GLOBAL BOOK-ENTRY PARK DISTRICT of the CITY of GRAND FORKS, NORTH DAKOTA (GRAND FORKS COUNTY) $3450000* General Ob

NEW ISSUE: GLOBAL BOOK-ENTRY

PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA (GRAND FORKS COUNTY)

$3,450,000* General Obligation Special Assessment Refunding Bonds, Series 2021A And $5,875,000* Refunding Improvement Bonds, Series 2021B

The date of this Official Statement is March 16, 2021

*Preliminary, Subject to Change Refunding Issue/Book Entry Only RATING: APPLIED FOR See “RATING” Herein

Preliminary Official Statement, Dated March 16, 2021

In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Series 2021A Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Code, and (iii) is excluded from taxable income for North Dakota income tax purposes. See "Tax Considerations" herein. PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA $3,450,000* General Obligation Special Assessment Refunding Bonds, Series 2021A

BONDS DATED: DATED DATE PRINCIPAL DUE: MAY 1, AS BELOW INTEREST DUE: MAY 1 AND NOVEMBER 1

THE PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA (THE “PARK DISTRICT”) IS ISSUING $3,450,000* GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A (“THE SERIES 2021A BONDS”). THE BONDS ARE ISSUED PURSUANT TO THE TERMS AND PROVISIONS OF THE NORTH DAKOTA CENTURY CODE, SECTIONS 21-03-07 AND A RESOLUTION ADOPTED BY THE BOARD OF COMMISSIONERS OF THE PARK DISTRICT ON MARCH 2, 2021 (the "SERIES 2021A RESOLUTION"). THE SERIES 2021A BONDS ARE BEING ISSUED FOR THE PURPOSES OF, TOGETHER WITH OTHER FUNDS AVAILABLE THEREFOR, (I) CURRENT REFUNDING THE PARK DISTRICT’S OUTSTANDING (A) GENERAL OBLIGATION SPECIAL ASSESSMENT PREPAYMENT BONDS, SERIES 2014A IN THE ORIGINAL AMOUNT OF $3,065,000, (B) GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2017A IN THE ORIGINAL AMOUNT OF $3,215,000 (ALL DEFINED HEREIN), AND (II) PAYING COSTS OF ISSUANCE OF THE SERIES 2021A BONDS. (SEE “DESCRIPTION OF SERIES 2021A BONDS – AUTHORITY AND PURPOSE” HEREIN). THE BOND ARE GENERAL OBLIGATIONS OF THE PARK DISTRICT FOR THE PAYMENT OF WHICH IT PLEDGES ITS FULL FAITH AND CREDIT AND UNLIMITED TAXING POWERS OF THE PARK DISTRICT ARE PLEDGED. ALL TAXABLE PROPERTY IN THE TERRITORY OF THE PARK DISTRICT IS SUBJECT TO AD VALOREM TAXATION WITHOUT LIMITATION AS TO RATE OR AMOUNT TO PAY DEBT SERVICE ON THE SERIES 2021A BONDS. THE PARK DISTRICT IS REQUIRED BY LAW TO INCLUDE IN ITS ANNUAL TAX LEVY THE PRINCIPAL AND INTEREST COMING DUE ON THE SERIES 2021A BONDS TO THE EXTENT THE NECESSARY FUNDS ARE NOT PROVIDED FROM OTHER SOURCES (SEE “DESCRIPTION OF SERIES 2021A BONDS – SECURITY AND SOURCE OF PAYMENT” HEREIN). The Park District will designate the Series 2021A Bonds as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS” herein.

The Series 2021A Bonds are issuable as fully registered Bonds and, when initially issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Series 2021A Bonds. Individual purchases may be made in book-entry only form, in denominations of $5,000 or any integral multiple thereof. Investors will not receive physical certificates of Series 2021A Bonds purchased (See “THE SERIES 2021A BONDS – Book Entry System” herein.) AMKO Advisors, LLC of Fargo, North Dakota is acting as Municipal Advisor and Dorsey & Whitney LLP of Minneapolis, Minnesota is acting as Bond Counsel, both to the District with respect to the Series 2021A Bonds. The Park District will serve as registrar and paying agent (the “Registrar”) for the Series 2021A Bonds. The Series 2021A Bonds will be available for delivery on or about May 3, 2021*.

The Series 2021A Bonds shall mature and bear interest as set forth on the inside cover.

The Series 2021A Bonds are subject to optional redemption prior to their stated maturities as provided herein under “DESCRIPTION OF SERIES 2021A BONDS – Redemption Provisions”. This cover page contains certain information for quick reference only. It is not a complete summary of the terms of the Series 2021A Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. ______This Preliminary Official Statement and the information contained in this Preliminary Official Statement are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

*Preliminary, Subject to Change The Series 2021A Bonds (as defined herein) will mature on May 1 in the years and amount as follows:

Maturity Interest Maturity Interest (May 1) Amount Rate Yield CUSIP (May 1) Amount Rate Yield CUSIP 2022 $610,000* 2025 $620,000* 2023 $615,000* 2026 $625,000* 2024 $615,000* 2027 $365,000*

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*Preliminary, Subject to Change Refunding Issue/Book Entry Only RATING: APPLIED FOR See “RATING” Herein

Preliminary Official Statement, Dated March 16, 2021

In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Series 2021A Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Code, and (iii) is excluded from taxable income for North Dakota income tax purposes. See "Tax Considerations" herein. PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA $5,875,000* Refunding Improvement Bonds, Series 2021B

BONDS DATED: DATED DATE PRINCIPAL DUE: MAY 1, AS BELOW INTEREST DUE: MAY 1 AND NOVEMBER 1

THE PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA (THE “PARK DISTRICT”) IS ISSUING $5,875,000* REFUNDING IMPROVEMENT BONDS, SERIES 2021B (“THE SERIES 2021B BONDS”). THE BONDS ARE ISSUED PURSUANT TO THE TERMS AND PROVISIONS OF THE NORTH DAKOTA CENTURY CODE, CHAPTERS 22 THROUGH 28 OF TITLE 40 AND A RESOLUTION ADOPTED BY THE BOARD OF COMMISSIONERS OF THE PARK DISTRICT ON MARCH 2, 2021 (THE “SERIES 2021B RESOLUTION”). THE SERIES 2021B BONDS ARE BEING ISSUED FOR THE PURPOSES OF, TOGETHER WITH OTHER FUNDS AVAILABLE THEREFOR, (I) CURRENT REFUNDING THE PARK DISTRICT’S OUTSTANDING (A) REFUNDING IMPROVEMENT BONDS, SERIES 2011 IN THE ORIGINAL AMOUNT OF $4,500,000, (B) REFUNDING IMPROVEMENT BONDS, SERIES 2013A IN THE ORIGINAL AMOUNT OF $1,985,000, (C) REFUNDING IMPROVMENT BONDS, SERIES 2016 IN THE ORIGINAL AMOUNT OF $2,025,000 (ALL DEFINED HEREIN), AND (II) PAYING COSTS OF ISSUANCE OF THE SERIES 2021B BONDS (SEE “DESCRIPTION OF SERIES 2021B BONDS – AUTHORITY AND PURPOSE” HEREIN). THE SPECIAL IMPROVEMENT WARRANTS ISSUED AGAINST THE FUND OF SUCH IMPROVEMENT DISTRICTS AND THE SPECIAL ASSESSMENTS LEVIED AND TO BE LEVIED FOR THE IMPROVEMENTS WILL BE APPROPRIATED BY THE PARK DISTRICT TO A SPECIAL FUND FOR THE PAYMENT OF THE SERIES 2021B BONDS. THE PARK DISTRICT IS ALSO REQUIRED BY LAW TO LEVY A TAX UPON ALL TAXABLE PROPERTY WITHIN ITS CORPORATE LIMITS TO RESTORE ANY DEFICIENCY IN THE IMPROVEMENT DISTRICT FUNDS FOR THE PAYMENT OF ALL WARRANTS AND INTEREST THEREON, AND THE PARK DISTRICT IS AUTHORIZED TO LEVY SUCH A TAX WHENEVER SUCH A DEFICIENCY IS ANTICIPATED TO OCCUR WITHIN ONE YEAR. SUCH TAX LEVIES ARE NOT SUBJECT TO ANY CONSTITUTIONAL OR STATUTORY LIMITATION AS TO RATE OR AMOUNT. (SEE “DESCRIPTION OF SERIES 2021B BONDS – SECURITY AND SOURCE OF PAYMENT” HEREIN). The Park District will designate the Series 2021B Bonds as “qualified tax-exempt obligations” pursuant to Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. See “BANK-QUALIFIED TAX-EXEMPT OBLIGATIONS” herein.

The Series 2021B Bonds are issuable as fully registered Bonds and, when initially issued, will be registered in the name of Cede & Co., as nominee of The Depository Trust Company (“DTC”). DTC will act as securities depository for the Series 2021B Bonds. Individual purchases may be made in book-entry only form, in denominations of $5,000 or any integral multiple thereof. Investors will not receive physical certificates of Series 2021B Bonds purchased (See “THE SERIES 2021B BONDS – Book Entry System” herein.) AMKO Advisors, LLC of Fargo, North Dakota is acting as Municipal Advisor and Dorsey & Whitney LLP of Minneapolis, Minnesota is acting as Bond Counsel, both to the District with respect to the Series 2021B Bonds. The Park District will serve as registrar and paying agent (the “Registrar”) for the Series 2020B Bonds. The Series 2021B Bonds will be available for delivery on or about May 3, 2021*.

The Series 2021B Bonds shall mature and bear interest as set forth on the inside cover.

The Series 2021B Bonds are subject to optional redemption prior to their stated maturities as provided herein under “DESCRIPTION OF SERIES 2021B BONDS – Redemption Provisions”. This cover page contains certain information for quick reference only. It is not a complete summary of the terms of the Series 2021B Bonds. Investors must read the entire Official Statement to obtain information essential to the making of an informed investment decision. ______This Preliminary Official Statement and the information contained in this Preliminary Official Statement are subject to completion or amendment. These securities may not be sold nor may offers to buy be accepted prior to the time the Official Statement is delivered in final form. Under no circumstances shall this Preliminary Official Statement constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of these securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

*Preliminary, Subject to Change The Series 2021B Bonds (as defined herein) will mature on May 1 in the years and amount as follows:

Maturity Interest Maturity Interest (May 1) Amount Rate Yield CUSIP (May 1) Amount Rate Yield CUSIP 2022 $320,000* 2027 $580,000* 2023 $325,000* 2028 $970,000* 2024 $325,000* 2029 $980,000* 2025 $330,000* 2030 $985,000* 2026 $330,000* 2031 $730,000*

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*Preliminary, Subject to Change PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS, NORTH DAKOTA

BOARD MEMBERS Tim Skarperud President Greg LaDouceur Vice President Cody Bartholomew Commissioner Terry Dvorak Commissioner Russell Kraft Commissioner

PARK DISTRICT OFFICIALS Bill Palmiscno Executive Director George Hellyer, CPA Superintendent of Finance

DISTRICT ATTORNEY Dick Olson Olson, Juntunen, Sandberg & Boettner, LTD Grand Forks, ND

PAYING AGENT AND REGISTRAR Park District of the City of Grand Forks Grand Forks, North Dakota

UNDERWRITER TBD

BOND COUNSEL Dorsey & Whitney LLP Minneapolis, MN

MUNICIPAL ADVISOR AMKO Advisors, LLC Fargo, ND No dealer, salesman, or other person has been authorized to give any information or to make any representation, other than the information contained in this Official Statement, in connection with the offering of the bonds, and, if given or made, such information or representation must not be relied upon as having been authorized by the Park District or the Municipal Advisor. The information in this Official Statement is subject to change without notice, and neither the delivery of this Official Statement nor any sale hereunder will, under any circumstances, create any implication that there has been no change in the affairs of the Park District since the date hereof. This Official Statement does not constitute an offer or solicitation in any jurisdiction in which such offer or solicitation is not authorized, or in which any person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. The information set forth herein has been furnished by the Park District and obtained from other sources which are believed to be reliable.

THE SERIES 2021A BONDS AND SERIES 2021B BONDS HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), IN RELIANCE ON SECTION 3(A)(2) OF THE SECURITIES ACT. THE SERIES 2021A BONDS AND SERIES 2021B BONDS HAVE NOT BEEN RECOMMENDED BY ANY FEDERAL OR STATE SECURITIES COMMISSION OR REGULATORY AUTHORITY. FURTHERMORE, THE FOREGOING AUTHORITIES HAVE NOT CONFIRMED THE ACCURACY OR DETERMINED THE ADEQUACY OF THIS OFFICIAL STATEMENT. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

Certain statements included in this Official Statement constitute “forward-looking statements.” Such statements generally are identifiable by the terminology used such as “plan,” “expect,” “intend,” “estimate,” “projection,” “budget” or other similar words. These forward-looking statements include, but are not limited to, the statements in this Official Statement under the caption “INVESTMENT CONSIDERATIONS.” These statements reflect the current views of the District with respect to future events and the achievement of certain results or other expectations contained in such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements described to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Other than as may be required by applicable law, the District does not intend to issue or cause to be issued any updates or revisions to those forward-looking statements if or when their expectations or the events, conditions or circumstances on which such statements are based occur. All forward-looking statements contained in this Official Statement are qualified in their entirety by the cautionary statements set forth in this Official Statement.

OFFICIAL TERMS OF OFFERING

$3,450,000* PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A

OFFICIAL TERMS OF OFFERING

$3,450,000* PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A

(BOOK ENTRY ONLY)

Bids for the Bonds will be received on March 25, 2021 until 11:00 A.M., Central Time, at the offices of AMKO Advisors, 4201 38th Street SW, Suite 207, Fargo, North Dakota 58104, after which time bids will be opened and tabulated. Consideration for award of the Bonds will be by the Park District at 1:00 P.M., Central Time, of the same day.

SUBMISSION OF BIDS

AMKO Advisors will assume no liability for the inability of the bidder to reach AMKO Advisors prior to the time of sale specified above. A bid may be withdrawn before the bid deadline using the same method used to submit the bid. If more than one bid is received from a bidder, the last bid shall be considered. All bidders are advised that each Bid shall be deemed to constitute a contract between the bidder and the Park District to purchase the Bonds regardless of the manner by which the Bid is submitted.

(a) Sealed Bidding. Bids may be submitted in a sealed envelope or by fax (844) 272-8191 to AMKO Advisors. Signed Bids, without final price or coupons, may be submitted to AMKO Advisors prior to the time of sale. The bidder shall be responsible for submitting to AMKO Advisors the final Bid price and coupons, by telephone (701) 540-6821 or fax (844) 272-8191 for inclusion in the submitted Bid.

