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FY2012-06 Solid Waste Disposal Facility Revenue Bonds 1 Introduced by: Borough Assembly 2 Requested by: Borough Assembly 3 Drafted by: Borough Attorney Introduced on: 08/04/2011 4 Adopted on: 08/94/2011 5 6 KODIAK ISLAND BOROUGH 7 RESOLUTION NO. FY2012 -06 8 9 A RESOLUTION OF THE ASSEMBLY OF THE KODIAK ISLAND 10 BOROUGH PROVIDING FOR THE ISSUANCE OF SOLID WASTE 11 DISPOSAL FACILITY REVENUE BONDS OF THE BOROUGH FOR THE 12 PURPOSE OF PROVIDING AMOUNTS TO ACQUIRE, ENGINEER, 13 DESIGN, AND CONSTRUCT NECESSARY ADDITIONS AND 14 IMPROVEMENTS TO THE BOROUGH'S SOLID WASTE DISPOSAL 15 FACILITY; AND PROVIDING FOR THE DETAILS THEREOF 16 17 WHEREAS, the Kodiak Island Borough, Alaska, (the "Borough ") owns, operates and 18 maintains a solid waste disposal facility which is in need of certain additions, improvements 19 and extensions; and 20 21 WHEREAS, the Constitution and statutes of the State of Alaska and the ordinances of the 22 Borough permit the Borough to issue revenue bonds to finance any project which serves a 23 public purpose which bonds are secured only by the revenues of the project and which do 24 not constitute a debt or pledge of the faith and credit or taxing power of the Borough and 25 which may be authorized by the Assembly; and 26 27 WHEREAS, it is necessary to establish the form, conditions, covenants and method of sale 28 of such bonds and to make provision for establishing the amount, maturities, interest rates 29 and redemption rights and other terms; 30 31 NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KODIAK ISLAND 32 BOROUGH, ALASKA: 33 34 Section 1. Purpose. The purpose of this resolution is to authorize the issuance and sale 35 of not to exceed $3,650,000 of solid waste disposal facility revenue bonds, to fix the form, 36 covenants and method of sale of the bonds, to provide for establishing the amount, 37 maturities, interest rates, redemption rights and other terms of the bonds and to fix the 38 conditions under which additional solid waste disposal facility revenue bonds may be issued 39 on a parity with the bonds. 40 41 Section 2. Definitions. As used in this resolution, unless a different meaning clearly 42 appears from the context: 43 Kodiak Island Borough Resolution No. FY2012 -06 Page 1 of 18 44 "Arbitrage and Tax Certificate" means the certificate executed and delivered by the 45 Borough at the time of issuance and delivery of the Bonds setting forth the Borough's 46 expectations as to the use of Bond proceeds. 47 48 "Annual Debt Service Requirement" means, with respect to any particular Fiscal 49 Year and to any specified bonds, an amount equal to (i) interest accruing during such Fiscal 50 Year on such bonds, except to the extent such interest is to be paid from deposits in the 51 Debt Service Subaccount from bond proceeds, (ii) the principal amount of such bonds due 52 during such Fiscal Year for which no sinking fund installments have been established, plus 53 (iii) the unsatisfied balance of any sinking fund installment for such bonds due during such 54 Fiscal Year. 55 56 "Assembly" means the general legislative authority of the Borough, as the same may 57 be constituted from time to time. 58 59 "Bond Account" means the Solid Waste Disposal Revenue Bond Account created by 60 Section 12 of this resolution. 61 62 "Bond Register" means the registration books maintained by the Registrar containing 63 the names and addresses of the owners of the Bonds. 64 65 "Bonds" means the Kodiak Island Borough, Alaska, Solid Waste Disposal Facility 66 Revenue Bonds, 2011. 67 68 "Bond Year" has the meaning given such term in the Arbitrage and Tax Certificate. 69 70 "Borough" means the Kodiak Island Borough, Alaska, a municipal corporation 71 organized and existing under the Constitution and laws of the State of Alaska. 72 73 "Code" means the Internal Revenue Code of 1986, as amended, and all applicable 74 regulations thereunder. 75 76 "Consulting Engineer" means an independent consulting engineer or engineering 77 firm licensed to practice in the State of Alaska, retained and appointed pursuant to Section 78 15(F). 79 80 "Debt Service Subaccount" means the Debt Service Subaccount created in the Bond 81 Account by Section 12 hereof. 82 83 "Facility" means the Borough's solid waste disposal facility. 84 85 "Fiscal Year" means the 12 -month period commencing on July 1 each year through 86 and including June 30 of the following calendar year. Kodiak Island Borough Resolution No. FY2012 -06 Page 2 of 18 87 88 "Future Parity Bonds" means any solid waste disposal revenue bonds, notes or other 89 obligations of the Borough, other than the Bonds, issued under a resolution wherein the 90 Borough pledges that the payments to be made out of the Pledged Revenues into the Bond 91 Account and Reserve Subaccount therein to pay and secure the payment of the principal of 92 and interest on such revenue bonds, notes or other obligations will be on a parity with the 93 payments required by this resolution to be made out of such Pledged Revenues into such 94 Bond Account and Reserve Subaccount to pay and secure the payment of the principal of 95 and interest on the Bonds. 96 97 "Government Obligations" means direct obligations, or obligations on which the 98 payment of and interest on are unconditionally guaranteed by the United States. 99 100 "Loan Agreement" means the Loan Agreement between the Borough and the Alaska 101 Municipal Bond Bank. 102 103 "Net Revenues" means, for any Fiscal Year, all amounts received by the Borough 104 and deposited in the Solid Waste Disposal Fund and interest and profits derived from the 105 investment of moneys held in the Solid Waste Disposal Fund during such period, less 106 Operating Expenses for such period. 107 108 "Operating Expenses" means, for any Fiscal Year, the expenses incurred for 109 operation, maintenance or repair of the Facility. Operating Expenses shall not include any 110 allowances for depreciation or amortization or any principal, redemption price or purchase 111 price of, or interest on, any obligations of the Borough incurred in connection with and 112 payable from Pledged Revenues or any fee or charge in lieu of Borough taxes. 113 114 "Parity Bonds" means the Bonds and any Future Parity Bonds. 