 15031.93 248530.72
01-Dec-21 22175.272051.56 172.50 15031.93 39431.26
01-Jun-22 239226.56 172.50 15031.93 254430.99
01-Dec-22 19024.50 15031.93 34056.43
1-Jun-23 1589055.931589055.93
$23797.5$259843.06$20930.48$1770178.36$5177680.91
U.S Treasury Note or Bond State and Local Govermnent Series
EXIIIBIT A-1
Page of
EXHIBIT A-2
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCEOFTHE
LONG-TERMCARECENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
DESCRIPTION OFTHE ESCROWED SECURITIES
AS OFNOVEMBER 222016
Settlement Maturity Par Coupon Total
Type Date Date Amount RatePrice Cost
SLGS 22-Nov-1601-Jun-17 $236722.00 0.590%100.000000%$236722.00
SLGS 22-Nov-1601-Dec-17 65580.00 0.750%100.000000%65580.00
SLGS 22-Nov-1601-Jun-18 1990825.00 0.850%100.000000%1990825.00
SLGS 22-Nov-1601-Dec-18 27961.00 0.960%100.000000%27961.00
SLGS 22-Nov-1601-Jun-19 218095.00 1.090%100.000000%218095.00
SLGS 22-Nov-1601-Dec-19 26434.00 1.220%100.000000%26434.00
SLGS 22-Nov-16 01-Jun-20 221595.00 1.330%100.000000%221595.00
SLGS 22-Nov-16 01-Dec-20 24169.00 1.430%100.000000%24169.00
SLGS 22-Nov-16 01-Jun-21 229341.00 1.530%100.000000%229341.00
SLGS 22-Nov-16 01-Dec-21 21996.00 1.630%100.000000%21996.00
SLGS 22-Nov-1601-Jun-22 237175.00 1.730%100.000000%237175.00
SLGS 22-Nov-1601-Dec-22 18852.00 1.830%100.000000%18852.00
SLGS 22-Nov-16O1-Jun-23 1574024.00 1.910%100.000000%1574024.00
$4892769.00 $4892769.00
EXHIBIT
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCE OF THE
LONG-TERM CARECENTER REVENUE BONDS 2013
PRO VIDENCEKODIAK ISLAND MEDICAL CENTER
ESCROW ACCOUNT DISBURSEMENT REQUIREMENTS
FOR THE DEFEASED BONDS
AS OF NOVEMBER 222016
Payment For
Payment Maturing Principal
Date Rate Principal Redeemed Interest Total
01 -Jun-17 4.000%$1 70000.00 100006.25 $270006.25
01-Dec-17 96606.25 96606.25
01-Jun-18 Various 180000.00$1745000.0096606.252021606.25
01-Dec-18 50281.2550281.25
1-Jun-19 3.000%190000.00 50281.25240281.25
01-Dec-19 47431.2547431.25
01-Jun-20 4.000%19500000 47431.25242431.25
01-Dec-20 43531.2543531.25
01-Jun-21 4.000%205000.00 43531.25248531.25
01-Dec-21 39431.2539431.25
01 -Jun-22 5.000%215000.00 39431.25254431.25
01-Dec-22 34056.2534056.25
01 -Jun-23 Various 225000.001330000.00 34056.251589056.25
$13 80000.00$3075000.00$72268 1.25 $5 177681.25
The interest payment dueon the DefeasedBondsonDecember2016 will be paid from sources
outside of the escrow
EXHIBIT B-1
KOIMAK ISLAND BOROUGil ALASKA
DEFEASANCE OF THE
LONG-TERMCARE CENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
DEBT SERVICE REQUIREMENTS FOR THE DEFEASED BONDS
ASSUMING NO OPTIONALREDEMPTIONS PRIOR TO MATURITY
AS OF NOVEMBER 22 2016
FOR INFORMATIONAL PURPOSES ONLY
Payment Debt Payment For Total Debt
Date Rate Principal Interest Payxnent
01-Jun-17 4.000%$170000.00$100006.25$270006.25