(b) Electronic Bidding. Notice is hereby given that electronic bids will be received via PARITY®. For purposes of the electronic bidding process, the time as maintained by PARITY® shall constitute the official time with respect to all Bids submitted to PARITY®. Each bidder shall be solely responsible for making necessary arrangements to access PARITY® for purposes of submitting its electronic Bid in a timely manner and in compliance with the requirements of the Official Terms of Offering. Neither the Park District, its agents nor PARITY® shall have any duty or obligation to undertake registration to bid for any prospective bidder or to provide or ensure electronic access to any qualified prospective bidder, and neither the Park District, its agents nor PARITY® shall be responsible for a bidder’s failure to register to bid or for any failure in the proper operation of, or have any liability for any delays or interruptions of or any damages caused by the services of PARITY®. The Park District is using the services of PARITY® solely as a communication mechanism to conduct the electronic bidding for the Bonds, and PARITY® is not an agent of the Park District.

If any provisions of these Official Terms of Offering conflict with information provided by PARITY®, these Official Terms of Offering shall control. Further information about PARITY®, including any fee charged, may be obtained from:

PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5021

*Preliminary, Subject to Change

DETAILS OF THE BONDS

The Bonds will be dated May 1, 2021* as the date of original issue, and will bear interest payable on May 1 and November 1 of each year, commencing November 1, 2021. Interest will be computed on the basis of a 360-day year of twelve 30-day months. The Bonds will mature May 1 in the years and amounts* as follows:

2022 - $610,000* 2025 - $620,000* 2023 - $615,000* 2026 - $625,000* 2024 - $615,000* 2027 - $365,000*

* The Park District reserves the right, after bids are opened and prior to award, to increase or reduce the principal amount of the Bonds or the maturity amounts offered for sale. Any such increase or reduction will be made in multiples of $5,000 in any of the maturities. In the event the principal amount of the Bonds is increased or reduced, any premium offered or any discount taken by the successful bidder will be increased or reduced by a percentage equal to the percentage by which the principal amount of the Bonds is increased or reduced.

Bids for the Bonds may contain a maturity schedule providing for a combination of serial bonds and term bonds. All term bonds shall be subject to mandatory sinking fund redemption at a price of par plus accrued interest to the date of redemption and must conform to the maturity schedule set forth above. In order to designate term bonds, the bid must specify “Years of Term Maturities” in the spaces provided on the Bid Form.

BOOK ENTRY SYSTEM

The Bonds will be issued by means of a book entry system with no physical distribution of Bonds made to the public. The Bonds will be issued in fully registered form and one Bond, representing the aggregate principal amount of the Bonds maturing in each year, will be registered in the name of Cede & Co. as nominee of The Depository Trust Company (“DTC”), New York, New York, which will act as securities depository of the Bonds. Individual purchases of the Bonds may be made in the principal amount of $5,000 or any multiple thereof of a single maturity through book entries made on the books and records of DTC and its participants. Principal and interest are payable by the registrar to DTC or its nominee as registered owner of the Bonds. Transfer of principal and interest payments to participants of DTC will be the responsibility of DTC; transfer of principal and interest payments to beneficial owners by participants will be the responsibility of such participants and other nominees of beneficial owners. The purchaser, as a condition of delivery of the Bonds, will be required to deposit the Bonds with DTC.

REGISTRAR

Park District of the City of Grand Forks, Grand Forks, North Dakota will serve as Bond Registrar, Paying Agent and Transfer Agent.

OPTIONAL REDEMPTION

The Bonds shall not be subject to optional redemption prior to their maturity.

*Preliminary, Subject to Change

SECURITY AND PURPOSE

The Bonds are issued pursuant to the provisions of Section 21-03-07 of the North Dakota Century Code. The proceeds of the Bonds will be used to current refund the General Obligation Special Assessment Prepayment Bonds, Series 2014A, current refund the General Obligation Special Assessment Prepayment Bonds, Series 2017A, and pay the costs associated with the issuance of the Bonds. The details of the Series 2014A and Series 2017A Bonds are as follows:

Maturities Maturities Amount Call Call

Type of Bond Outstanding Refunded Refunded Date Price Dated 1/07/14 G.O. Special Assess Prepayment 2021-2028 2022-2028 $1,660,000 5/01/21* 100% 2/09/17 G.O. Special Assess Prepayment 2021-2026 2022-2026 $1,710,000 5/01/21* 100%

The Bonds are general obligations of the Park District for the payment of which it pledges its full faith and credit and unlimited taxing powers of the Park District are pledged. All taxable property in the territory of the Park District is subject to ad valorem taxation without limitation as to rate or amount to pay on the Bonds. The Park District is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources.

BIDDING PARAMETERS

Bids shall be for not less than $3,415,500* (99.0% of Par) and accrued interest on the total principal amount of the Bonds. No bid can be withdrawn or amended after the time set for receiving bids unless the meeting of the Issuer scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 of 1% or 1/8 of 1% in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional bids will be accepted.

AWARD

The Bonds will be awarded to the bidder offering the lowest interest rate to be determined on a true interest cost (TIC) basis. The Park District's computation of the interest rate of each bid, in accordance with customary practice, will be controlling. The Park District will reserve the right to: (i) waive non-substantive informalities of any bid or of matters relating to the receipt of bids and award of the Bonds, (ii) reject all bids without cause, and (iii) reject any bid that the Park District determines to have failed to comply with the terms herein.

BOND INSURANCE AT PURCHASER'S OPTION

If the Bonds qualify for issuance of any policy of municipal bond insurance or commitment therefor at the option of the bidder, the purchase of any such insurance policy or the issuance of any such commitment shall be at the sole option and expense of the purchaser of the Bonds.

Any increased costs of issuance of the Bonds resulting from such purchase of insurance shall be paid by the purchaser, except that, if the Park District has requested and received a rating on the Bonds from a rating agency, the Park District will pay that rating fee. Any other rating agency fees shall be the responsibility of the purchaser.

Failure of the municipal bond insurer to issue the policy after Bonds have been awarded to the purchaser shall not constitute cause for failure or refusal by the purchaser to accept delivery on the Bonds.

*Preliminary, Subject to Change

GOOD FAITH DEPOSIT

A good faith deposit (the “Deposit”) in the amount of $34,500 in the form of a federal wire transfer (payable to the order of the Park District) is only required from the apparent winning bidder, and must be received within two hours after the time stated for the receipt of Proposals. The apparent winning bidder will receive notification of the wire instructions from the Municipal Advisor promptly after the sale. If the Deposit is not received from the apparent winning bidder in the time allotted, the Park District may choose to reject their Proposal and then proceed to offer the Bonds to the next lowest bidder based on the terms of their original proposal, so long as said bidder wires funds for the Deposit amount within two hours of said offer.

REOFFERING PRICE CERTIFICATE

Simultaneously with or before the delivery of the Bonds, the successful bidder shall furnish to the Park District a certificate acceptable to Bond Counsel to the Park District stating (i) the initial reoffering prices given to the Park District in the bid; (ii) that the successful bidder has made a bona fide public offering of the Bonds at such reoffering prices; and (iii) that at least 10% or more in par amount of the Bonds of each maturity has been sold to the public (excluding bond houses, brokers, and other intermediaries) at such reoffering prices. In addition, the successful bidder agrees to provide the Park District upon request actual sales prices of all initial and subsequent sales of the Bonds, together with such other information as to such sales as the Park District may request from time to time in connection with the determination of the initial offering price of the Bonds for federal tax purposes. Such certificate shall be a condition to the delivery of the Bonds. If less than ten percent of the principal amount of any maturity of the Bonds was sold to the public (excluding bond houses, brokers and other intermediaries) at the initial offering price given to the Park District, the successful bidder must identify such maturities and certify that it reasonably expected on the date of the award of the Bonds to sell at least ten percent (10%) of such maturities at the initial reoffering prices given to the Park District. The reoffering prices may not be greater or less than the maximum or minimum reoffering prices, if applicable, set forth in the Bidding Parameters Table for both the entire issue and each maturity. By submitting its bid, the winning bidder agrees to provide to the Park District upon request actual sales prices of initial and subsequent sales of Bonds, together with such other information as to such sales as the Park District may request from time to time.

CUSIP NUMBERS

If the Bonds qualify for assignment of CUSIP numbers such numbers will be printed on the Bonds, but neither the failure to print such numbers on any Bond nor any error with respect thereto will constitute cause for failure or refusal by the purchaser to accept delivery of the Bonds. The CUSIP Service Bureau charge for the assignment of CUSIP identification numbers shall be paid by the purchaser.

SETTLEMENT

Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of approving legal opinions of Dorsey & Whitney LLP, Minneapolis, Minnesota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Park District or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the Park District, or its agents, the purchaser shall be liable to the Park District for any loss suffered by the Park District by reason of the purchaser's non-compliance with said terms for payment.

CONTINUING DISCLOSURE

On the date of actual issuance and delivery of the Bonds, the Park District will execute and deliver a Continuing Disclosure Undertaking (the “Undertaking”) whereunder the Park District will covenant for the benefit of the owners of the Bonds to provide certain financial and other information about the Park District and notices of certain occurrences to information repositories as specified in and required by SEC Rule 15c2-12(b)(5).

OFFICIAL STATEMENT

The Park District has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement and the Official Bid Form or for any additional information prior to sale, any prospective purchaser is referred to the Municipal Advisor to the Park District, AMKO Advisors, 4201 38th Street SW, Suite 207, Fargo, North Dakota 58104, telephone (701) 540-6821.

The Official Statement, when further supplemented by an addendum or addenda specifying the maturity dates, principal amounts and interest rates of the Bonds, together with any other information required by law, shall constitute a “Final Official Statement” of the Park District with respect to the Bonds, as that term is defined in Rule 15c2-12. By awarding the Bonds to any underwriter or underwriting syndicate submitting an Official Bid Form therefor, the Park District agrees that, no more than seven business days after the date of such award, it shall provide without cost to the senior managing underwriter of the syndicate to which the Bonds are awarded 250 copies of the Official Statement and the addendum or addenda described above. The Park District designates the senior managing underwriter of the syndicate to which the Bonds are awarded as its agent for purposes of distributing copies of the Final Official Statement to each Participating Underwriter. Any underwriter executing and delivering an Official Bid Form with respect to the Bonds agrees thereby that if its bid is accepted by the Park District (i) it shall accept such designation and (ii) it shall enter into a contractual relationship with all Participating Underwriters of the Bonds for purposes of assuring the receipt by each such Participating Underwriter of the Final Official Statement.

BY ORDER OF THE BOARD OF COMMISSIONERS OF THE PARK DISTRICT

OFFICIAL TERMS OF OFFERING

$5,875,000* PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA REFUNDING IMPROVEMENT BONDS, SERIES 2021B

OFFICIAL TERMS OF OFFERING

$5,875,000* PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS COUNTY, NORTH DAKOTA REFUNDING IMPROVEMENT BONDS, SERIES 2021B

(BOOK ENTRY ONLY)

SUBMISSION OF BIDS

PARITY®, 1359 Broadway, 2nd Floor, New York, New York 10018 Customer Support: (212) 849-5021

*Preliminary, Subject to Change

DETAILS OF THE BONDS

The Bonds will mature May 1 in the years and amounts* as follows:

2022 - $320,000* 2027 - $580,000* 2023 - $325,000* 2038 - $970,000* 2024 - $325,000* 2029 - $980,000* 2025 - $330,000* 2030 - $985,000* 2026 - $330,000* 2031 - $730,000*

BOOK ENTRY SYSTEM

Park District of the City of Grand Forks, Grand Forks, North Dakota will serve as Bond Registrar, Paying Agent and Transfer Agent.

OPTIONAL REDEMPTION

The Park District may elect on May 1, 2029* and on any day thereafter, to prepay Bonds due on or after May 1, 2030*. Redemption may be in whole or in part and if in part at the option of the Park District and in such manner as the Park District shall determine. If less than all Bonds of a maturity are called for redemption, the Park District will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest.

*Preliminary, Subject to Change SECURITY AND PURPOSE

The Bonds are issued pursuant to the terms and provisions of the North Dakota Century Code, Chapters 40-49, 40-22, 40-27, and Sections 57-15-41. The proceeds of the Bonds will be used to current refund the Park District’s Refunding Improvement Bonds, Series 2011, its Refunding Improvement Bonds, Series 2013A, its Refunding Improvement Bonds, Series 2016, and pay the costs associated with the issuance of the Bonds. The details of the Series 2011, Series 2013A and Series 2016 Bonds are as follows:

Maturities Maturities Amount Call Call Dated Type of Bond Outstanding Refunded Refunded Date Price 12/1/11 Refunding Improvement 2021-2037 2022-2037 $2,965,000 5/01/21* 100% 12/12/13 Refunding Improvement 2021-2033 2022-2033 $1,365,000 5/01/21* 100% 5/26/16 Refunding Improvement 2021-2031 2022-2031 $1,415,000 5/01/21* 100%

The Bonds are valid and binding special obligations of the Park District issued in anticipation of the collection of special assessments levied or to be levied upon property within the Park District benefitted by the improvement, which special assessments have been appropriated to the funds of the Park District for the payment of the improvement warrants and any additional improvement warrants drawn thereon. Whenever all special assessments appropriated and collected for any improvement are insufficient to pay principal and interest due on the improvement warrants, the governing body is required by law to levy a tax upon all taxable property in the corporate limits of the Park District for the payment of such deficiency, and the governing body is authorized to levy a similar tax whenever such a deficiency is likely to occur within one year, which deficiency levies are not subject to any limitation as to rate or amount.

BIDDING PARAMETERS

Bids shall be for not less than $5,816,250* (99.0% of Par) and accrued interest on the total principal amount of the Bonds. No bid can be withdrawn or amended after the time set for receiving bids unless the meeting of the Issuer scheduled for award of the Bonds is adjourned, recessed, or continued to another date without award of the Bonds having been made. Rates shall be in integral multiples of 5/100 of 1% or 1/8 of 1% in ascending order. Bonds of the same maturity shall bear a single rate from the date of the Bonds to the date of maturity. No conditional bids will be accepted. AWARD

BOND INSURANCE AT PURCHASER'S OPTION

*Preliminary, Subject to Change

GOOD FAITH DEPOSIT

A Good Faith Deposit will not be required with the submission of a bid.

REOFFERING PRICE CERTIFICATE

CUSIP NUMBERS

SETTLEMENT

Within 40 days following the date of their award, the Bonds will be delivered without cost to the purchaser through DTC in New York, New York. Delivery will be subject to receipt by the purchaser of approving legal opinions of Arntson Stewart Wegner PC, Fargo, North Dakota, and of customary closing papers, including a no- litigation certificate. On the date of settlement, payment for the Bonds shall be made in federal, or equivalent, funds that shall be received at the offices of the Park District or its designee not later than 12:00 Noon, Central Time. Unless compliance with the terms of payment for the Bonds has been made impossible by action of the Park District, or its agents, the purchaser shall be liable to the Park District for any loss suffered by the Park District by reason of the purchaser's non-compliance with said terms for payment.