115 116 "Pledged Revenues" means Net Revenues and interest received and profits derived 117 from the investment of moneys obtained from moneys held in any fund solely to pay or 118 secure the payment of any Parity Bonds issued under this resolution. 119 120 "Registered Owner" means the person named as the registered owner of a Parity 121 Bond in the Bond Register. 122 123 "Registrar" means the Finance Director of the Borough. 124 125 "Reserve Subaccount" means the Reserve Subaccount created in the Bond Account 126 by Section 12 hereof. 127 128 "Reserve Subaccount Requirement" means an amount equal to the least of (i) 10% 129 of the initial principal amount of all outstanding Parity Bonds, (ii) 125% of the average Kodiak Island Borough Resolution No. FY2012 -06 Page 3 of 18 130 Annual Debt Service Requirement for all outstanding Parity Bonds, and (iii) the maximum 131 Annual Debt Service Requirement on all outstanding Parity Bonds. 132 133 Section 3. Authorization of Bonds and Purpose of Issuance. The Borough shall enter 134 into the Loan Agreement and issue and sell an issue of revenue bonds designated "Kodiak 135 Island Borough, Alaska Solid Waste Disposal Facility Revenue Bonds, 2011" (the "Bonds ") 136 in the aggregate principal amount of not to exceed $3,650,000. The proceeds of the Bonds 137 shall be used to pay the costs of certain additions, betterments and extensions of the Facility 138 consisting principally of design, engineering, reconstruction and installation of a portion of 139 the Borough's Facility. These projects serve a public purpose of the Borough. 140 141 Section 4. Date, Maturities, Interest Rates and Other Details of the Bonds. The Bonds 142 shall be dated on such dates, and mature on such dates not later than December 31, 2026, 143 and shall bear interest from their date payable on such dates, and at such rates, not 144 exceeding 6% per annum, as the Manager or Finance Director may fix and determine at or 145 prior to the time of sale of the Bonds. 146 147 The Bonds shall be fully registered as to both principal and interest, shall be in the 148 denomination of $5,000 each, or any integral multiple thereof, and shall be numbered 149 separately in such manner and with any additional designation as the Registrar deems 150 necessary for purposes of identification. 151 152 Section 5. Place and Medium of Payment. Both principal of and interest on the Bonds 153 shall be payable in lawful money of the United States of America. For so long as all 154 outstanding Bonds are registered in the name of the Alaska Municipal Bond Bank, payments 155 of principal and interest thereon shall be made as provided in the Loan Agreement. In the 156 event that the Bonds are no longer registered in the name of the Alaska Municipal Bond 157 Bank, interest on the Bonds shall be paid to the Registered Owners of the Bonds at the 158 addresses for such Registered Owners appearing on the Bond Register on the 20th day of 159 the month preceding the interest payment date. Principal of the Bonds shall be payable 160 upon presentation and surrender of the Bonds by the Registered Owners at the principal 161 office of the Registrar. 162 163 Section 6. Registration. 164 165 A. Bond Register. The Bonds shall be issued only in registered form as to both 166 principal and interest. The Registrar shall keep, or cause to be kept, a bond register. 167 168 B. Registered Ownership. The Borough and the Registrar, each in its discretion, 169 may deem and treat the Registered Owner of each Bond as the absolute owner thereof for 170 all purposes, and neither the Borough nor the Registrar shall be affected by any notice to 171 the contrary. Payment of any such Bond shall be made only as described in Section 5 172 hereof, but such registration may be transferred as herein provided. All such payments Kodiak Island Borough Resolution No. FY2012 -06 Page 4 of 18 173 made as described in Section 5 shall be valid and shall satisfy and discharge the liability of 174 the Borough upon such Bond to the extent of the amount or amounts so paid. 175 176 C. Transfer or Exchange. Bonds shall be transferred only upon the Bond 177 Register kept by the Registrar. Upon surrender for transfer or exchange of any Bond at the 178 office of the Registrar, with a written instrument of transfer or authorization for exchange in 179 form and with guaranty of signature satisfactory to the Registrar, duly executed by the 180 registered owner or its duly authorized attorney, the Borough shall execute and the 181 Registrar shall deliver an equal aggregate principal amount of Bonds of the same maturity of 182 any authorized denominations, subject to such reasonable regulations as the Registrar may 183 prescribe and upon payment sufficient to reimburse it for any tax, fee or other governmental 184 charge required to be paid in connection with such transfer or exchange. All Bonds 185 surrendered for transfer or exchange shall be cancelled by the Registrar. The Registrar 186 shall not be required to transfer or exchange Bonds subject to redemption during the 15 187 days preceding any principal or interest payment date or the date of mailing of notice of 188 redemption of such Bonds, or any Bond after such Bond has been called for redemption. 189 190 D. Registration Covenant. The Borough covenants that, until all Bonds have 191 been surrendered and cancelled, it will maintain a system for recording the ownership of 192 each Bond that complies with the provisions of Section 149 of the Code. 193 194 Section 7. Redemption. The Bonds maturing on or after September 1, 2022 are subject 195 to redemption on or after September 1, 2021, and may be redeemed at the times and in the 196 manner described in the Loan Agreement. When the Borough determines to redeem any 197 Bonds not owned by the Bond Bank: 198 199 A. The Borough shall give notice of such redemption, which notice shall state 200 the redemption date and identify the Bonds to be redeemed by reference to their numbers 201 and further state that on such redemption date there shall become due and payable upon 202 each such Bond the principal amount thereof plus the applicable premium, if any (the 203 "Redemption Price "), together with interest accrued to the redemption date, and that from 204 and after such date interest thereon shall cease to accrue. Such notice shall be given at 205 least thirty (30) days but not more than forty -five (45) days prior to the redemption date by 206 first class mail, postage prepaid, to the registered owner of any Bond to be redeemed at the 207 address appearing on the Bond Register. 