01-Dec-17 96606.25 96606.25
01-Jun-18 3.000%180000.00 96606.25276606.25
01-Dec-1 93906.25 93906.25
01-Jun-19 3.000%190000.00 93906.25283906.25
01-Dec-19 91056.25 91056.25
01-Jun-20 4.000%195000.00 91056.25 286056.25
01-Dec-20 87156.25 87156.25
01-Jun-21 4.000%205000.00 87156.25292156.25
01-Dec-21 83056.25 83056.25
01-Jun-22 5.000%215000.00 83056.25298056.25
01-Dec-22 77681.25 77681.25
01 -Jun-23 5.000%225000.00 77681.25302681.25
01-Dec-23 72056.25 72056.25
01-Jun-24 5.000%245000.00 72056.25 17056.25
01-Dec-24 65931.25 65931.25
01-Juri-25 5.000%250000.00 65931.25315931.25
01-Dec-25 59681.25 59681.25
01 -Jun-26 5.000%270000.00 59681.25 329681.25
01-Dec-26 52931.25 52931.25
01 -Jun-27 5.000%280000.00 52931.25332931.25
01-Dec-27 45931.25 45931.25
1-Jun-28 5.000%300000.00 45931.25345931.25
01-Dec-28 38431.25 38431.25
01 -Jun-29 5.000%310000.00 38431.25 348431.25
01-Dec-29 30681.25 30681.25
01-Jun-30 5.000%335000.00 30681.25365681.25
01-Dec-30 22306.25 22306.25
01-Jun-31 5.000%350000.00 22306.25372306.25
01-Dec-31 13556.25 13556.25
01-Jun-32 3.625%360000.00 13556.25373556.25
01-Dec-32 7031.25 7031.25
01 -Jun-33 3.750%375000.00 7031.25 382031.25
$4455000.00 $1 976006.25$643 1006.25
The interest payrnent dueon the DefeasedBondson Deceniber 2016 will be
paid from sources outside of the escrow
EXHIBIT B-2
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCEOFTHE
LONG-TERMCARECENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
DEBT SERVICE REQUIREMENTS FOR THE UNDEFEASED BONDS
ASSUMING NO OPTIONALREDEMPTIONS PRIOR TO MATURITY
AS OF NOVEMBER 22 2016
FOR INFORMATIONAL PURPOSES ONLY
Debt Payment For
Payment Defeased Total Debt
DateRate Principal Interest Payment
01 -Dec-16 $255887.50$255887.50
01-Jun-17 4.000%$475000.00255887.50730887.50
01-Dec-17 246387.50246387.50
1-Jun-l 3.000%490000.00246387.50736387.50
01-Dec-18 239037.50239037.50
1-Jun-19 3.000%500000.00239037.50739037.50
01-Dec-19 23 1537.50 23 1537.50
01 -Jun-20 4.000%520000.00231537.50751537.50
01-Dec-20 221137.50221137.50
01-Jun-21 4.000%540000.00221137.50761137.50
01-Dec-21 210337.50210337.50
01 -Jun-22 5.000%560000.00210337.50770337.50
01-Dec-22 196337.50 196337.50
01 -Jun-23 5.000%590000.00196337.50786337.50
01-Dec-23 181587.50 181587.50
01-Jun-24 5.000%615000.00 181587.50 796587.50
01 -Dec-24 166212.50166212.50
01-Jun-25 5.000%650000.00 166212.50 816212.50
01 -Dec-25 149962.50 149962.50
01-Jun-26 5.000%680000.00 149962.50 829962.50
01 -Dec-26 132962.50132962.50
01-Jun-27 5.000%715000.00 132962.50 847962.50
01-Dec-27 115087.50 115087.50
01-Jun-28 5.000%750000.00 115087.50 865087.50
0I-Dec-28 96337.50 96337.50
01 -Jun-29 5.000%790000.00 96337.50 886337.50
01-Dec-29 76587.50 76587.50
01 -Jun-30 5.000%825000.00 76587.50901587.50
01-Dec-30 55962.50 55962.50