CONTINUING DISCLOSURE

OFFICIAL STATEMENT

The Park District has authorized the preparation of an Official Statement containing pertinent information relative to the Bonds, and said Official Statement will serve as a nearly-final Official Statement within the meaning of Rule 15c2-12 of the Securities and Exchange Commission. For copies of the Official Statement and the Official Bid Form or for any additional information prior to sale, any prospective purchaser is referred to the Financial Advisor to the Park District, AMKO Advisors, 4201 38th Street SW, Suite 207, Fargo, North Dakota 58104, telephone (701) 540-6821.

BY ORDER OF THE BORAD OF COMMISSIONERS OF THE PARK DISTRICT

Table of Contents

INTRODUCTION TO THE OFFICIAL STATEMENT ...... 2 Taxable Sales & Purchases ...... 22 DESCRIPTION OF THE BONDS ...... 5 FINANCIAL SUMMARY ...... 23 Introduction ...... 5 INDEBTEDNESS ...... 24 Authority and Purpose ...... 5 Debt Limit ...... 24 Security and Source of Payment ...... 5 General Obligation Long-Term Bonds ...... 24 Redemption Provisions ...... 5 Special Assessment Long-Term Bonds ...... 25 Mandatory Sinking Fund Redemption ...... 5 Revenue Notes Payable ...... 26 Interest Computation ...... 6 Lease Obligations ...... 27 Sources and Uses of Funds ...... 6 Other Debt (Contracts Payable) ...... 28 DESCRIPTION OF THE BONDS ...... 7 Overlapping Debt ...... 29 Introduction ...... 7 Future Financing ...... 29 Authority and Purpose ...... 7 FINANCIAL INFORMATION ...... 30 Security and Source of Payment ...... 7 Financial Reports ...... 30 Redemption Provisions ...... 7 Results of Operations ...... 30 Mandatory Sinking Fund Redemption ...... 8 Budgets...... 31 Interest Computation ...... 8 Cash Position ...... 32 Sources and Uses of Funds ...... 8 PROPERTY VALUATIONS AND TAXES ...... 33 Book-Entry Only System ...... 9 History of Valuations (1) ...... 33 Continuing Disclosure ...... 10 Property Tax Levies and Collections ...... 34 INVESTMENT CONSIDERATIONS ...... 11 Principal Taxpayers...... 34 Infectious Disease Outbreak – COVID-19 ...... 11 APPROVAL OF LEGAL PROCEEDINGS ...... 35 IRS Tax-Exempt Compliance Program ...... 11 RATING...... 35 Determination of Taxability ...... 11 TAX CONSIDERATIONS ...... 35 Risk of Early Redemption ...... 11 QUALIFIED TAX EXEMPTION OBLIGATIONS ...... 37 Certain Matters Relating to Enforceability ...... 12 CERTIFICATION ...... 37 THE GRAND FORKS PARK DISTRICT ...... 13 LITIGATION ...... 37 General Information ...... 13 CLOSING DOCUMENTS ...... 38 Organization ...... 13 LEGAL MATTERS...... 38 Defined Benefit Pension Plan – Single Employer ...... 14 LEGISLATIVE PROPOSALS ...... 38 North Dakota Public Employees Retirement System .... 14 MUNICIPAL ADVISOR ...... 38 ECONOMIC AND DEMOGRAPHIC INFORMATION ...... 16 MISCELLANEOUS ...... 38 General Information Concerning the City which the Park District Serves ...... 16 APPENDIX A…..…………………….Series 2021A Bond Resolution Population and Area ...... 16 APPENDIX B………………………….Series 2021B Bond Resolution Transportation ...... 16 APPENDIX C………………………..…Audited Financial Statements Labor Force and Unemployment Statistics ...... 17 2019 Largest Employers ...... 17 2018 Housing and Income Statistics ...... 18 2017 Personal Income ...... 18 APPENDIX D…………….….Series 2021A Form of Legal Opinion Retail Sales and Effective Buying Income (EBI) ...... 19 APPENDIX E……………..….Series 2021B Form of Legal Opinion Building Permits Issued by the City ...... 19 APPENDIX F…….Series 2021A Form of Continuing Disclosure Recent Development ...... 20 Undertaking Health Care Services ...... 21 APPENDIX G….…Series 2021B Form of Continuing Disclosure Education ...... 22 Undertaking

INTRODUCTION TO THE OFFICIAL STATEMENT

The following information is furnished solely to provide limited introductory information regarding the Park District’s $3,450,000* General Obligation Special Assessment Refunding Bonds, Series 2021A (the “Series 2021A Bonds”) and the $5,875,000* Refunding Improvement Bonds, Series 2021B (the “Series 2021B Bonds”) (collectively referred as the “Bonds”) and does not purport to be comprehensive. All such information is qualified in its entirety by reference to the more detailed descriptions appearing in this Official Statement, including the appendices hereto.

Issuer: The Park District of the City of Grand Forks, North Dakota is a political subdivision, duly created and existing under and pursuant to the Constitution and laws of the State of North Dakota. The Park District is governed by a five-member Board of Park Commissioners.

Series 2021A Bonds: $3,450,000* General Obligation Special Assessment Refunding Bonds, Series 2021A to be issued by the Park District in whole multiples of $5,000 principal amount. See “DESCRIPTION OF SERIES 2021A BONDS.”

Series 2021B Bonds: $5,875,000* Refunding Improvement Bonds, Series 2021B to be issued by the Park District in whole multiples of $5,000 principal amount. See “DESCRIPTION OF SERIES 2021B BONDS.”

Authorization: Series 2021A Bonds: The Series 2021A Bonds are issued pursuant to the provisions of the North Dakota Century Code, Sections 21-03-07 and a resolution adopted by the Board of Commissioners of the Park District on March 2, 2021 (the "Series 2021A Resolution").

Series 2021B Bonds: The Series 2021B Bonds are issued pursuant to the provisions of the North Dakota Century Code, Chapters 22 through 28 of Title 40, and a resolution adopted by the Board of Commissioners of the Park District on March 2, 2021 (the "Series 2021B Resolution," and together with the Series 2021A Resolution, the "Resolutions").

Purpose: Series 2021A Bonds: The proceeds of the Series 2021A Bonds will be used to (i) affect a current refunding of the Park District’s (a) General Obligation Special Assessment Prepayment Bonds, Series 2014A in the original amount of $3,065,000, (b) General Obligation Special Assessment Refunding Bonds, Series 2017A in the original amount of $3,215,000, and (ii) pay the costs associated with the issuance of the Series 2021A Bonds.

Series 2021B Bonds: The proceeds of the Series 2021B Bonds will be used to (i) affect a current refunding of the Park District’s (a) Refunding Improvement Bonds, Series 2011 in the original amount of $4,500,000, (b) Refunding Improvement Bonds, Series 2013A in the original amount of $1,985,000, (c) Refunding Improvement Bonds, Series 2016 in the original amount of $2,025,000, and (ii) pay the costs associated with the issuance of the Series 2021B Bonds.

Redemption and Prepayment: Series 2021A Bonds: As more fully described herein, Series 2021A Bonds are NOT subject to optional redemption prior to the stated maturities. See “DESCRIPTION OF SERIES 2021A BONDS – Redemption.”

Series 2021B Bonds: As more fully described herein, Series 2021B Bonds are subject to optional redemption by the Park District on May 1, 2029, and on any date thereafter, at a Redemption Price equal to the principal amount thereof to be redeemed plus accrued interest to the date of redemption, as described herein. See “DESCRIPTION OF SERIES 2021B BONDS – Redemption.”

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*Preliminary, Subject to Change 2

INTRODUCTION TO THE OFFICIAL STATEMENT (continued)

Security: Series 2021A Bonds: The Series 2021A Bonds are general obligations of the Park District for which its full faith and credit and unlimited taxing powers are pledged (See “DESCRIPTION OF SERIES 2021A BONDS – Security and Source of Payment” herein).

Series 2021B Bonds: The Series 2021B Bonds are valid and binding special obligations of the Park District issued in anticipation of the collection of special assessments levied or to be levied upon property within the Park District benefitted by the improvement, which special assessments have been appropriated to the funds of the Park District for the payment of the improvement warrants and any additional improvement warrants drawn thereon (See “DESCRIPTION OF SERIES 2021B BONDS – Security and Source of Payment” herein).

Payments: Interest accrues on the Bonds at the rates set forth on the cover page hereof and is scheduled to be paid on May 1 and November 1 of each year (commencing November 1, 2021). Principal will be payable on May 1 in the years and amounts set forth on the cover page. So long as DTC is the registered owner of the Bonds, payment of principal and interest will be made directly to DTC. See “THE BONDS – Book-Entry Only System.”

Rating: A rating on the Series 2021A Bonds and Series 2021B Bonds has been requested by Moody’s Investors Service, Inc.

Form: The Bonds will be issued as book-entry only securities through Depository Trust Company (“DTC”).

Record Date: Interest and principal shall be paid to the registered holders of the Bonds appearing of record in the bond register as of the close of business on the 15th day of the calendar month next preceding such interest payment date, whether or not such day is a business day.

Legal Matters: Validity, tax exemption, and legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of Dorsey & Whitney LLP, Bond Counsel. The opinion will be substantially in the form set forth in Appendix C attached hereto.

Dated Date/ Delivery Date: May 1, 2021*

Tax Status: Interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Code, and (iii) is excluded from taxable income for North Dakota income tax purposes (see "Tax Considerations" herein).

Bank Qualified: The Bonds will be designated “Qualified Tax-Exempt Obligations”.

Professional Consultants: Municipal Advisor: AMKO Advisors, LLC Fargo, North Dakota

Bond Counsel: Dorsey & Whitney LLP Minneapolis, Minnesota

Paying Agent: Park District of the City of Grand Forks Grand Forks, North Dakota

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*Preliminary, Subject to Change

INTRODUCTION TO THE OFFICIAL STATEMENT (continued)

Limitation on Offerings or Reoffering Securities: No dealer, broker, salesman or other person has been authorized by the Park District, the Municipal Advisor or the Underwriters to give any information or to make any representations other than those contained in this Official Statement or the Final Official Statement and, if given or made, such information and representations must not be relied upon as having been authorized by the Park District, the Municipal Advisor or the Underwriters. This Official Statement or the Final Official Statement does not constitute an offer to sell or solicitation of an offer to buy, nor shall there by any sale of the Bonds by any person in any jurisdiction in which it is unlawful for such person to make such offer, solicitation or sale. The information set forth herein has been obtained from the Park District and other sources which are believed to be reliable, but it is not to be construed as a representation by the Municipal Advisor or Underwriters. The information and expressions of opinion herein are subject to change without notice, and neither the delivery of this Official Statement or the Final Official Statement nor any sale made thereafter shall, under any circumstances, create any implication that there has been no change in the affairs of the Park Park District or in any other information contained herein, since the date hereof.

Continuing Disclosure: Pursuant to the requirements of Securities and Exchange Commission Rule 15c2-12 (17 CFR Part 240, § 240.15c2-12) (the “Rule”), the Park District has agreed for the benefit of the owners of The Bonds to provide certain financial information, other operating data and notices of material events. See “CONTINUING DISCLOSURE” and “APPENDIX D - FORM OF CONTINUING DISCLOSURE CERTIFICATE” in this Official Statement.

IN CONNECTION WITH THE OFFERING OF THE BONDS, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE BONDS AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

Questions regarding the Bonds or the Preliminary Official Statement can be directed to, and additional copies of the Preliminary Official Statement, the Park District’s audited financial reports and the Resolutions may be obtained from AMKO Advisors, 4201 38th Street SW, Suite 207, Fargo, ND 58104 (701-540-6821) the Park District’s municipal advisor.

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DESCRIPTION OF THE BONDS

PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA $3,450,000* GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A

Introduction

The purpose of this Official Statement (including all appendices) is to set forth certain information relating to the sale of the Series 2021A Bonds to be issued by the Park District. All references to and summaries of certain provisions of the laws of the State of North Dakota and any other documents referred to herein do not purport to be complete and are qualified in their entirety by reference to the complete provisions thereof.

Authority and Purpose

The Series 2021A Bonds are issued pursuant to the terms and provisions of the North Dakota Century Code Section 21-03-07 and a resolution adopted by the Board of Commissioners of the Park District on March 2, 2021 (the "Series 2021B Resolution"). The purpose of the General Obligation Special Assessment Refunding Bonds, Series 2021A Bonds are issued for the purposes of (i) current refunding the Park District’s (a) General Obligation Special Assessment Prepayment Bonds, Series 2014A in the original amount of $3,065,000, (b) General Obligation Special Assessment Refunding Bonds, Series 2017A in the original amount of $3,215,000, and (ii) paying the costs associated with the issuance of the Series 2021A Bonds. The details of the Series 2014A and Series 2017A Bonds are as follows: Maturities Maturities Amount Dated Type of Bond Outstanding Refunded Refunded Call Date Call Price 1/7/14 GO Special Assessment Prepay Bonds 2021 – 2028 2022 – 2028 $1,660,132.24 5/1/21* 100% 2/9/17 GO Special Assessment Ref Bonds 2021 – 2026 2022 – 2026 $1,710,114.17 5/1/21* 100%

Security and Source of Payment

The Series 2021A Bonds are general obligations of the Park District for the payment of which it pledges its full faith and credit and unlimited taxing powers of the Park District are pledged. All taxable property in the territory of the Park District is subject to ad valorem taxation without limitation as to rate or amount to pay on the Bonds. The Park District is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources.

Redemption Provisions

Optional Redemption

The Series 2021A Bonds shall not be subject to optional redemption prior to the stated maturities.

Mandatory Sinking Fund Redemption

The purchaser may consolidate consecutive maturities of the Series 2021A Bonds into one or more term bonds having a stated maturity on the last maturity so consolidated and such term bonds shall be redeemed on the dates and the amounts shown on the cover for the maturities so consolidated.

The following principal payments will be due on May 1 followed by its corresponding year:

Year Amount Year Amount 2022 - $610,000* 2025 - $620,000* 2023 - $615,000* 2026 - $625,000* 2024 - $615,000* 2027 - $365,000*

*Preliminary, Subject to Change

Interest Computation

Interest on the Series 2021A Bonds is payable semi-annually on each May 1 and November 1, commencing November 1, 2021, to registered owners of the Series 2021A Bonds appearing of record in the bond register as of the close of business on the fifteenth day (whether or not a business day) of the calendar month next preceding such interest payment date (the “Record Date”). Interest on the Series 2021A Bonds will be computed on a 360-day year and a 30-day month basis. Payments coming due on a non-business day will be paid the following business day.