208 209 B. Notice of Redemption having been given in the manner provided in this 210 Resolution, the Bonds so called for redemption shall become due and payable on the 211 redemption date stated in the notice at the applicable Redemption Price plus interest 212 accrued and unpaid to the redemption date upon presentation and surrender thereof, 213 together with a written instrument of transfer duly executed by the registered owner or the 214 owner's duly authorized attorney. 215 Kodiak Island Borough Resolution No. FY2012 -06 Page 5 of 18 216 Section 8. Form of Bonds. The form of the Bonds shall be substantially as follows: 217 218 No. $ 219 220 UNITED STATES OF AMERICA 221 222 KODIAK ISLAND BOROUGH, ALASKA 223 SOLID WASTE DISPOSAL FACILITY REVENUE BOND, 2011 224 225 REGISTERED OWNER: 226 227 PRINCIPAL AMOUNT: 228 229 The Kodiak Island Borough, Alaska (the "Borough"), a municipal corporation of the State of 230 Alaska, hereby acknowledges itself to owe and for value received promises to pay to the 231 Registered Owner identified above, or its registered assigns, from the sources stated herein, 232 the Principal Amount indicated above in the following installments on of each 233 of the following years, and to pay, from the sources stated herein, interest on such 234 installments from the date hereof, payable on , 2012 and semiannually 235 thereafter on the first days of each and of each year, at the 236 rates per annum as follows: 237 238 Maturity Principal Interest 239 Date Amount Rate 240 241 For so long as this Bond is owned by the Alaska Municipal Bond Bank (the "Bond 242 Bank "), payment of principal and interest shall be made as provided in the Loan Agreement 243 between the Bond Bank and the Borough. In the event that this Bond is no longer owned by 244 the Bond Bank, payment of principal of and interest on this Bond will be made by check or 245 draft mailed by first class mail to the registered owner at the address appearing on the bond 246 register of the Borough, provided that the final installment of principal and interest on this 247 Bond will be payable at the office of the Finance Director (the "Registrar") upon surrender of 248 this Bond. Interest shall be computed on the basis of a 360 -day year composed of twelve 249 30 -day months. Both principal of and interest on this bond are payable in lawful money of 250 the United States of America solely out of the special fund of the Borough known as the 251 "Solid Waste Disposal Revenue Bond Account" created by Section 12 of Resolution No. FY 252 2012- 253 254 This bond is one of an issue of bonds (the "Bonds") of like date and tenor except as 255 to number, rate of interest, and date of maturity, aggregating the principal sum of 256 $ and is issued pursuant to the Constitution and statutes of the State of Alaska 257 and the duly adopted resolutions and ordinances of the Borough, including Resolution No. 258 FY 2012- (the "Bond Resolution "). The definitions contained in the Bond Resolution Kodiak Island Borough Resolution No. FY2012 -06 Page 6 of 18 259 shall apply to capitalized terms contained herein. The Bonds are being issued for the 260 purpose of financing certain design, engineering, and capital improvements to the Borough's 261 Solid Waste Disposal Facility. 262 263 Bonds owned by the Bond Bank, or its registered assigns, maturing on or after 264 , may be called for redemption on or after _, 20_on any 265 date, in whole or in part, at the option of the Borough at a price equal to 100% of the 266 principal amount thereof to be redeemed plus accrued interest to the date of redemption as 267 described in the Loan Agreement. 268 269 Bonds not owned by the Bond Bank maturing on or after September 1, 2022 may be 270 called for redemption by or on behalf of the Borough prior to maturity and upon notice as set 271 forth in the Bond Resolution as a whole on any date or in part on or after September 1, 2021 272 at a redemption price of 100% of the principal amounts thereof, together with interest 273 thereon to the redemption date. 274 275 The Borough does hereby pledge and bind itself to set aside out of Pledged 276 Revenues of the Borough and to pay into the Bond Account the various amounts required 277 by the Bond Resolution to be paid into and maintained in the Bond Account all within the 278 times provided in the Bond Resolution. 279 280 The pledge of Pledged Revenues contained herein and in the Bond Resolution may 281 be discharged by making provision, at any time, for the payment of the principal of and 282 interest on this Bond in the manner provided in the Bond Resolution. 283 284 The pledge of amounts to be paid into the Bond Account is hereby declared to be a 285 lien and charge upon the Pledged Revenues superior to all other charges of any kind or 286 nature and equal in rank to the lien and charge thereon for amounts pledged to the payment 287 of any Future Parity Bonds hereafter issued. 288 289 The Borough has further bound itself to maintain the Facility in good condition and 290 repair, to operate the same in an efficient manner and at a reasonable cost, and to 291 establish, maintain and collect fees for as long as any Parity Bonds are outstanding that will 292 provide Pledged Revenues in an amount equal to at least 1.25 times the maximum Debt 293 Service Requirement for such year on all outstanding Parity Bonds. 294 295 It is hereby certified that all acts, conditions and things required by the Constitution 296 and statutes of the State of Alaska and the resolutions of the Borough to be done precedent 297 to and in the issuance of this bond have happened, been done and performed. 298 299 IN WITNESS WHEREOF, the Kodiak Island Borough, Alaska, has caused this bond 300 to be executed with the manual or facsimile signature of its Mayor and to be countersigned Kodiak Island Borough Resolution No. FY2012 -06 Page 7 of 18 301 with the manual or facsimile signature of its Clerk and the official seal of the Borough to be 302 impressed or imprinted hereon, as of this day of , 2011. 