01 -Jun-3 5.000%870000.00 55962.50 925962.50
01-Dec-31 34212.50 34212.50
01 -Jun-32 3.625%910000.00 34212.50944212.50
01-Dec-32 17718.75 17718.75
01-Jun-33 3.750%945000.00 17718.75 962718.75
$1 1.425.000.00$5.254.587.5016.679.587.50
EXHIBIT B-3
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCEOFTHE
LONC-TERM CARECENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
DEBT SERVICE REQUIREMENTSFORTHE BONDS
ASSUMINC NO OPTIONAL REDEMPTIONS PRIOR TO MATURITY
AS OF NOVEMBER 22 2016
FOR INFORMATIONAL PURPOSES ONLY
Original Undefeased
Payment Principal Defeased Principal
Date Outstanding Bond Principal Remaining
01-Jun-17 $645000.00$170000.00 $475000.00
01-Dec-17
01-Jun-18 670000.00 180000.00 490000.00
01-Dec-1
1-Jun-19 690000.00 190000.00 500000.00
01-Dec-19
01-Jun-20 715000.00 195000.00 520000.00
01 -Dec-20
01-Jun-21 745000.00205000.00 540000.00
1-Dec-2
01-Jun-22 775000.00215000.00 560000.00
01 -Dec-22
01-Jun-23 815000.00225000.00 590000.00
01 -Dec-23
01-Jun-24 860000.00245000.00 615000.00
01 -Dec-24
01-Jun-25 900000.00250000.00 650000.00
01-Dec-25
01 -Jun-26 950000.00270000.00 680000.00
01 -Dec-26
0J-Jun-27 995000.00 280000.00 715000.00
01 -Dec-27
01-Jun-28 1050000.00 300000.00 750000.00
01-Dec-28
01-Jun-29 1100000.00 310000.00 790000.00
01 -Dec-29
01 -Jun-30 1160000.00 335000.00 825000.00
O1-Dec-30
01-Jun-31 1220000.00 350000.00 870000.00
01 -Dec-3
01-iun-32 1270000.00 360000.00 910000.00
01 -Dec-32
01 -Jun-33 1320000.00 375000.00 945000.00
$1 5880000.00 $4.455.000.00 $0.00$11.425.000.00
EXHIBIT
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCEOFTHE
LONG-TERMCARECENTERREVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
YIELD ON THE ESCROWED SECURITIES
AS OF NOVEMBER 22 2016
Total Cash Present Value at
Receipts From November 22 2016
U.S Treasury Using Semi-Annually
Securities Compounded Yieldof
Date Exhbit 1.60874%
01-Jun-1 $270005.90 $267744 12
01-Dec-17 96607.16 95033.48
01-Jun-1 2021606.23 1972806.75
01-Dec-18 50281.22 48675.95
01-Jun1 240281.01 23 0753.73
01-Dec-19 47431.39 45187.24
01-Jun-20 24243 1.14 229117.88
01-Dec-20 4353 1.53 40812.68
01-Jun-21 248530.72 231148.96
01-Dec-21 39431.26 36380.88
01-Jun-22 254430.99 232875.16
01-Dec-22 34056.43 30922.38
01-Jun-23 1589055.93 1431309.79
$5177680.91 $4892769.00
TotalCost of the Securities $4892769.00
EXHIBIT
KODIAK ISLAND BOROUGH ALASKA
DEFEASANCE OF THE
LONG-TERMCARE CENTER REVENUE BONDS 2013
PROVIDENCE KODIAK ISLAND MEDICAL CENTER
ESTIMATED SOURCES AND USES OFFUNDS
AS OFNOVEMBER 22 2016
Sources of Funds
KIB Contribution 84540656.85
DSRF Contribution 1346687.50
Total Sources of Funds 85887344.35
Uses of Funds
Beginning EscrowAccountCash Balance $0.35
Cost of the Escrowed Securities 4892769.00
DSRF Deposit 983075.00
IssuanceCosts 11500.00
Total Uses of Funds $5887344.35