Sources and Uses of Funds

Table 1 presents the sources and used of funds for the Series 2021A Bonds is shown below:

Table 1 Sources and Uses of Funds

Sources of Funds Par Amount of Bonds $3,450,000* Reoffering Premium

Total Sources

Use of Funds Deposit to Current Refunding Cost of Issuance*

Total Uses

*Includes Paying Agent’s fees, various attorneys’ fees, Advising fees, Rating fees, Underwriter’s fees, and other miscellaneous fees and expenses related to the Series 2021A Bonds.

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*Preliminary, Subject to Change

DESCRIPTION OF THE BONDS

PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA $5,875,000* REFUNDING IMPROVEMENT BONDS, SERIES 2021B

Introduction

The purpose of this Official Statement (including all appendices) is to set forth certain information relating to the sale of the Series 2021B Bonds to be issued by the Park District. All references to and summaries of certain provisions of the laws of the State of North Dakota and any other documents referred to herein do not purport to be complete and are qualified in their entirety by reference to the complete provisions thereof.

Authority and Purpose

The Series 2021B Bonds are issued pursuant to the terms and provisions of the North Dakota Century Code, Chapters 40‐49, 40‐22, 40‐27, and Section 57‐15‐41. The Series 2021B Bonds are issued for the purposes of (i) current refunding the Park District’s (a) Refunding Improvement Bonds, Series 2011 in the original amount of $4,500,000, (b) Refunding Improvement Bonds, Series 2013A in the original amount of $1,985,000, (c) Refunding Improvement Bonds, Series 2016 in the original amount of $2,025,000, and (ii) paying the costs associated with the issuance of the Series 2021B Bonds. The details of the Series 20111, Series 2013A, and Series 2016 Bonds are as follows:

Maturities Maturities Amount Dated Type of Bond Outstanding Refunded Refunded Call Date Call Price 12/1/11 Refunding Improvement Bonds 2021 – 2023 2022 – 2023 $2,965,256.43 5/1/21* 100% 12/12/13 Refunding Improvement Bonds 2021 – 2033 2022 – 2033 $1,365,124.49 5/1/21* 100% 5/26/16 Refunding Improvement Bonds 2021 – 2031 2022 - 2031 $1,415,080.73 5/1/21* 100%

Security and Source of Payment

The Series 2021B Bonds are valid and binding special obligations of the Park District issued in anticipation of the collection of special assessments levied or to be levied upon property within the Park District benefitted by the improvement, which special assessments have been appropriated to the funds of the Park District for the payment of the improvement warrants and any additional improvement warrants drawn thereon. Whenever all special assessments appropriated and collected for any improvement are insufficient to pay principal and interest due on the improvement warrants, the governing body is required by law to levy a tax upon all taxable property in the corporate limits of the Park District for the payment of such deficiency, and the governing body is authorized to levy a similar tax whenever such a deficiency is likely to occur within one year, which deficiency levies are not subject to any limitation as to rate or amount.

Redemption Provisions

Optional Redemption

Bonds maturing in 2030* and thereafter shall be subject to redemption and prepayment, at the option of the Park District, on May 1, 2029*, and any date thereafter, in any order of maturities and by lot within any maturity, at par plus accrued interest. Notice of redemption shall be given by registered mail to the registered owner of the Bonds not less than 30 days prior to such redemption date. Redemption may be in whole or in part and if in part at the option of the Park District and in such manner as the Park District shall determine. If less than all Bonds of a maturity are called for redemption, the Park District will notify DTC of the particular amount of such maturity to be prepaid. DTC will determine by lot the amount of each participant's interest in such maturity to be redeemed and each participant will then select by lot the beneficial ownership interests in such maturity to be redeemed. All prepayments shall be at a price of par plus accrued interest.

*Preliminary, Subject to Change 7

Mandatory Sinking Fund Redemption

The purchaser may consolidate consecutive maturities of the Series 2021B Bonds into one or more term bonds having a stated maturity on the last maturity so consolidated and such term bonds shall be redeemed on the dates and the amounts shown on the cover for the maturities so consolidated.

The following principal payments will be due on May 1 followed by its corresponding year:

Year Amount Year Amount 2022 - $320,000* 2027 - $580,000* 2023 - $325,000* 2028 - $970,000* 2024 - $325,000* 2029 - $980,000* 2025 - $330,000* 2030 - $985,000* 2026 - $330,000* 2031 - $730,000*

Interest Computation

Interest on the Series 2021B Bonds is payable semi-annually on each May 1 and November 1, commencing November 1, 2021, to registered owners of the Series 2021B Bonds appearing of record in the bond register as of the close of business on the fifteenth day (whether or not a business day) of the calendar month next preceding such interest payment date (the “Record Date”). Interest on the Series 2021B Bonds will be computed on a 360-day year and a 30-day month basis. Payments coming due on a non-business day will be paid the following business day.

Sources and Uses of Funds

Table 1 presents the sources and used of funds for the Series 2021B Bonds is shown below:

Table 1 Sources and Uses of Funds

Sources of Funds Par Amount of Bonds $5,875,000* Reoffering Premium

Total Sources

Use of Funds Deposit to Current Refunding Cost of Issuance*

Total Uses

*Includes Paying Agent’s fees, various attorneys’ fees, Advising fees, Rating fees, Underwriter’s fees, and other miscellaneous fees and expenses related to the Series 2021B Bonds.

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*Preliminary, Subject to Change

Book-Entry Only System

The information contained in the following paragraphs of this subsection “Book-Entry Only System” has been extracted from a schedule prepared by Depository Trust Company (“DTC”) entitled “SAMPLE OFFERING DOCUMENT LANGUAGE DESCRIBING BOOK-ENTRY ONLY ISSUANCE.” The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Park District believes to be reliable, but the Park District takes no responsibility for the accuracy thereof.

1. The Depository Trust Company (“DTC”), New York, New York will act as securities depository for the Bonds. The Bonds will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee). One fully- registered certificate will be issued for the aggregate principal amount of (of that security) and will be deposited with DTC.

2. DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds securities that its participants (“Participants”) deposit with DTC. DTC also facilitates the settlement among Participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in Participants’ accounts, thereby eliminating the need for physical movement of securities certificates. Direct Participants include securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations (“Direct Participants”). DTC is owned by a number of its Direct Participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc., and the National Association of Securities Dealers, Inc. Access to the DTC system is also available to others such as securities brokers and dealers, banks, and trust companies that clear through or maintain a custodial relationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). The Rules applicable to DTC and its Participants are on file with the Securities and Exchange Commission.

3. Purchases of Bonds under the DTC system must be made by or through Direct Participants, which will receive a credit for the Bonds on DTC’s records. The ownership interest of each actual purchaser of each Certificate (“Beneficial Owner”) is in turn to be recorded on the Direct and Indirect Participants’ records. Beneficial Owners will not receive written confirmation from DTC of their purchase, but Beneficial Owners are expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Bonds are to be accomplished by entries made on the books of Participants acting on behalf of Beneficial Owners. Beneficial Owners will not receive certificates representing their ownership interests in Bonds, except in the event that use of the book-entry system for the Bonds is discontinued.

4. To facilitate subsequent transfers, all Bonds deposited by Participants with DTC will be registered in the name of DTC’s partnership nominee, Cede & Co. The deposit of Bonds with DTC and their registration in the name of Cede & Co. will effect no change in beneficial ownership. DTC will have no knowledge of the actual Beneficial Owners of the Bonds; DTC’s records will reflect only the identity of the Direct Participants to whose accounts such Bonds are credited, which may or may not be the Beneficial Owners. The Participants will remain responsible for keeping account of their holdings on behalf of their customers.

5. Redemption notices shall be sent to Cede & Co. If less than all of the Obligations within an issue are being redeemed DTC’s practice is determined by lot the amount of the interest of each Direct Participant in such issue to be redeemed.

6. Conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.

7. Neither DTC or Cede & Co. will consent or vote with respect to the Bonds. Under its usual procedures, DTC will mail an Omnibus Proxy to the Issuer as soon as possible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or voting rights to those Direct Participants to whose accounts the Bonds are credited on the record date (identified in a listing attached to the Omnibus Proxy).

8. Principal and interest payments on the Bonds will be made to DTC. DTC’s practice is to credit Direct Participants’ accounts on the payable date in accordance with their respective holdings shown on DTC’s records unless DTC has reason to believe that it will not receive payment on the payable date. Payments by Participants to Beneficial Owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC or the Issuer, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal and interest to DTC is the responsibility of the Issuer or the Agent, disbursements of such payments to Direct Participants shall be the responsibility of DTC, and disbursement of such payments to the Beneficial Owners shall be the responsibility of Direct and Indirect Participants.

9. DTC may discontinue providing its services as securities depository with respect to the Bonds at any time by giving reasonable notice to the Park District. Under such circumstances, in the event that a successor securities depository is not obtained, certificates for the Bonds are required to be printed and delivered.

10. Issuer may decide to discontinue use of the system of book-entry-only transfers through DTC (or a successor securities depository). In that event, Security certificates will be printed and delivered to DTC.

11. The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources that the Park District believes to be reliable, but the Park District takes no responsibility for the accuracy thereof.

NEITHER THE PARK DISTRICT NOR THE UNDERWRITERS WILL HAVE ANY RESPONSIBILITY OR OBLIGATION TO PARTICIPANTS, TO INDIRECT PARTICIPANTS OR TO ANY BENEFICIAL OWNER WITH RESPECT TO (1) THE ACCURACY OF ANY RECORDS MAINTAINED BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT; (2) THE PAYMENT BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY AMOUNT WITH RESPECT TO THE PRINCIPAL OF OR INTEREST ON THE BONDS; (3) ANY NOTICE WHICH IS PERMITTED OR REQUIRED TO BE GIVEN TO CERTIFICATEHOLDERS; (4) ANY CONSENT GIVEN BY DTC OR OTHER ACTION TAKEN BY DTC AS CERTIFICATEHOLDER; OR (5) THE SELECTION BY DTC, ANY DTC PARTICIPANT OR ANY INDIRECT PARTICIPANT OF ANY BENEFICIAL OWNER TO RECEIVE PAYMENT IN THE EVENT OF A PARTIAL REDEMPTION OF BONDS.

Continuing Disclosure

In order to assist the Underwriters in complying with SEC Rule 15c2-12 promulgated by the Securities and Exchange Commission, pursuant to the Securities Exchange Act of 1934 (the “Rule”), the Park District has agreed for the benefit of the holders and beneficial owners of the Bonds to provide certain financial information and operating data relating to the Park District by not later than 180 days following the end of the Park District’s fiscal year (the “Annual Report”), commencing with the report for the fiscal year ended December 31, 2020, and to provide notices of the occurrence of certain enumerated events, if material. The Annual Report is to be filed with the MSRB through its Electronic Municipal Market Access system (EMMA) at www.emma.msrb.org. The notices of material events are to be filed with the Municipal Securities Rulemaking Board. The details and terms of the Undertaking, as well as the information to be contained in the annual report or the notices of material events are set forth in the Continuing Disclosure Certificate to be executed and delivered by the Park District at the time the Bonds are delivered. Such Certificate will be in substantially the form attached hereto as Appendixes F & G.

The Park District failed to file Annual Reports in a timely manner as required under its previous continuing disclosure undertakings with respect to the years 2005, 2006, 2007 and 2008. The Park District became aware of the failure to file timely Annual Reports and filed its audited financial statements on July 30, 2009 through the Electronic Municipal Market Access system (“EMMA”) of the Municipal Securities Rulemaking Board (“MSRB”) in accordance with the Rule. The Park District is now in compliance and has retained a dissemination agent to ensure compliance in the future with the Disclosure Covenants and any other undertakings entered into by the Park District under the Rule. In addition, the Park District’s 2015 Annual Audited Financial Statement and Operating Data was filed on June 30, 2016, short of the required 180 days.

A failure by the Park District to comply with the Undertaking will not constitute an event of default on the Bonds (although holders will have any available remedy at law or in equity). Nevertheless, such failure must be reported in accordance with the Rule and must be considered by any broker, dealer or municipal securities dealer before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure adversely affects the transferability and liquidity of the Bonds and their market price.

INVESTMENT CONSIDERATIONS

The following is a discussion of certain considerations that could affect payments to be made with respect to the Bonds. Such discussion is not exhaustive, should be read in conjunction with all other parts of this Official Statement and should not be considered as a complete description of all risks that could affect such payments.

Infectious Disease Outbreak – COVID-19

On March 11, 2020, the World Health Organization proclaimed the Coronavirus (COVID-19) to be a pandemic. In an effort to lessen the risk of transmission of COVID-19, the United States government, state governments, local government, and private industries have taken measures to limit social interactions in an effort to limit the spread of COVID-19, affecting business activities and impacting global, state and local commerce and financial markets. The emergence of COVID-19 and the spread thereof is an emerging and evolving issue.

As the federal, state and local governments, including the Park District, continue efforts to contain and limit the spread of COVID-19, the City may implement and /or the county, State or federal government may mandate operational measures designed to slow the spread of the virus, which may result in delays in the City’s operations and receipt of tax and other revenue, increased costs of operations, and curtailment of services. In addition, the economic repercussions of the pandemic are expected to adversely affect the City and its residents and may negatively affect the ability of property owners to timely pay property taxes and/or fees and charges for City services. Future tax, resort tax, and other revenue collections, including Revenue of the System, may deviate from historical or anticipated collections and may have an adverse impact on the financial position and operations of the City and its ability to pay debt obligations, including the Bonds, in accordance with their terms. The City is not able to quantify economic impacts of COVID-19 at this time and is not able to predict future economic impacts of the COVID-19 pandemic on the City or its financial position.

IRS Tax-Exempt Compliance Program

The IRS has established a Tax-Exempt and Government Entities Division (the “TE/GE Division”). The TE/GE Division has a subdivision that is specifically devoted to tax-exempt obligations compliance. The Internal Revenue Service has an active program of conducting examinations of tax-exempt obligations, such as the Bonds. In recent years, the number of IRS tax- exempt obligation examinations has increased, and public statements made by individual IRS officials indicate that the number of IRS examinations of tax-exempt obligations, including issues such as the Bonds, may continue to increase in the future. IRS officials have recently indicated that more resources will be invested in audits of tax-exempt obligations. The Bonds may be subject to audit by the IRS.

Bond Counsel will render an opinion with respect to the tax-exempt status of interest on the Bonds, as described under the caption “TAX CONSIDERATIONS” herein. However, the Park District has not sought and is not expected to seek a ruling from the Internal Revenue Service with respect to the tax status of the Bonds. No assurance can be given that the Internal Revenue Service will not examine the Bonds. If the Internal Revenue Service examines the Bonds, such examination, if it occurs, may have an adverse impact on the marketability and price of the Bonds.

Determination of Taxability

Failure to comply with certain requirements imposed by applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), may result in a determination by the Internal Revenue Service that interest on the Bonds is includable in gross income for federal income tax purposes retroactive to the date of issuance. An initial or final determination of taxability with respect to the Bonds by the Internal Revenue Service could adversely affect the marketability and market price of the Bonds. No provision has been made for the mandatory redemption or acceleration of the Bonds or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is finally determined to be includable in gross income for federal or state income tax purposes.