303 304 KODIAK ISLAND BOROUGH, ALASKA 305 306 307 308 Jerome M. Selby, Borough Mayor 309 310 ATTEST: 311 312 313 314 Nova M. Javier, MMC, Borough Clerk 315 316 Section 9. Execution of Bonds. The Bonds shall be executed on behalf of the Borough 317 with the manual or facsimile signature of the Mayor of the Borough, attested by the manual 318 or facsimile signature of the Clerk. The official seal of the Borough shall be impressed or 319 imprinted on each Bond. The execution of a Bond on behalf of the Borough by persons that 320 at the time of the execution are duly authorized to hold the proper offices shall be valid and 321 sufficient for all purposes, regardless of whether any such person shall have ceased to hold 322 office at the time of issuance and delivery of the Bond or shall not have held office on the 323 date of the Bond. 324 325 Section 10. Mutilated, Destroyed, Stolen or Lost Bonds. Upon surrender to the Registrar 326 of a mutilated Bond, the Borough shall execute and deliver a new Bond of like maturity and 327 principal amount. Upon filing with the Registrar of evidence satisfactory to the Borough that 328 a Bond has been destroyed, stolen or lost and of the ownership thereof, and upon furnishing 329 the Borough with indemnity satisfactory to it, the Borough shall execute and deliver a new 330 Bond of like maturity and principal amount. The person requesting the authentication and 331 delivery of a new Bond pursuant to this section shall comply with such other reasonable 332 regulations as the Borough may prescribe and pay such expenses as the Borough may 333 incur. Any Bonds issued pursuant to this section in substitution for Bonds alleged to be 334 destroyed, stolen or lost shall constitute original additional contractual obligations on the part 335 of the Borough, whether or not the Bonds alleged to be destroyed, stolen or lost be at any 336 time enforceable by anyone, and shall be equally and proportionately secured with all other 337 Bonds issued hereunder. 338 339 Section 11. Priority of Use of Pledged Revenues. Pledged Revenues are hereby pledged 340 to and shall be used only for the following purposes and in the following order of priority: 341 Kodiak Island Borough Resolution No. FY2012 -06 Page 8 of 18 342 First, to make all payments, including sinking fund payments, required to be made 343 into the Debt Service Subaccount for the payment of the principal of and interest on Parity 344 Bonds; 345 346 Second, to make all payments required to be made into the Reserve Subaccount; 347 348 Third, to make all payments, including sinking fund payments, required to be made 349 into a subordinate lien debt service account for the payment of the principal of and interest 350 on any subordinate lien bonds; 351 352 Fourth, to make all payments required to be made into a reserve account for 353 subordinate lien bonds; and 354 Fifth, to pay the costs of additions, betterments, improvements and repairs to and 355 extensions and replacements of the Facility, to purchase or redeem Facility improvement 356 revenue bonds or notes of the Borough, or for any other proper purpose in connection with 357 the operation of the Facility. 358 359 Section 12. Solid Waste Disposal Revenue Bond Account and Subaccounts Therein. 360 There is hereby created a special restricted account within the Solid Waste Fund of the 361 Borough known as the "Solid Waste Disposal Revenue Bond Account" (the "Bond 362 Account "), which account is to be drawn upon for the sole purpose of paying the principal of 363 and interest and premium, if any, on all Parity Bonds. The Bond Account consists of two 364 subaccounts, the Debt Service Subaccount and the Reserve Subaccount. Amounts 365 pledged to be paid into the Bond Account are hereby declared to be a lien and charge upon 366 Pledged Revenues superior to all other charges of any kind or nature and equal in rank to 367 the charge thereon to pay and secure the payment of the principal of and interest on all 368 Parity Bonds. 369 370 From and after the time of issuance and delivery of the Bonds and as long thereafter 371 as any of the same remain outstanding, the Borough hereby irrevocably obligates and binds 372 itself to set aside and pay the following each month into the Debt Service Subaccount out of 373 Pledged Revenues on or before the date due: 374 375 A. Such amounts, in approximately equal monthly installments, as will be 376 sufficient to accumulate the amount required to pay the interest scheduled to become due 377 on Parity Bonds on the next interest payment date; and 378 379 B. Such amounts, in approximately equal monthly installments, as will be 380 sufficient to accumulate (i) the principal amount of all Parity Bonds due for which no sinking 381 fund installments have been established, plus (ii) the unsatisfied balance of any sinking fund 382 installment for Parity Bonds, in each case during the next 12 months. 383 Kodiak Island Borough Resolution No. FY2012 -06 Page 9 of 18 384 C. For so long as Parity Bonds are held by the Bond Bank, the Borough will pay 385 such amounts into the Debt Service Subaccount out of Pledged Revenues as may be 386 required by the Loan Agreement. 387 388 Moneys in the Debt Service Subaccount may be held in cash or invested in 389 accordance with Borough policy such that investments will mature prior to the time such 390 money is required for the payment of the principal of or interest on the Parity Bonds. All 391 interest earned on and profits derived from such investments shall remain in and become a 392 part of the Debt Service Subaccount. 393 394 Section 13. Reserve Subaccount. The Borough hereby covenants and agrees that it will 395 at the time of issuance of the Bonds cause amounts to be paid into the Reserve Subaccount 396 such that the total amount in the Reserve Subaccount will be equal to the Reserve 397 Subaccount Requirement. 398 399 The Borough further covenants and agrees that it will set aside and pay into the 400 Reserve Subaccount amounts from Pledged Revenues, commencing with the first month 401 following the closing and delivery of the Bonds, so that the amount on deposit in the 402 Reserve Subaccount will at all times be at least equal to the Reserve Subaccount 403 Requirement. 404 405 The Borough further covenants and agrees that in the event it issues any Future 406 Parity Bonds hereafter it will provide in each resolution authorizing the same that at the time 407 of issuance of such Future Parity Bonds payments will be made into the Reserve 408 Subaccount such that the total amount of such payments together with the money already in 409 the Reserve Subaccount will be equal to the Reserve Subaccount Requirement. 410 411 The Borough further covenants and agrees that it will at all times maintain therein an 412 amount at least equal to the Reserve Subaccount Requirement until there is a sufficient 413 amount in the Bond Account and Reserve Subaccount to pay the principal of, premium, if 414 any, and interest on all outstanding Parity Bonds in the manner set forth in Section 19 415 hereof , at which time the money in the Reserve Subaccount may be used to pay such 416 principal, premium, if any, and interest; provided, however, that moneys in the Reserve 417 Subaccount may be withdrawn, or set aside in a special account in the Bond Account 418 pursuant to Section 19 of this resolution, to pay (with or without other available funds) the 419 principal, premium, if any, and interest on all of the outstanding Parity Bonds of any single 420 issue or series payable out of the Bond Account, so long as the moneys remaining on 421 deposit in the Reserve Subaccount are at least equal to the Reserve Subaccount 422 Requirement on all of the remaining outstanding Parity Bonds. The Borough may, from time 423 to time, transfer from the Reserve Subaccount to the Debt Service Subaccount amounts in 424 excess of the Reserve Subaccount Requirement. 425 Kodiak Island Borough Resolution No. FY2012 -06 Page 10 of 18 426 In the event there shall be a deficiency in the Debt Service Subaccount for meeting 427 maturing installments of either principal of or interest on Parity Bonds, such deficiency shall 428 be made up from the Reserve Subaccount by the withdrawal of cash therefrom. Any 429 deficiency created in the Reserve Subaccount by reason of any such withdrawal shall then 430 be made up from Pledged Revenues first available therefor after making necessary 431 provision for the required payments into the Debt Service Subaccount. 432 433 All money in the Reserve Subaccount may be kept in cash or invested in accordance 434 with the Arbitrage and Tax Certificate. Such investments shall mature not later than the last 435 maturity of Parity Bonds outstanding at the time of their purchase. Interest on any such 436 investments and /or any profits realized from the sale thereof shall be deposited in and 437 become a part of the Debt Service Subaccount. 438 439 Section 14. Investment of Certain Accounts. Moneys held in the Bond Account and in the 440 Reserve Subaccount shall be invested and reinvested to the fullest extent practicable in 441 accordance with Borough policy, such investments to mature not later than at such times as 442 shall be necessary to provide moneys when needed for payments to be made from such 443 Accounts, and in the case of the Reserve Subaccount not later than November 1, 2026. 444 445 Nothing in this resolution shall prevent any Government Obligations from being 446 issued or held in book -entry form on the books of the Department of the Treasury of the 447 United States. 448 449 Obligations purchased as an investment of moneys in any Account or Subaccount 450 created under this resolution shall be deemed at all times to be a part of such Account or 451 Subaccount and any profit realized from the liquidation of such investment shall be credited 452 to such Account or Subaccount and any loss resulting from the liquidation of such 453 investment shall be charged to the respective Account or Subaccount. 454 455 Section 15. Specific Covenants. The Borough hereby covenants with the owners of each 456 of the Parity Bonds for so long as any of the same remain outstanding as follows: 457 458 A. The Borough will establish, maintain, and collect Facility fees and Net 459 Revenues in each Fiscal Year that will provide Pledged Revenues in an amount equal to the 460 amount of the Annual Debt Service Requirement for such year on all outstanding Parity 461 Bonds. For so long as the Parity Bonds are held by the Alaska Municipal Bond Bank, the 462 Borough will establish, maintain, and collect Facility fees and Net Revenues as required by 463 the terms of the Loan Agreement, and the Finance Director will provide a certificate annually 464 to the Bond Bank as to compliance with this covenant. 465 466 B. The Borough will at all times maintain, preserve and keep the Facility and 467 every part and parcel thereof in good repair, working order and condition; will from time to 468 time make or cause to be made all necessary and proper repairs, renewals and Kodiak Island Borough Resolution No. FY2012 -06 Page 11 of 18 469 replacements thereto so that the business carried on in connection therewith may be 470 properly and advantageously conducted; and will at all times operate the Facility in an 471 efficient manner and at a reasonable cost. 472 473 C. The Borough will at all times carry such forms of insurance on such of the 474 buildings, equipment, and property of the Facility as are ordinarily insured in such amounts 475 and with such deductibles as under good business practice are ordinarily carried on such 476 facilities. All such insurance shall be carried with responsible insurers and the policies shall 477 be payable to the Borough. 478 479 D. The Borough will keep and maintain proper books and accounts with respect 480 to the operation of the Facility in such manner as prescribed by any authorities having 481 jurisdiction over the Facility; will cause its books and accounts to be audited annually be a 482 certified public accountant not later than 210 days following the end of each Fiscal Year, 483 copies of which audits shall, upon request, be furnished to the owners of the Parity Bonds. 484 The audit shall show whether or not the Borough has in all respects performed and complied 485 with the covenants set forth in this resolution, including the payments into the Debt Service 486 Subaccount and Reserve Subaccount provided for herein. 