Risk of Early Redemption

Purchasers of the Bonds should consider that the Bonds are subject to optional redemption upon the terms set forth in the Resolution and described under the caption “DESCRIPTION OF THE BONDS – Optional Redemption”, herein).

Certain Matters Relating to Enforceability

The remedies available upon a default will, in many respects, be dependent upon judicial actions, which are often subject to discretion and delay. Under existing constitutional and statutory law and judicial decisions, including the United States Bankruptcy Code and state laws concerning the use of assets of municipalities such as the Issuer, equitable remedies may not be readily available or may be limited. The various legal opinions to be delivered in connection with the issuance of the Bonds will be expressly subject to the qualification that the enforceability of the Resolutions and other legal documents is limited by bankruptcy, reorganization, insolvency, moratorium and other similar laws affecting the rights of creditors and by the exercise of judicial discretion in appropriate cases. See “ENFORCEABILITY OF OBLIGATIONS” in this Official Statement.

Bondholders will not receive a mortgage or similar security instrument with respect to the Bonds. Accordingly, the Bondholders will not have any right to foreclose on any real property of the Park District as a result of an event of default under the Resolutions.

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THE GRAND FORKS PARK DISTRICT

General Information

The Grand Forks Park District (the "Park District") was created in 1905 and is coterminous with the City of Grand Forks (the “City”). It is located in northeastern North Dakota on the Red River of the North, which divides North Dakota from Minnesota.

The Park District is comprised of three departments: parks, recreation, and forestry. It manages 1,188 acres of land, maintains 44 parks and facilities including golf courses, ice arenas, fitness center, and tennis complex. The Park District is also responsible for athletic and recreational programs for the community, including basketball, baseball, softball, soccer, figure skating, and hockey.

The Park District completed in 2012 the construction of the Choice Health and Fitness wellness center (“Choice Health and Fitness”), a 159,000 square foot health and fitness facility center, which includes locker facilities, a swimming pool, basketball courts, tennis courts, fitness and group exercise rooms, activity areas for cardiovascular, strength training, free weights, running tracts, community rooms, obesity research center with medical services provided, a deli/snack bar, and related facilities. Choice Health and Fitness is a collaboration of the Grand Forks Park District, Altru Health System, and the YMCA Family Center. As of January 2020, Choice Health and Fitness had approximately 14,700 members (includes employee memberships).

Organization

The Park District is a separate governing and taxing entity within the city of Grand Forks. It has an elected board of five members elected to four-year terms. The Board of Commissioners sets the budget and policies for the Park District; ensures coordination of parks, forestry and recreational services; and employs the director. Park Board meetings are the first Tuesday of each month unless otherwise announced.

A list of the Board Members and Administration is shown below:

Board of Directors

Name Position Term Expires Tim Skarperud President 2024 Greg LaDouceur Vice President 2022 Cody Bartholomew Commissioner 2024 Terry Dvorak Commissioner 2022 Russell Kraft Commissioner 2024

Administration Name Position Bill Palmiscno Executive Director George Hellyer, CPA Superintendent of Finance Dick Olson Attorney

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Defined Benefit Pension Plan – Single Employer

Substantially all employees of the Park District were eligible to belong to a pension plan administered by the Park District (the “Pension Plan”). Effective January 1, 2010, the plan was closed to new employees. New employees are eligible to participate in the North Dakota Public Employee Retirement System (NDPERS). The cost to administer the plan is financed through the contributions and investment earnings of the plan.

Responsibility for administration of the closed plan rest with the Board of Commissioners of the Park District.

At December 31, 2019, the Park District reported a liability of $2,439,459 for the net pension liability. The net pension liability was measured as of December 31, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2019 and rolled forward to December 31, 2019.

Changes in the Net Pension Liability: Increase (Decrease) Total Plan Net Position Fiduciary Position Liability Net Position Liability (a) (b) (a) - (b) Balances at 1/1/2019 $ 9,844,092 $ 6,559,235 $ 3,284,857 Changes for the Year: Service Cost 69,068 - 69,068 Interest 678,667 - 678,667 Contributions – Employer - 318,000 (318,000) Contributions – Employee - 65,266 (65,266) Net Investment Income - 1,148,064 (1,148,064) Differences Between Expected and Actual Experience (63,683) - (63,683) Changes of Assumptions (22,897) - (22,897) Benefits Payments, Including Refunds of Employee Contributions (435,840) (435,840) - Administrative Expenses - (24,777) 24,777 Net Changes 225,315 1,070,713 (845,398) Balances at 12/31/2019 $ 10,069,407 $ 7,629,948 $ 2,439,459

Sensitivity of the Park District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate:

The following presents the Park District’s net pension liability calculated using the discount rate of 7 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6 percent) of 1 percentage point higher (8 percent) than the current rate: 1% Decrease in 1% Increase in Discount Rate (6%) Discount Rate (7%) Discount Rate (8%) Park District’s proportionate share of the Single Employer net pension liability: $ 3,491,737 $ 2,439,459 $ 1,541,084

For a more detailed description of the Pension Plans of the Park District, please refer to Note 14 of the Park District’s Financial Statements for Fiscal Year Ended December 31, 2019 attached in Appendix A of this Official Statement.

North Dakota Public Employees Retirement System

The Park District participates in the North Dakota Public Employee Retirement System (NDPERS) administered by the State of North Dakota. The NDPERS is a cost-sharing multiple employer defined pension plan covering substantially all classified employees in the Park District. The plan provides retirement, disability and death benefits. Benefits and contribution provisions are administered in accordance with Chapter 54-52 of the North Dakota Century Code. This state statute requires that 7% of the participant's salary be contributed to the plan by either the employee or by the employer under a "salary reduction" agreement. The Park District has implemented a salary reduction agreement and is currently remitting the employees share. The Park District is required to contribute 7.12% of each participant's salary as the employer's share. In addition to the 7.12% employer contribution, the employer is required to contribute 1.14% of each participating employee’s gross wage to a prefunded retiree health insurance program.

At December 31, 2019, the Park District reported a liability of $2,192,268 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The Park District's proportion of the net pension liability was based on the Park District's share of covered payroll in the Main System pension plan relative to the covered payroll of all participating Main System employers. At June 30, 2019, the Park District's proportion was 0.179905%.

Sensitivity of the Park District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate:

The following presents the Park District’s proportionate share of the net pension liability calculated using the discount rate of 7.50 percent, as well as what the Employer’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.50 percent) of 1 percentage point higher (8.50 percent) than the current rate:

1% Decrease in 1% Increase in Discount Rate (6.50%) Discount Rate (7.50%) Discount Rate (8.50%) Park District’s proportionate share of the PERS net pension liability: $ 3,143,240 $ 2,192,268 $ 1,393,285

For a more detailed description of the Pension Plans of the Park District, please refer to Note 15 of the Park District’s Financial Statements for Fiscal Year Ended December 31, 2019 attached in Appendix A of this Official Statement.

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ECONOMIC AND DEMOGRAPHIC INFORMATION

General Information Concerning the City which the Park District Serves

The City is the county seat of Grand Forks County, located along the Red River, in northeastern North Dakota. The City is located at the intersection of Interstate 29 (north/south) and U.S. Highway 2 (east/west), and encompasses an area of approximately 20 square miles (12,800 acres). Incorporated in 1881, the City serves as the economic, educational and retail trade center for the area. The University of North Dakota (UND) and the Grand Forks Air Force Base are located in the City.

Population and Area

Historical population data for the City of Grand Forks and the County of Grand Forks (the “County”) for the past five decennial censuses and the most recent estimates available is outlined in the following table:

Population Statistics

City of Grand Forks Grand Forks County 2019 Census Est. 55,839 69,451 2010 Census 52,838 66,861 2000 Census 49,321 66,109 1990 Census 49,425 70,683 1980 Census 43,765 66,100 1970 Census 39,008 61,102 Source: U.S. Census Bureau

The City’s population by age group for the past five years is as follows:

Data Year/ Report Year 0-17 18-34 35-64 65 and Over 2019/20 12,039 20,632 16,783 7,178 2018/19 11,961 21,226 16,752 6,992 2017/18 11,872 21,820 17,020 6,954 2016/17 11,656 21,948 16,879 6,669 2015/16 11,543 21,992 17,218 6,511

Sources: Environics Analytics, Claritas, Inc. and The Nielsen Company.

Transportation

The Grand Forks International Airport, located five miles west of the City, is owned and operated by the Grand Forks Airport Authority. The airport is served by two commercial air carriers: Delta Airlines, Inc. and Allegiant Airlines. The City has both passenger and freight services with Amtrak’s “Empire Builder” service (Seattle-Chicago) and Burlington Northern Santa Fe Railroad. Three bus lines serve the area. Federal Express, United Parcel Service and a number of trucking firms provide daily service.

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Labor Force and Unemployment Statistics

The following table presents annualized average labor force and unemployment statistics for the City as compared to the State of North Dakota and the United States for the past five years, and through December 2020. Figures below are not seasonally adjusted.

Labor Force and Unemployment Statistics Grand Forks North Dakota United States Labor Average Annual Average Annual Average Annual Year Force Unemployment Rate Unemployment Rate Unemployment Rate 2020(1) 38,162 3.4% 4.1% 6.7% 2019 30,895 2.0% 2.7% 3.8% 2018 31,405 2.1% 2.6% 3.9% 2017 32,419 2.1% 2.6% 4.4% 2016 32,372 2.2% 3.2% 4.9% 2015 31,097 2.3% 2.7% 5.3%

(1) Through December 2020 Source: Job Service North Dakota, www.jobsnd.com.

Largest Employers Some of the largest employers of the Grand Forks metropolitan area, compiled by the Grand Forks Chamber of Commerce are listed below:

Principal Employers

Number of Firm Type of Business Employees Altru Health Sysyem Health Care 3,950(a) University of North Dakota Education – Training 3,464(b) Grand Forks Air Force Base Military 2,897(e) Grand Forks Public Schools Education – Training 1,600(b) LM Wind Power Fiberglass blades manufacturing 900 Valley Memorial Homes Nursing home 890 City of Grand Forks City government 510(b) Development Homes Group homes and services 480 Hugo’s (4 locations) Grocery store 450(b)(d) J.R. Simplot Food processing 440(d) Rydell GM Auto Center Automobile dealership 350 Wal-Mart Retail 350(b)(f) Grand Forks County County government 330(b)(c) Target Retail 300(b)(d) Canad Inns Hotel and entertainment center 225(c) MinnKota Power Cooperative Power plant 220(b) Menards Home improvement store 202(b) Alerus Financial Financial services 189(b)

(a) Most recent update as of September 2019. (b) Includes full-time and part-time employees. (c) Most recent update as of September 2018. (d) Most recent update as of September 2017. (e) Military personnel only. (f) Most recent update as of September 2016.

Sources: This does not purport to be a comprehensive list and is based on an October 2020 telephone survey of individual employers.

Housing and Income Statistics

The following table presents key housing and income statistics for Grand Forks County as compared with the State of North Dakota.

Housing and Income Statistics

Grand Forks County State of North Dakota Median Value of Home (2015-2019) $ 206,500 $ 193,900 Median Household Income (2015-2019) $ 54,051 $ 64,894

Source: Job Service North Dakota, www.jobsnd.com. U.S. Census Bureau, www.census.gov.

Personal Income

Total Personal and Per Capita Income

The following table outlines the personal and per capita personal income statistics for the Grand Forks Metropolitan Service Area, Grand Forks County and the State for the years 2015 – 2019.

Total Personal Income (000’s)*

Grand Forks Grand Forks State of Year Metro Area County North Dakota 2019 $5,237,350 $3,715,733 $43,614,400 2018 5,114,605 3,640,652 42,291,900 2017 4,920,789 3,492,821 39,812,900 2016 4,780,299 3,389,331 39,104,000 2015 4,730,642 3,359,380 40,540,000

*current dollars Source: U.S. Bureau of Economic Analysis www.bea.gov

Per Capita Personal Income*

Grand Forks Grand Forks State of Year Metro Area County North Dakota 2019 $51,950 $53,502 $57,762 2018 50,258 51,747 55,788 2017 48,184 49,551 52,736 2016 46,787 48,094 51,832 2015 46,448 47,751 53,762

*current dollars Source: U.S. Bureau of Economic Analysis www.bea.gov

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Retail Sales and Effective Buying Income (EBI)

City of Grand Forks

Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI

2019/20 $1,787,639 $1,435,990 $42,242 2018/19 1,826,966 1,382,379 56,110 2017/18 1,564,950 1,548,302 46,931 2016/17 1,732,339 1,393,724 41,676 2015/16 1,960,594 1,360,365 40,303

Grand Forks County

Data Year/ Total Retail Total Median Report Year Sales ($000) EBI ($000) Household EBI

2019/20 $2,152,744 $1,841,865 $45,338 2018/19 2,197,265 1,759,167 46,798 2017/18 1,831,630 1,941,171 48,591 2016/17 2,018,434 1,779,701 43,884 2015/16 2,284,002 1,726,765 42,903

The 2019/20 Median Household EBI for the State of North Dakota was $56,624. The 2019/20 Median Household EBI for the United States was $54,686.

Sources: Environics Analytics, Claritas, Inc. and The Nielsen Company.

Building Permits Issued by the City

New Residential New Commercial Total Permits2 Fiscal Year No. Value No. Value No. Value 20201 360 $ 47,606,123 30 $ 79,958,511 1,187 $ 179,596,130 2019 145 34,506,943 21 59,486,635 1,691 329,061,146 2018 227 41,679,488 16 56,649,157 1,895 156,473,039 2017 289 44,644,894 29 22,824,499 1,948 133,766,938 2016 304 48,502,233 22 25,169,665 1,981 140,940,924 2015 433 62,109,411 26 35,688,744 1,816 203,309,401 2014 895 125,555,259 21 32,404,596 1,727 366,599,640 2013 984 110,685,427 28 124,833,375 1,579 212,067,083 2012 424 53,710,209 15 27,780,340 1,506 127,729,350 2011 326 42,319,630 17 17,467,243 1,480 144,053,797

(1) As of August 31, 2020 (2) In addition to building permits, the total value includes all other permits issued by the City (i.e., heating, lighting, plumbing, roof replacement, etc.).

Source: City Building Inspector

Recent Development

Projects to be completed in 2020 with a value of more than $500,000 include:

University of North Dakota New Memorial Union Building $36,343,000* Miskagisi Property A, LLC 145 unit assisted living facility 18,000,000 Crary Properties, LLC 4 20-unit apartment buildings 12,000,000 GFDA, LLC 173 unit Park District Apartments 10,000,000 Fire Thorn, LLC Mixed Use Building – Pure Development 9,551,237* University of North Dakota New Nistler College of Business and Public Administration 5,300,000 BN/RR Company Exterior/interior renovations – Amtrak Station 4,359,418 Empire Apartments New 24 unit apartment building 3,840,000 MIDCO New MIDCO Tech. Operations Shop Building 2,456,352 Calvin & Mary Sommer New medical building in Edgewood Development 2,400,000 JLG GFK, LLC New Mixed Use Building – The Argyle 1,500,000* 421 DeMers LLC New Harry’s Steakhouse 1,380,000 State of ND Addition of Truck Scales 1,235,181 Epic Holdings, LLC Complete Renovation Mill Square Building 1,234,000 Bakken Land Enterprises, Inc. New Corporate Office Building/Shop Pro Transport 1,000,000 PC Properties, LLC New Building – McDonald Dentistry 962,950 PRGA Properties – St. Joseph LLC New Taco John’s Restaurant 540,518

*This is part of a series of permits related to the construction of the facility

Other major projects include:

Growth in housing continues to be strong in several areas of the City. The City adopted development policies to attract and encourage more development both in new areas and infill areas of the City. In part, due to these single family housing policy changes, the City has seen larger housing developments, better infrastructure economies of scale, and better than historic average single and townhouse housing starts.

Altru Health System is planning an approximately $305 million investment in the replacement of its current hospital with a state-of-the-art hospital facility at the current South Columbia Road campus location. The Altru hospital project reflects Altru’s commitment to creating a “culture of health” in a park like setting and to incorporate the amenities of Sertoma Park, Japanese Gardens, recreational paths, and the English Coulee. The Altru hospital vision for the campus development represents a phased development over the next 25 years and is expected to have a major economic, workforce, healthy community, infrastructure, and quality of life positive impact on the Grand Forks community and region. Initial construction efforts began in 2019 and due to the COVID-19 Pandemic, Altru Health System paused construction of the hospital with the intent of restarting construction in 2021.

Edgewood Senior Living is currently constructing a senior living housing development that will include a Sanford Health System medical clinic.

The City is leading a downtown action plan focused on a renewed downtown streetscape, park and open spaces, redevelopment strategies, and branding. Several strategic downtown redevelopment projects began in 2018 and have continued into 2020. The first project is a mixed-use downtown project named Selkirk on 4th, which is five story and approximately $8 million development made up of commercial space and condominiums. The Selkirk on 4th project started construction in 2018 and was completed in late 2019. The second mixed use downtown project is Pure Development, which is five story and approximately $12 million development made up of a grocery store, bank, and apartments. The Pure Development project began construction in 2019 and is anticipated to be completed in the first quarter of 2021. The third project is The Argyle mixed use commercial and residential development, which will include the architectural office of JLG and started construction in 2020 with a final completion in 2021 and an estimated total investment of $6 million. The fourth project is Mill Square mixed use redevelopment project of an existing and historic project. The fifth project is a redevelopment project called Harry’s Steakhouse. The final projects are a series of downtown transportation infrastructure projects to include the 2019/20 Demers Avenue Reconstruction, 5th Street Reconstruction and resurfacing, and University Avenue resurfacing projects, which renewed a few of the main thoroughfares in the downtown Park District with a renewed street and associated streetscape and include more than a $10 million infrastructure reinvestment. Future planned downtown mixed-use redevelopments include the redevelopment of the downtown and current Grand Forks Water Treatment Plant, the St. John’s

Block and Annex building, Lyons, and Townhouse Hotel redevelopments. The City is planning future downtown infrastructure redevelopments to include downtown street and streetscape and park and open space infrastructure renewals.

The University of North Dakota (UND) is currently undergoing a renewal of the campus from infrastructure to facilities. In 2020, UND completed an estimated $80 million new Steam Heating Facility. UND is nearing completion of an estimated $70 million Student Union, an estimated $4 million Gershman Graduate Student Center, an estimated $10 million renewed Chester Fritz Library, and an estimated $15 million University Avenue and associated streetscape renewal and reconstruction. UND has also recently broken ground on a campus redevelopment of a new $70 million Nistler School of Business and Public Administration Building that will include a Grand Forks Workforce Development Center. The UND School of Engineering and Mines continues to work on the development of a Data Science Research Center.

The City has continued to see growth in primary sector commercial and industrial developments. In 2020 Acme Tools completed construction that doubled the size of its logistics and distribution center with an estimated $2.6 million and 40,000 square-foot expansion. Border State Electric has purchased land and completed construction in 2020 of an estimated $9 million new regional office and distribution center. Ironhide Equipment completed construction in 2020 of an estimated $4 million new corporate center and heavy equipment center. The Red River BioRefinery completed constructing in 2020 of an estimated $100 million ethanol/alcohol disinfection facility that will process sugar beet tailings, potato, and pasta processing biomass with a process start up planned in the third quarter of 2020. J.R. Simplot Company is completing construction of an estimated $60 million high bay freezer addition to its facility and as part of its larger regional logistical network.

The City continues to build on its strong collaborative and supportive relationship with the Grand Forks Air Force Base (the “Base”) and was named one of ten cities nationally to be designated as a “Greater American Defense Community” in 2016. The Base recently transitioned from an Air Mobility Command (AMC) designation to an Air Combat Command (ACC) designation, which aligns current operations with future opportunities. The Base is also in a prime location for unmanned and other related Intelligence, Surveillance, and Recognizance (ISR) missions that complement the Global Hawk, as well as for additional unmanned and Arctic missions. The Base is home to the regional headquarters of the US Border Patrol.

Planning and development continues at Grand Sky, a new state-of–the-art business and technology park located on underutilized land leased from the Department of Defense at the Base. Grand Sky is focused on attracting companies and governmental organizations engaged in the research, development, training and operations of manned and unmanned aircraft systems (UAS), sensor technologies, aircraft testing and evaluation, pilot, sensor operator and aircraft maintenance training, data management and analysis, secure data storage, and systems development for energy, law enforcement and agricultural industries. The park currently includes two main tenants, Northrup Grumman and General Atomics Aeronautical Systems, Inc. General Atomics joined Northrup Grumman, which produces Global Hawk unmanned aircraft, as a compliment to this industry. UND is the first school in the nation to offer a degree program in UAS operations.

Northrup Grumman has opened a $10 million, 36,000 square-foot facility, which serves as a base for its unmanned aircraft systems research and development, as well as a training and operations site. In addition, they completed a 35,000 square-foot aircraft hanger in 2020. General Atomics has opened a Remote Piloted Aircraft (RPA) Flight Training Academy, which was an investment of a $2.5 million, and is a 19,400 square-foot facility that trains 100 pilots and crew annually from the United States and abroad. In addition, General Atomics announced in 2019 that they will more than triple their footprint at Grand Sky. The expansion for the Flight Test and Training Center at the Grand Sky UAS Business Park will grow from 5.5 acres to 20 acres, with anticipated doubling of its current employment in the years ahead.

In 2013, the State of North Dakota was designated as one of six test sites for UAS Development in the nation. In late 2016, the FAA granted a waiver to allow for Beyond Visual Line of Sight (BVLOS) flight in the Grand Forks region; the first of its kind. As this BVLOS program grows, there will be increasing opportunities for partnerships between UND, Grand Forks Regional Airport Authority, the Base, Federal Aviation Administration (FAA), other federal agencies, and private sector businesses.

Health Care Services

Medical services are available to area residents at clinics located throughout the City and at Altru Health System hospital.

Altru Health System employs 3,950 persons at its various facilities including the hospital, several clinics and its health management organization, all located within the City. The Altru hospital has a capacity of 322 licensed beds. Altru Health System has a formal affiliation with the Mayo Clinic, which means that Altru’s patients have access to the highest level of clinical expertise available and benefit from enhanced access to Mayo physicians and clinical resources.

Sanford Health, located in the City of East Grand Forks, provides a full range of health care services.

Education

Public Education

The Grand Forks School Park District currently operates 12 elementary schools, four middle schools, three senior high schools, and an adult education center. Park District enrollment for the 2020/2 school year was approximately 7,423 students for grades K-12.

Non-Public Education

The City of Grand Forks is also served by the following private schools:

School Location Grades St. Michael’s School City of Grand Forks PK-5 Holy Family St. Mary’s Elementary City of Grand Forks K-5 Grand Forks Montesori Academy City of Grand Forks PK-6 Prairie Voyager Sda School City of Grand Forks 4-6

Post-Secondary Education

Post-secondary education is available at the University of North Dakota with approximately 13,615 students enrolled in undergraduate and graduate programs in the Fall of 2020. Technical/vocational programs are available at various schools located in the City of East Grand Forks, Minnesota.

Taxable Sales & Purchases

Taxable sales and purchases for the City of Grand Forks, Grand Forks County and for the State of North Dakota for the past six years and the most recent quarter of 2020 available are listed in the following table:

Taxable Sales & Purchases

City of Grand Forks State of Year Grand Forks County North Dakota 2020(1) $ 701,546,971 $ 720,598,333 $ 13,650,878,434 2019 1,016,480,385 1,045,128,117 21,523,512,010 2018 1,018,084,191 1,048,416,300 20,237,603,993 2017 1,162,738,041 1,192,881,511 17,982,488,265 2016 1,183,571,519 1,214,280,290 17,347,243,371 2015 1,212,672,435 1,248,063,521 22,898,280,111 2014 1,204,241,710 1,243,990,487 28,236,456,966

(1) Totals through 3rd Quarter of 2020 Source: North Dakota State Tax Office

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FINANCIAL SUMMARY

(This summary is subject in all respects to more complete information contained in this Official Statement).

2019/20 Market Value (100%) $ 4,973,307,131

2019/20 Assessed Value (50%) $ 2,486,653,566

2019/20 Taxable Value $ 234,509,321

Direct General Obligation Debt: Tax Levy Supported Debt $ 3,450,000* Special Assessment Supported Debt $ 5,875,000* Total Direct Debt: $ 9,325,000*

Revenue Debt (Wellness Center) $ 16,715,000

Lease Obligations $ 3,590,000

Other Debt $ 821,593

Overlapping General Obligation Debt $ 15,399,351

City of Grand Forks Population 55,839 (2019 Estimate)

Area Approx. 1,188 Acres Debt Ratios

Debt Per Capita % of Total (55,839) Market Value Direct Debt $ 9,325,000* $ 167* 0.19%* Revenue Debt 16,715,000 299 0.34% Lease Obligations 3,590,000 64 0.07% Other Debt 821,593 15 0.02% Overlapping Debt 15,399,351 276 0.31% Total $ 45,850,944* $ 821* 0.93%*

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*Preliminary, Subject to Change

INDEBTEDNESS

Debt Limit

According to Article V, Section 15 of the North Dakota Constitution and Sections 21-03-04 and 21-03-06 of the North Dakota Century Code, North Dakota, a Park District may not become indebted for any purpose in excess of 1% of their Assessed Value. Section 57-02- 01(16) of the North Dakota Century Code defines “Assessed Value” as 50% of the true and full value of the property.

Debt Limit Computation

Assessed Value (2019/20) $ 2,486,653,566 Limit Percentage 1.00%

Authorized Debt Limit $ 24,866,536 Debt Subject to Limit 0 0.00%

Debt Margin $ 24,866,536 100.00%

General Obligation Long-Term Bonds

The Park District’s General Obligation Bonds are paid by tax levies levied against all taxable property within the Park Park District. The following tables summarize the Park District’s outstanding general obligation long-term debt by issue and the annual maturity schedule of the Park District’s debt.

General Obligation Long-Term Debt by Issue

Issue Original Interest Rate Outstanding Outstanding Date Purpose Amount Range Maturities Amount 5/1/2021 Special Assessment Prepayment, Series 2021A $3,450,000* This Issue 5/1/22 – 27 $ 3,450,000*

Totals $ 3,450,000*

General Obligation Long-Term Debt – Supported by Tax Levies Annual Maturity Schedule Series 2021A (This Issue) Bond % of Debt Year Principal Interest Payment Paid 2022 $ 610,000* - 2023 615,000* - 2024 615,000* - 2025 620,000* - 2026 625,000* - 2027 365,000* -

$ 3,450,000*

*Preliminary, Subject to Change 24

Special Assessment Long-Term Bonds

The Park District’s Refunding Improvement Bonds will be repaid from special assessments levied against the property owners benefited by the improvements. The following tables summarize the Park District’s outstanding refunding improvement long- term debt by issue and the annual maturity schedule of the Park District’s debt.

Special Assessment Long-term Debt by Issue Issue Original Interest Rate Outstanding Outstanding Date Purpose Amount Range Maturities Amount 9/3/09 Refunding Improvement, Series 2009C(1) $485,000 3.80% - 4.00% 12/1/2020 - 21 $ 0 9/3/09 Taxable Ref Improvement, Series 2009D(1) 510,000 5.25% - 5.40% 12/1/2020 - 21 0 2/26/14 Refunding Improvement, Series 2014B(1) 4,820,000 2.00% - 2.15% 5/1/2020 – 23 0 2021B Refunding Improvement, Series 2021B 5,875,000* This Issue 5/1/2022 - 31 5,875,000*

Totals $ 5,875,000*

(1) The Park Park District as of May 1, 2021 has called for full and final redemption its Refunding Improvement Bonds, Series 2009C, 2009D, and 2014B in the principal amounts of $50,000, $50,000, and $1,145,000, respectively.

Special Assessment Long-Term Debt Annual Maturity Schedule Series 2021B Bond (This Issue) % of Debt Year Principal Interest Total Paid 2022 320,000* - 2023 325,000* - 2024 325,000* - 2025 330,000* - 2026 330,000* - 2027 580,000* - 2028 970,000* - 2029 980,000* - 2030 985,000* - 2031 730,000* -

$5,875,000*

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*Preliminary, Subject to Change

Revenue Notes Payable

The following 2 tables summarize the Park District’s outstanding revenue debt and its associated annual maturity schedule. The Revenue Debt and any additional revenue issues are payable and secured by a pledge and lien on the revenues derived from operations of the Park District’s revenue producing facilities and the Pledged Revenues as defined in the Indenture of Trust and its supplements.