487 488 E. All employees and agents of the Borough collecting or handling money of the 489 Borough in connection with the management and operation of the Facility shall be bonded in 490 an amount commensurate with the funds they handle and in an amount sufficient to protect 491 the Borough from loss. 492 493 F. The Borough will not sell or otherwise dispose of the Facility unless 494 contemporaneously with such sale or disposal there shall be paid into the Bond Account a 495 sum sufficient to pay the principal of and interest on all Parity Bonds then outstanding to the 496 date or dates on which they first may be redeemed, nor will it sell or otherwise dispose of 497 any part of the Facility which is material to the production of Pledged Revenues unless, in 498 the opinion of a Consulting Engineer, the remaining Facility will generate Pledged Revenues 499 sufficient to enable the Borough to comply with the requirements of this resolution and each 500 resolution authorizing the issuance of Future Parity Bonds. 501 502 G. The Borough will not at any time create or permit to accrue or exist any lien or 503 other encumbrance or indebtedness upon the Facility or the Pledged Revenues, or any part 504 thereof, or upon any Account or Subaccount created hereunder, prior or superior to the lien 505 thereon for the payment of the Parity Bonds, and will pay and discharge, or cause to be paid 506 and discharged, any and all lawful claims for labor, materials or supplies which, if unpaid, 507 might become a lien or charge upon the Pledged Revenue, or any part thereof, or upon any 508 Account or Subaccount in the hands of the Borough, prior or superior to the lien of the Parity 509 Bonds, or which might impair the security of the Parity Bonds. 510 Kodiak Island Borough Resolution No. FY2012 -06 Page 12 of 18 • 511 H. The Borough will not expend any of the Pledged Revenues or the proceeds 512 of any indebtedness payable from Pledged Revenues for any additions, betterments or 513 improvements to the Facility which are not economically sound and which will not properly 514 and advantageously contribute to the conduct of the business of the Facility in an efficient 515 and economical manner. 516 517 I. At any and all times the Borough shall, as far as it may be authorized by law, 518 make, do, execute, acknowledge, and deliver all further resolutions, acts, deeds, 519 conveyances, assignments, transfers, and assurances as may be necessary or desirable for 520 better assuring, conveying, granting, pledging, assigning, and confirming all and singular the 521 rights, revenues, and other funds, moneys, and securities pledged or assigned under the 522 resolution, or intended so to be, or which the Borough may become bound to pledge or 523 assign. 524 525 J. The Borough is duly authorized under all applicable laws to create and issue 526 the Bonds and to adopt this resolution and to pledge the Pledged Revenues and other 527 funds, moneys, and securities purported to be pledged by this resolution in the manner and 528 to the extent provided in this resolution. The Pledged Revenues and other funds, moneys, 529 and securities so pledged are and will be free and clear of any pledge, lien, charge, or 530 encumbrance thereon or with respect thereto prior to, or of equal rank with, the pledge and 531 assignment created by this resolution, and all corporate or other action on the part of the 532 Borough to that end has been and will be duly and validly taken. The Bonds and the 533 provisions of this resolution are and will be the valid and legally enforceable obligations of 534 the Borough in accordance with their terms and the terms of this resolution. 535 536 K. The Borough has, and will have so long as any Parity Bonds are outstanding, 537 good right, and lawful power to operate, maintain, and repair the Facility and to fix and 538 collect rates, fees, and other charges related to the Facility. 539 540 L. The Borough shall do and perform or cause to be done and performed all 541 acts and things required to be done or performed by or on behalf of the Borough under 542 applicable laws and this resolution. 543 544 Section 16. Parity Bonds. As described in this Section 16, the Borough may issue Parity 545 Bonds. The Borough hereby covenants with the owners of each of the Parity Bonds for so 546 long as the same remain outstanding that it will not issue any bonds having a greater or 547 equal lien on Pledged Revenues to pay and secure the payment of the principal of and 548 interest on such bonds than the lien created thereon to pay and secure the payment of the 549 principal of and interest on the Parity Bonds except that the Borough reserves the right to 550 issue future Parity Bonds as follows: 551 552 A. For the purpose of acquiring, constructing and installing additions, 553 betterments and improvements to and extensions of, acquiring necessary property and Kodiak Island Borough Resolution No. FY2012 -06 Page 13 of 18 554 equipment for, or making necessary replacements or repairs to the Facility, for funding 555 interest and reserves and for the purpose of refunding at or prior to their redemption or 556 maturity any outstanding revenue bonds or notes of the Borough that have a lien on 557 Pledged Revenues for the payment of the principal thereof and interest thereon junior and 558 inferior to the lien on Pledged Revenues for the payment of the principal of and interest on 559 the Bonds and upon compliance with the following conditions: 560 561 (1) The Borough will covenant in each resolution authorizing the issuance of 562 Future Parity Bonds that it will pay into and maintain in the Reserve Subaccount the 563 amounts required by Section 13 of this resolution to be paid into and maintained in the 564 Reserve Subaccount in the event Future Parity Bonds are issued. 565 566 (2) At the time of the issuance of such Future Parity Bonds the Borough shall 567 have on file a certificate of the Finance Director showing that the "annual income available 568 for revenue bond debt service," as hereinafter set forth, shall be at least equal to 1.25 times 569 the maximum Annual Debt Service Requirement on all outstanding Parity Bonds and the 570 Future Parity Bonds being issued. 571 572 Such "annual income available for revenue bond debt service" shall be determined 573 by adding the following: 574 575 (I) The historical Pledged Revenues for any 12 consecutive 576 months out of the 24 months immediately preceding the month of delivery of the Future 577 Parity Bonds being issued. 