Revenue Debt by Issue

Issue Original Interest Rate Outstanding Outstanding Date Purpose Amount Range Maturities Amount 4/8/2015 Choice Health & Fitness $20,975,000 3.00% - 3.50% 12/1/2021 – 36 $16,715,000

Totals $16,715,000

Revenue Debt Annual Maturity Schedule

% of Debt Year Principal Interest Total Paid 2021 840,000 528,425 1,368,425 6.32% 2022 865,000 503,225 1,368,225 12.64% 2023 890,000 477,275 1,367,275 18.96% 2024 915,000 450,575 1,365,575 25.27% 2025 940,000 423,125 1,363,125 31.57% 2026 970,000 394,925 1,364,925 37.87% 2027 995,000 365,825 1,360,825 44.16% 2028 1,020,000 335,975 1,355,975 50.42% 2029 1,050,000 305,375 1,355,375 56.69% 2030 1,075,000 273,875 1,348,875 62.92% 2031 1,105,000 240,281 1,345,281 69.13% 2032 1,140,000 204,369 1,344,369 75.34% 2033 1,170,000 167,319 1,337,319 81.52% 2034 1,210,000 127,831 1,337,831 87.70% 2035 1,245,000 86,994 1,331,994 93.86% 2036 1,285,000 44,975 1,329,975 100.00%

$ 16,715,000 $ 4,930,369 $21,645,369

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Lease Obligations

The following tables summarizes the Park District’s outstanding lease obligations by issue and the annual maturity schedule of the Park District’s debt.

Lease Obligations by Issue

Issue Original Interest Rate Outstanding Outstanding Date Purpose Amount Range Maturities Amount 12/12/2013 Ice Arena Project 6,845,000 3.00% - 4.25% 10/1/2021 – 33 3,590,000

Totals $ 3,590,000

Lease Obligations Annual Maturity Schedule

% of Debt Year Principal Interest Total Paid 2021 410,000 143,451 553,451 11.93% 2022 420,000 130,026 550,026 23.79% 2023 390,000 117,726 507,726 34.73% 2024 200,000 105,126 305,126 41.31% 2025 205,000 93,426 298,426 47.74% 2026 215,000 87,176 302,176 54.26% 2027 220,000 80,001 300,001 60.72% 2028 230,000 72,208 302,208 67.24% 2029 240,000 63,408 303,408 73.78% 2030 250,000 54,208 304,208 80.33% 2031 260,000 44,608 304,608 86.90% 2032 270,000 34,295 304,295 93.46% 2033 280,000 23,375 303,375 100.00%

$ 3,590,000 $ 1,049,034 $4,639,034

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Other Debt (Contracts Payable)

The following table shows the Park District’s Other Debt, in the form of contracts payable, along with the annual maturity schedule.

Other Debt (Contacts Payable) by Issue

Issue Original Interest Rate Outstanding Outstanding Date Purpose Amount Range Maturities Amount 9/2/2014 ICON Holdings LLC $ 716,750 4.50% 12/31/2021 – 24 $ 325,605 6/6/2017 City of Grand Forks, ND 590,461 3.00% 12/31/2021 – 43 495,988

Totals $ 821,593

Contracts Payable Annual Maturity Schedule

% of Debt Year Principal Interest Total Paid 2021 99,640 26,541 126,181 12.48% 2022 103,119 22,411 125,530 24.90% 2023 106,758 18,125 124,883 37.26% 2024 110,562 13,675 124,238 49.55% 2025 23,618 12,045 35,664 53.08% 2026 23,618 11,337 34,955 56.54% 2027 23,618 10,628 34,247 59.93% 2028 23,618 9,920 33,538 63.24% 2029 23,618 9,211 32,830 66.49% 2030 23,618 8,503 32,121 69.67% 2031 23,618 7,794 31,413 72.78% 2032 23,618 7,086 30,704 75.82% 2033 23,618 6,377 29,995 78.78% 2034 23,618 5,668 29,287 81.68% 2035 23,618 4,960 28,578 84.51% 2036 23,618 4,251 27,870 87.26% 2037 23,618 3,543 27,161 89.95% 2038 23,618 2,834 26,453 92.57% 2039 23,618 2,126 25,744 95.12% 2040 23,618 1,417 25,036 97.59% 2041 23,618 709 24,327 100.00%

$ 821,585 $ 189,161 $1,137,587

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Overlapping Debt

There are three taxing jurisdictions which overlap the Park District, and which have general obligation debt outstanding. The table below sets forth the general obligation debt for each of these jurisdictions and the amount of that debt allocable to the Park District. Overlapping Debt

2020 Outstanding Percent Allocable Portion Allocable Taxable Value Debt (1) to the Park District (1) to the Park District Grand Forks County (2) $ 319,402,844 $ 6,095,000 73.42% $ 4,474,949 City of Grand Forks (3) 234,509,321 2,290,000 100.00% 2,290,000 Grand Forks School Park District (4) 248,114,019 9,135,000 94.52% 8,634,402

Total $ 15,399,351

(1) As of December 2020 (2) Includes lease revenue obligations issued by Grand Forks County Building Authority. (3) Does not include the City of Grand Forks; $87,277,618 of special assessment debt. (4) Includes lease revenue obligations that are payable solely from annual appropriation rental payments made by the Grand Forks School Park District.

Future Financing

The Park District does not expect to issue any additional debt within the next six months.

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FINANCIAL INFORMATION

Financial Reports

The Park District’s financial statements are audited annually by Brady Martz, an independent certified public accountant. Copies of the Park District’s Audit Reports are upon request from AMKO Advisors, the Park District’s municipal advisor.

Results of Operations

Financial data summarized in this Official Statement has been compiled from the Park District’s Financial Statements and presented in a format to facilitate year-to-year comparison. The table below presents the audited statement of revenues, expenditures and changes in fund balance for the fiscal years ended December 31, 2016 through 2019.

Statement of Revenues, Expenditures, and Changes in Fund Balance of the General Fund (Year Ended December 31)

2019 2018 2017 2016 Audited Audited Audited Audited Revenues: Local Property Taxes $ 5,628,270 $ 5,701,064 $ 5,670,237 $ 5,186,447 State Revenue 993,704 941,675 816,622 830,997 Program Income 1,241,339 1,175,410 1,226,093 1,189,370 Donations/Sponsorships 327,306 335,819 326,065 370,705 Investment Earnings 225,037 124,357 54,884 11,885 Miscellaneous 48,189 52,709 63,625 92,909 Total Revenues $ 8,463,845 $ 8,331,034 $ 8,157,526 $ 7,682,313 Expenditures Current: Park Operations 5,252,083 5,315,076 5,209,101 5,057,834 Forestry 842,999 773,520 793,073 757,981 Recreation 594,699 605,811 698,343 769,479 Capital Outlay 884,576 781,381 489,329 1,139,739 Debt Service: Principal Payments 93,132 90,315 96,965 70,891 Interest 36,186 39,712 43,833 29,489 Total Expenditures $ 7,703,675 $ 7,605,815 $ 7,330,644 $ 7,825,413

Excess (Deficiency) of Revenues Over Expenditures 760,170 725,219 826,882 (143,100)

Other Financing Sources (Uses) Proceeds on Sale of Capital Assets 73,965 - - - Issuance of Debt - - - 590,461 Operating Transfers In 14,187 98,473 - 48,874 Operating Transfers Out (931,000) (250,986) (108,064) (110,000)

Total Other Financing Sources (Uses) (842,8480 (152,513) (108,064) 529,335

Net Change in Fund Balance (82,678) 572,706 718,818 386,235

Fund Balance, January 1 $ 2,833,575 $ 2,260,869 $ 1,542,051 $ 1,155,816

Fund Balance, December 31 $ 2,750,897 $ 2,833,575 $ 2,260,869 $ 1,542,051

Budgets

The table below outlines the Park District’s budget for fiscal years 2020 – 2021.

2021 2020 Final Budget Final Budget Revenues Government Funds - Operating General Fund $ 6,921,900 $ 6,742,200 Forestry Fund 972,600 1,110,100 Recreation Fund 639,200 735,200 Special Assessment 1,460,000 1,712,700 Capital and Betterment 1,148,700 1,106,100 Total Government Fund – Operating $ 11,142,400 $ 11,406,300

Government Funds – Non-Operating Capital and Betterment - $ 349,400

Enterprise Funds - Operating Lincoln Golf Course $ 307,700 $ 308,300 King’s Walk Golf Course 1,235,200 1,213,400 Choice Health & Fitness 3,823,500 4,177,500 Total Enterprise Funds - Operating $ 5,366,400 $ 5,699,200

Enterprise Funds – Non-Operating Choice Health & Fitness $ 284,000 $ 398,000

Total Revenues $ 16,792,800 $ 17,852,900

Expenses Government Funds - Operating General Fund $ 5,495,300 $ 5,463,800 Forestry Fund 1,115,200 1,005,400 Recreation Fund 710,600 701,800 Special Assessment 1,705,300 1,704,900 Capital and Betterment 780,000 1,353,500 Total Government Funds - Operating $ 9,806,400 $ 10,229,400

Government Funds – Non-Operating General Fund $ 198,500 $ 269,800 Forestry Fund - - Total Government Funds – Non-Operating $ 198,500 $ 269,800

Enterprise Funds - Operating Lincoln Golf Course $ 364,100 $ 376,200 King’s Walk Gold Course 1,068,900 1,052,500 Choice Health & Fitness 3,528,700 3,627,800 Total Enterprise Fund - Operating $ 4,961,700 $ 5,056,500

Enterprise Funds – Non-Operating Lincoln Golf Course - $ 40,000 King’s Walk Golf Course 800,300 800,900 Choice Health & Fitness 1,403,500 1,448,100 Total Enterprise Funds – Non-Operating $ 2,203,800 $ 2,289,000

Total Expenses $ 17,170,400 $ 17,844,700

Cash Position

Grand Forks Park District’s funds on hand as of December 31, 2020:

Funds Amount General Fund $ 1,693,311.55 Forestry Fund 513,526.73 Recreation Fund 274,993.69 Special Assessment Fund 1,162,592.42 C & B Fund 761,484.46 Lincoln Golf Course 63,129.29 King’s Walk Golf Course 1,591,639.44 Choice Health & Fitness - Operations 1,080,770.36 Choice Health & Fitness - Restricted 1,534,823.14

Total $ 8,676,271.08*

*This is the Park District’s preliminary cash balances and does not include any Foundation cash balances.

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PROPERTY VALUATIONS AND TAXES

The City Assessor's office establishes an estimated market value on all properties. The assessed value is computed at 50% of estimated market value. The taxable value is then computed in the following manner: on residential property the taxable value is 9% of the assessed value; on agricultural and commercial property the taxable value is 10% of the assessed value. The following table shows the market, assessed and taxable values of taxable property in the Park District for assessment year 2020/collection year 2021. The table below, shows the trend in property valuations over the last six years.

Property Values in the Park District (Assessment 2020/Collection 2021)

Market Value Assessed Value Equalization (1) (100%) (50%) Factor Taxable Value Real Property Residential $ 2,831,207,111 $ 1,415,603,556 9% $ 127,404,320 Agricultural 966,300 483,150 10% 48,315 Commercial 2,047,734,840 1,023,867,420 10% 102,386,742 Utilities Railroad 1,088,560 544,280 10% 54,428 Other Utilities 92,310,320 46,155,160 10% 4,615,516

Totals $ 4,973,307,131 $ 2,486,653,566 $ 234,509,321

History of Valuations (1)

Market Assessed Taxable Year Valuation Valuation Valuation 2019/20 $ 4,869,652,569 $2,434,826,284 $229,619,718 2018/19 4,788,984,164 2,394,492,082 225,896,656 2017/18 4,690,442,682 2,345,221,341 221,320,080 2016/17 4,464,924,369 2,232,462,184 210,658,918 2015/16 4,109,539,907 2,054,769,953 193,836,206 2014/15 3,816,795,336 1,908,397,668 180,137,234

(1) Does not include the subtraction of incremental value. Source: Grand Forks County Auditor as of January 2021

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Property Tax Levies and Collections

After final equalization by assessing authorities in September of each year, the County Auditor calculates mill rates and spreads taxes. The resulting taxes are payable on the following January 1.

Taxes are collected by the County in two semiannual installments, and the receipts are distributed by the County to the local government entities. A discount of five percent is given on the tax bill if the entire payment is made by February 15. Discounts given are subtracted from the levy amount by the County Auditor. If taxes are not paid by March 1, a three percent penalty is charged with the penalty being raised on May 1 to six percent, on July 1 to nine percent, and on October 15 to twelve percent.

North Dakota residents over 65 years of age whose income is less than $26,000 receive a homestead property tax credit. The credit is subtracted from their tax bill. North Dakota residents who are disabled veterans of the United States armed forces that have a disability of 50% or greater are eligible for a property tax credit on the first $5,400 of their taxable value based on the amount of their disability. The land assessment of a disabled veteran is not included in the discount. Local political subdivisions are reimbursed for this credit by the state as is done for the homestead credits so no loss in tax revenue is incurred by the city or other local entities.

Tax Levies and Collection in the Park District

Amount Net Levy Collected During % Collected as of % Levy Year of Levy (95% of Levy) Collection Year Collected December 31, 2020 Collected 2019/20 $ 8,987,409 $ 8,538,039 In Process………………………………… $8,450,132 94.02% 2018/19 8,853,979 8,411,280 $ 8,290,162 93.63% 8,406,819 94.95% 2017/18 8,693,827 8,259,136 8,196,082 94.27% 8,313,004 95.62% 2016/17 7,488,366 7,113,948 7,052,410 94.18% 7,158,071 95.59% 2015/16 6,912,663 6,567,030 6,519,999 94.32% 6,628,737 95.89% 2014/15 6,422,612 6,101,481 6,085,545 94.75% - 0.00% 2013/14 5,870,920 5,577,374 5,870,920 100.0% - 0.00%

Source: Grand Forks County Auditor

Principal Taxpayers

A list of the ten largest taxpayers within the Park District with the highest assessed valuations for taxes payable in 2021 is presented in table below. Top Ten Taxpayers

Taxable Percent of Total Taxpayer Valuation Type of Property Taxable Valuation Northern States Power Company $ 4,123,766 Utility 1.76% IRET Properties 3,637,575 Rental Apartments and Commercial Retail 1.55% Altru Health System 2,279,313 Medical Clinic and Hospital 0.97% JR Simplot Company 1,489,800 Manufacturing 0.64% Sterling Properties LLP 1,231,565 Rental Apartments and Commercial Retail 0.53% Campus Crest at Grand Forks, LLC 1,087,220 Commercial 0.46% Wal-Mart Real Estate Business Trust 1,045,875 Retail 0.45% LM Wind Power Blades (ND), Inc 1,004,530 Fiberglass Blades Manufacturing 0.43% Menard, Inc 977,955 Retail 0.42% Sterling Pointe Apartments, LLP 953,240 Apartments 0.41%

Total $ 17,830,839 7.60%

Source: City of Grand Fork’s Assessor’s Office

APPROVAL OF LEGAL PROCEEDINGS On the date for delivery of the Bonds, Bond Counsel, Dorsey & Whitney LLP, Minneapolis, Minnesota, will deliver their opinion, dated the date thereof, that the Bonds are valid and legally binding on the Park District, enforceable in accordance with their terms and with regard to the tax-exempt status of interest on the Bonds under existing laws. The foregoing opinion will be generally qualified to the extent that the enforceability of the respective instruments may be limited by laws, decisions and equitable principles affecting remedies and by bankruptcy or insolvency or other laws, decisions and equitable principles affecting creditors’ rights generally.