578 579 (ii) The estimated annual Pledged Revenues to be derived from 580 the operation of any additions or improvements to or extensions of the Facility under 581 construction but not completed at the time of such certificate and not being paid for out of 582 the proceeds of sale of such Future Parity Bonds being issued, and which Pledged 583 Revenues are not otherwise included in any of the sources of Pledged Revenues described 584 in this subsection (2). 585 586 (Hi) The estimated Pledged Revenues to be derived from the 587 operation of any additions and improvements to or extensions of the Facility being paid for 588 out of the proceeds of sale of such Future Parity Bonds being issued. 589 590 The computation of "annual income available for revenue bond debt service" shall be 591 adjusted to reflect the Facility fees effective on the date of such certificate or approved by 592 the regulatory authority with jurisdiction to become effective thereafter if there has been any 593 change in such rates and charges put into effect or so approved during or after such 12- 594 consecutive -month base period. 595 Kodiak Island Borough Resolution No. FY2012 -06 Page 14 of 18 596 Notwithstanding the preceding provisions of this subparagraph (2), the certificate 597 referred to above shall not be required if one -half of Pledged Revenues, verified from certain 598 financial statements of the Facility, for a period of any consecutive two out of the three 599 Fiscal Years immediately preceding the issuance and delivery of such Future Parity Bonds, 600 was equal to at least 1.25 times the maximum Annual Debt Service required to be paid in 601 any Fiscal Year succeeding the date of issuance of such Future Parity Bonds on all 602 outstanding Parity Bonds and the Future Parity Bonds being issued. 603 604 Further, notwithstanding the preceding provisions of this subparagraph (2), Future 605 Parity Bonds may be issued if the Borough shall have on file a certificate stating that the 606 Pledged Revenues for the next full Fiscal Year after the initial operation of any additions or 607 improvements to or extensions of the Facility being paid for out of the proceeds of the 608 Future Parity Bonds will be at least equal to [1.25] times the maximum Annual Debt Service 609 Requirement on all outstanding Parity Bonds and the Future Parity Bonds being issued; and 610 that at the time of the issuance of such Future Parity Bonds there is no deficiency in the 611 Debt Service Subaccount or Reserve Subaccount. 612 613 B. For the purpose of refunding at or prior to their redemption or maturity any 614 part or all of the then outstanding Parity Bonds if the issuance of such refunding Future 615 Parity Bonds does not require a greater amount to be paid out of Pledged Revenues for 616 principal and interest over the life of such refunding Future Parity Bonds being refunded, 617 and if the conditions required in subsections (a)(1) and (a)(3) of this section are complied 618 with. 619 620 Proceeds of Parity Bonds to be used to fund interest or reserves shall be deposited 621 in the Debt Service Subaccount or the Reserve Subaccount, as the case may be. 622 623 Section 17. Subordinate Lien Bonds. Nothing contained herein shall prevent the Borough 624 from issuing revenue bonds or notes which are a charge upon Pledged Revenues 625 subordinate or inferior to the payments required herein to be made therefrom into the Debt 626 Service Subaccount and Reserve Subaccount, or from issuing solid waste disposal revenue 627 bonds to refund maturing bonds for the payment of which moneys are not otherwise 628 available. 629 630 Section 18. Covenants Regarding Arbitrage and Private Activity Bonds. The Borough 631 hereby covenants that it will not make any use of the proceeds of sale of the Bonds or any 632 other funds of the Borough which may be deemed to be proceeds of such Bonds pursuant 633 to Section 148 of the Code which will cause the Bonds to be "arbitrage bonds" within the 634 meaning of such section and the regulations applicable thereunder. The Borough will 635 comply with the requirements of Section 148 of the Code (or any successor provision 636 thereof applicable to the Bonds) and the applicable regulations thereunder throughout the 637 term of the Bonds. 638 Kodiak Island Borough Resolution No. FY2012 -06 Page 15 of 18 639 The Borough further covenants that it will not take any action or permit any action to 640 be taken that would cause the Bonds to constitute "private activity bonds" under Section 141 641 of the Code. The Borough will take any action determined by the Borough, after 642 consultation with its bond counsel, to be legal and practicable and required to be taken by 643 the Borough under future federal laws or regulations in order to maintain the exemption of 644 the interest on the Bonds from federal income taxation. 645 646 Section 19. Defeasance. In the event that money and /or Government Obligations 647 maturing at such time or times and bearing interest to be earned thereon in amounts 648 sufficient to redeem and retire any or all of the Bonds in accordance with their terms are set 649 aside in a special restricted account in the Bond Account to effect such redemption or 650 retirement and such money and the principal of and interest on such obligations are 651 irrevocably set aside and pledged for such purpose, then no further payments need to be 652 made into the Bond Account for the payment of the principal of and interest on such Bonds, 653 and such Bonds shall cease to be entitled to any lien, benefit or security of this resolution 654 except the right to receive the funds so set aside and pledged, and such Bonds shall be 655 deemed not to be outstanding hereunder or under any other resolution authorizing the 656 issuance of Future Parity Bonds. 657 658 Section 20. General Authorization to Municipal Officials. After the sale of the Bonds, the 659 proper officials of the Borough are hereby authorized and directed to do everything 660 necessary to complete such sale and to deliver the Bonds to the purchaser thereof upon 661 payment of the purchase price thereof. 662 663 Section 21. Amendatory and Supplemental Resolutions. 664 665 A. The Assembly from time to time and at any time may pass a resolution or 666 resolutions supplemental hereof, which resolution or resolutions thereafter shall become a 667 part of this resolution, for any one or more of the following purposes: 668 669 (1) To add to the covenants and agreements of the Borough contained in 670 this resolution, other covenants and agreements thereafter to be observed, or to surrender 671 any right or power herein reserved to or conferred upon the Borough. 672 673 (2) To make such provisions for the purpose of curing any ambiguities or 674 of curing, correcting or supplementing any defective provision contained in this resolution or 675 in regard to matters or questions arising under this resolution as the Assembly may deem 676 necessary or desirable and not inconsistent with this resolution and which shall not 677 adversely affect the interest of the owners of Parity Bonds. 678 679 Any such supplemental resolution of the Assembly may be adopted without the 680 consent of the owner of any Parity Bonds at any time outstanding, notwithstanding any of 681 the provisions of subsection B of this section. Kodiak Island Borough Resolution No. FY2012 -06 Page 16 of 18 682 683 B. With the consent of the owners of not less than 60% in aggregate principal 684 amount of Parity Bonds at the time outstanding, the Assembly may pass a resolution or 685 resolutions supplemental hereto for the purpose of adding any provisions to or changing in 686 any manner or eliminating any of the provisions of this resolution or of any supplemental 687 resolution; provided, however, that no such supplemental resolution shall: 688 689 (1) Extend the fixed maturity of any of the Parity Bonds, or reduce the 690 rate of interest thereon, or reduce the amount or change the date of any sinking fund 691 installment requirement, or extend the time of payments of interest from their due date, or 692 reduce the amount of the principal thereof, or reduce any premium payable on the 693 redemption thereof, without the consent of the owner of each Parity Bond so affected; or 694 695 (2) Reduce the aforesaid percentage of owners of Parity Bonds required 696 to approve any such supplemental resolution without the consent of the owners of all of the 697 Parity Bonds then outstanding; or 698 699 (3) Remove the pledge and lien of this resolution on Pledged Revenues. 700 701 It shall not be necessary for the consent of the owners of Parity Bonds under 702 this subsection B to approve the particular form of any proposed supplemental resolution, 703 but it shall be sufficient if such consent shall approve the substance thereof. 704 705 C. Upon the passage of any supplemental resolution pursuant to the provisions 706 of this section, this resolution shall be deemed to be modified and amended in accordance 707 therewith, and the respective rights, duties and obligations of the Borough under this 708 resolution and all owners of Parity Bonds outstanding hereunder shall thereafter be 709 determined, exercised and enforced thereunder, subject in all respects to such modification 710 and amendment, and all the terms and conditions of any such supplemental resolution shall 711 be deemed to be part of the terms and conditions of this resolution for any and all purposes. 712 713 D. Parity Bonds executed and delivered after the execution of any supplemental 714 resolution adopted pursuant to the provisions of this section may bear a notation as to any 715 matter provided for in such supplemental resolution, and if such supplemental resolution 716 shall so provide, new Parity Bonds so modified as to conform, in the opinion of the 717 Assembly, to any modification of this resolution contained in any such supplemental 718 resolution, may be prepared by the Borough and delivered without cost to the owners of 719 Parity Bonds then outstanding, upon surrender for cancellation of such Parity Bonds in 720 equal aggregate principal amounts. 721 722 Section 22. Disposition of the Proceeds of Sale of the Bonds. The proceeds received 723 from the sale of the Bonds (exclusive of accrued interest, if any, which shall be paid into the 724 Debt Service Subaccount) shall be deposited into the fund of the Borough designated by the Kodiak Island Borough Resolution No. FY2012 -06 Page 17 of 18 725 Finance Director and shall be used to pay all costs allocable to the issuance of the Bonds 726 and to undertake improvements authorized by Section 3 of this resolution. 727 728 Section 23. Loan Agreement. The Manager and Finance Director are each authorized to 729 enter into a Loan Agreement with the Alaska Municipal Bond Bank providing for and relating 730 to the sale of the Bonds to the Alaska Municipal Bond Bank and the Manager and Finance 731 Director are authorized to cause the same to be executed and delivered on behalf of the 732 Borough. 733 734 Section 24. Continuing Disclosure. The Borough acknowledges that, under Rule 15c2 -12 735 of the Securities and Exchange Commission (the "Rule ") the Borough may now or in the 736 future be an "obligated person" with respect to the Bond Bank bonds. In accordance with 737 the Rule, and as set forth in the Loan Agreement, the Borough shall undertake to provide 738 certain annual financial information and operating data and execute a continuing disclosure 739 agreement. Notwithstanding any other provision of this Resolution, failure of the Borough to 740 comply with the continuing disclosure obligations shall not be considered a default of the 741 Borough's obligations under this Resolution or the Parity Bonds; however the beneficial 742 owner of any Parity Bond may bring an action for specific performance, to cause the 743 Borough to comply with its continuing disclosure obligations under the Rule. 744 745 Section 25. Severability. If any one or more of the covenants or agreements provided in 746 this resolution to be performed on the part of the Borough shall be declared by any court of 747 competent jurisdiction to be contrary to law, then such covenant or covenants, agreement or 748 agreements shall be null and void and shall be deemed separable from the remaining 749 covenants and agreements in this resolution and shall in no way affect the validity of the 750 other provisions of this resolution or of the Bonds. 751 752 Section 26. Effective Date. This resolution shall become effective immediately. 753 754 ADOPTED BY THE ASSEMBLY OF THE KODIAK ISLAND BOROUGH 755 THIS FOURTH DAY OF AUGUST, 2011 756 757 KODIAK ISLAND BOROUGH 758 759 760 " 761 ATTEST: Jer me M. Selby, Borg: -v• 762 n 763 c M' . 7 n 764 . - 765 Nova M. Javier, MM' , Borough Clerk 766 Kodiak Island Borough Resolution No. FY2012 -06 Page 18 of 18