RATING

A rating on the Bonds has been requested from Moody’s Investors Service, Inc. A rating is subject to withdrawal at any time; withdrawal of a rating may have an adverse effect on the marketability of the Bonds. For an explanation of the significance of the rating, an investor should communicate with the rating agency directly.

TAX CONSIDERATIONS The following is a summary of certain U.S. federal income tax considerations relating to the purchase, ownership, and disposition of the Bonds. This summary is based on the U.S. Internal Revenue Code of 1986 (the “Code”) and the Treasury Regulations promulgated thereunder, judicial decisions, and published rulings and administrative pronouncements of the Internal Revenue Service (the “IRS”), all as of the date hereof and all of which are subject to change, possibly with retroactive effect. Any such change could adversely affect the matters discussed below, including the tax exemption of interest on the Bonds. The Park Park District has not sought and will not seek any rulings from the IRS regarding the matters discussed below, and there can be no assurance the IRS or a court will not take a contrary position regarding these matters.

Prospective purchasers of Bonds should consult their own tax advisors with respect to applicable federal, state, and local tax rules, and any pending or proposed legislation or regulatory or administrative actions, relating to the Bonds based on their own particular circumstances.

This summary is for general information only and is not intended to constitute a complete analysis of all tax considerations relating to the purchase, ownership, and disposition of Bonds. It does not address the application of the alternative minimum tax or the additional tax on net investment income, nor does it address the U.S. federal estate and gift tax or any state, local, or non-U.S. tax consequences. This summary is limited to consequences to U.S. holders that purchase the Bonds for cash at original issue and hold the Bonds as “capital assets” (generally, property held for investment).

This discussion does not address all aspects of U.S. federal income or state taxation that may be relevant to particular holders of Bonds in light of their specific circumstances or the tax considerations applicable to holders that may be subject to special income tax rules, such as: holders subject to special tax accounting rules under Section 451(b) of the Code; insurance companies; brokers, dealers, or traders in stocks, securities, or currencies or notional principal contracts; foreign corporations subject to the branch profits tax; holders receiving payments in respect of the Bonds through foreign entities; and S corporations, partnerships, or other pass-through entities or investors therein.

For purposes of this discussion, the “issue price” of a maturity of Bonds is the first price at which a substantial amount of Bonds of that maturity is sold for cash to persons other than bond houses, brokers, or similar persons or organizations acting in the capacity of underwriters, placement agents, or wholesalers.

The Bonds

Tax-Exempt Interest

In the opinion of Dorsey & Whitney LLP, Bond Counsel, based on existing law and assuming the accuracy of certain representations and compliance with certain covenants, interest on the Bonds (i) is excluded from gross income for federal income tax purposes under Section 103 of the Code, (ii) is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Code, and (iii) is excluded from taxable income for North Dakota income tax purposes.

The Code establishes certain requirements that must be met after the issuance of the Bonds in order that interest on the Bonds be excluded from federal gross income. These requirements include, but are not limited to, provisions regarding the use of Bond proceeds and the facilities financed or refinanced with such proceeds and restrictions on the investment of Bond proceeds and other amounts. The Park District has made certain representations and has covenanted to comply with certain restrictions, conditions, and requirements designed to ensure interest on the Bonds will not be included in federal gross income. Inaccuracy of these representations or noncompliance with these covenants may cause interest on the Bonds to be included in federal gross income retroactively to their date of issue. Bond Counsel has not independently verified the accuracy of these representations and will not verify the continuing compliance with these covenants. No provision has been made for redemption of or for an increase in the interest rate on the Bonds in the event that interest on the Bonds is included in federal gross income.

Original Issue Discount

Bonds may be issued at a discount from their principal amount (any such Bonds being “Discount Bonds”). The excess of the principal amount payable on Bonds of a given maturity over their issue price constitutes “original issue discount” (“OID”). OID that accrues to a holder of a Discount Bond is excluded from federal gross income to the same extent that stated interest on such Discount Bond would be so excluded. The amount of OID that accrues on a Discount Bond is added to the holder’s federal tax basis.

OID on a Discount Bond generally accrues pursuant to a constant-yield method that reflects semiannual compounding on dates that are determined by reference to the maturity date of the Discount Bond. The amount of OID that accrues for any particular semiannual accrual period generally is equal to the excess of (1) the product of (a) one-half of the yield on such Discount Bonds (adjusted as necessary for an initial short period) and (b) the adjusted issue price of such Discount Bonds, over (2) the amount of stated interest actually payable. For this purpose, the adjusted issue price is determined by adding to the issue price for such Discount Bonds the OID that is treated as having accrued during all prior accrual periods. If a Discount Bond is sold or otherwise disposed of between compounding dates, then the original issue discount that would have accrued for that accrual period for federal income tax purposes is allocated ratably to the days in that accrual period.

If a Discount Bond is purchased for a cost that exceeds the sum of the issue price plus accrued interest and accrued OID, the amount of OID that is deemed to accrue thereafter to the purchaser is reduced by an amount that reflects amortization of such excess over the remaining term of the Discount Bond. If the excess is greater than the amount of remaining OID, the basis reduction rules for amortizable bond premium may result in taxable gain upon sale or other disposition of the Bonds, even if the Bonds are sold, redeemed, or retired for an amount equal to or less than their cost.

It is possible under certain state and local income tax laws that original issue discount on a Discount Bond may be taxable in the year of accrual and may be deemed to accrue differently than under federal law.

Market Discount

If a Bond is purchased for a cost that is less than the Bond’s issue price (plus accrued original issue discount, if any), the purchaser will be treated as having purchased the Bond with market discount (unless a statutory de minimis rule applies). Market discount is treated as ordinary income and generally is recognized on the maturity or earlier disposition of the Bond (to the extent that the gain realized does not exceed the accrued market discount on the Bond).

Bond Premium

A holder that acquires a Bond for an amount in excess of its principal amount generally must, from time to time, reduce the holder’s federal tax basis for the Bond. Premium generally is amortized for federal income tax purposes on the basis of a bondholder’s constant yield to maturity or to certain call dates with semiannual compounding. Accordingly, holders who acquire Bonds at a premium might recognize taxable gain upon sale of the Bonds, even if such Bonds are sold for an amount equal to or less than their original cost. Amortized premium is not deductible for federal income tax purposes.

Related Tax Considerations

Section 86 of the Code requires recipients of certain social security and railroad retirement benefits to take interest on the Bonds into account in determining the taxability of such benefits.

Section 265(a) of the Code denies a deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds. In the case of a financial institution, generally no deduction is allowed under section 265(b) the Code for that portion of the holder’s interest expense that is allocable to interest on tax-exempt obligations, such as the Bonds, unless the obligations are “qualified tax-exempt obligations.” Indebtedness may be allocated to the Bonds for this purpose even though not directly traceable to the purchase of the Bonds.

The Bonds are “qualified tax-exempt obligations” for purposes of Section 265(b)(3) of the Code. Accordingly, although interest expense allocable to the Bonds is not subject to the disallowance under Section 265(b) of the Code, the deduction for interest on indebtedness incurred or continued to purchase or carry the Bonds may be subject to reduction under Section 291 of the Code.

The ownership or disposition of, or the accrual or receipt of amounts treated as interest on, the Bonds may affect a holder’s federal, state, or local tax liability in some additional circumstances. The nature and extent of these other tax consequences depends upon the particular tax status of the holder and the holder’s other items of income or deduction.

Sale or Other Disposition

A holder will generally recognize gain or loss on the sale, exchange, redemption, retirement, or other disposition of a Bond equal to the difference between (i) the amount realized less amounts attributable to any accrued but unpaid stated interest and (ii) the holder’s adjusted tax basis in the Bond. The amount realized includes the cash and the fair market value of any property received by the holder in exchange for the Bond. A holder’s adjusted tax basis in a Bond generally will be equal to the amount that the holder paid for the Bond, increased by any accrued original issue discount with respect to the Bond and reduced by the amount of any amortized bond premium on the Bond. Except to the extent attributable to market discount (which will be taxable as ordinary income to the extent not previously included in income), any gain or loss will be capital gain or loss and will be long-term capital gain or loss if the holder held the Bond for more than one year. Long-term capital gains recognized by certain non-corporate persons, including individuals, generally are taxable at a reduced rate. The deductibility of capital losses is subject to significant limitations.

Information Reporting and Backup Withholding

Payments of interest on the Bonds (including any allocable bond premium or accrued original issue discount) and proceeds from the sale or other disposition of the Bonds are expected to be reported to the IRS as required under applicable Treasury Regulations. Backup withholding will apply to these payments if the holder fails to provide an accurate taxpayer identification number and certification that it is not subject to backup withholding (generally on an IRS Form W-9) or otherwise fails to comply with the applicable backup withholding requirements. Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or a credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS. Certain holders are exempt from information reporting. Potential holders should consult their own tax advisors regarding qualification for an exemption and the procedures for obtaining such an exemption. QUALIFIED TAX EXEMPTION OBLIGATIONS In the opinion of Bond Counsel, the Bonds are eligible for designation, and the Park District will designate the Bonds as “Qualified Tax-Exempt Obligations” for purposes of Section 265 of the Internal Revenue Code of 1986 relating to the ability of certain financial institutions to deduct from income for federal income tax purposes.

CERTIFICATION The Park District will furnish, upon request, a statement to the effect that this Official Statement to the best of their knowledge and belief, as of the date of delivery, is true and correct in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact necessary in order to make the statements made herein, in the light of the circumstances in which they were made, not misleading.

LITIGATION The Park District is not aware of any threatened or pending litigation affecting the validity of the Bonds, or the Park District’s ability to meet its financial obligations.

CLOSING DOCUMENTS

Simultaneously with the delivery of and payment for the Bonds by the original purchasers thereof, the Park District will furnish to the original purchasers the customary closing documents in form satisfactory to bond counsel.

LEGAL MATTERS

Legal matters incident to the authorization and issuance of the Bonds are subject to the opinion of Dorsey & Whitney LLP, Minneapolis, Minnesota, Bond Counsel, as to validity and tax exemption. The opinion will accompany the Bonds. Bond Counsel has not participated in the preparation of this Official Statement.

LEGISLATIVE PROPOSALS

Bond Counsel’s opinion is given as of its date and Bond Counsel assumes no obligation to update, revise, or supplement such opinion to reflect any changes in facts or circumstances or any changes in law that may hereafter occur. Proposals are regularly introduced in both the United States House of Representatives and the United States Senate that, if enacted, could alter or affect the tax-exempt status on municipal bonds. The likelihood of adoption of any such legislative proposal relating to tax- exempt bonds cannot be reliably predicted. If enacted into law, current or future proposals may have a prospective or retroactive effect and could affect the value or marketability of tax-exempt bonds (including the Bonds). Prospective purchasers of the Bonds should consult their own tax advisors regarding the impact of any such change in law.

MUNICIPAL ADVISOR

The Park Park District has retained AMKO Advisors of Fargo, North Dakota, as Municipal Advisor (the “Municipal Advisor”) in connection with the issuance of the Bonds. In preparing the Official Statement, the Municipal Advisor has relied upon governmental officials, and other sources that have access to relevant data to provide accurate information for the Official Statement, and the Municipal Advisor has not been engaged, nor has it undertaken, to independently verify the accuracy of such information. The Municipal Advisor is not a public accounting firm and has not been engaged by the Park District to compile, review, examine or audit any information in the Official Statement in accordance with accounting standards. The Municipal Advisor is an independent advisory firm and is not engaged in the business of underwriting, trading or distributing municipal securities or other public securities and therefore will not participate in the underwriting of the Bonds.

Requests for information concerning the Park District should be addressed to AMKO Advisors, 4201 38th Street South, Suite 207, Fargo, North Dakota, 58104 (701-540-6821).

MISCELLANEOUS

Any statements made in this official statement involving matters of opinion or of estimates, whether or not so expressly stated, are set forth as such and not as representations of fact, and no representation is made that any of the estimates will be realized.

The execution and delivery of this Official Statement by its Superintendent of Finance has been duly authorized by the Park Park District.

PARK PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA

By: /s/ George Hellyer Superintendent of Finance

APPENDIX A -

BOND RESOLUTION

General Obligation Special Assessment Refunding Bonds, Series 2021A CERTIFICATION

The undersigned, being the duly appointed, qualified and acting Clerk of the Park District of the City of Grand Forks, Grand Forks County, North Dakota, does hereby certify that attached hereto is a true, correct and complete copy of the following resolution:

RESOLUTION PROVIDING FOR THE PUBLIC SALE OF AND APPROVING THE ISSUANCE OF NOT TO EXCEED $3,500,000 PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A

Adopted on March 2, 2021, by the Board of Park Commissioners

The undersigned further certifies that such resolution has not been amended, modified or supplemented by the Board and that such resolution remains in full force and effect as of the date hereof.

Dated this _____ day of March, 2021.

Clerk

4817-2631-6504\5 RESOLUTION PROVIDING FOR THE PUBLIC SALE OF AND APPROVING THE ISSUANCE OF NOT TO EXCEED $3,500,000 PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA GENERAL OBLIGATION SPECIAL ASSESSMENT REFUNDING BONDS, SERIES 2021A

BE IT RESOLVED by the Board of Commissioners (the “Board”), of the Park District of the City of Grand Forks, North Dakota (the “Issuer” or the “District”), as follows:

SECTION 1. RECITALS.

1.01. The Board has found and determined that it is desirable and in the best interest of the Issuer to authorize the issuance of its General Obligation Special Assessment Refunding Bonds, Series 2021A (the “Bonds”) as authorized by Section 21-03-07, of the North Dakota Century Code (“N.D.C.C.”), in an amount not exceeding $3,500,000, for the purpose of providing funds to (i) refund the outstanding General Obligation Special Assessment Prepayment Bonds, Series 2014A (the “Series 2014A Bonds”), dated January 7, 2014, maturing in the years 2022 through 2028 in the aggregate principal amount of $1,660,000 and the General Obligation Special Assessment Prepayment Refunding Bonds, Series 2017A (the “Series 2017A Bonds,” and together with the Series 2014A Bonds, the “Refunded Bonds”), dated February 9, 2017, maturing in the years 2022 through 2026 in the aggregate principal amount of $1,710,000; and (ii) to pay a portion of the costs of issuing the Bonds.

SECTION 2. AUTHORIZATION FOR EXECUTION AND DELIVERY

2.01. The Board hereby authorizes the Issuer’s municipal advisor, AMKO Advisors, Fargo, North Dakota, to solicit bids for the purchase of the Bonds pursuant to the Terms of Offering attached hereto as Exhibit A. The Board hereby authorizes the Issuer to accept bids to purchase the Bonds upon the terms and conditions set forth in this resolution. The Board hereby delegates the power and authority to the President of the Board and the Clerk to review bids received for the purchase of the Bonds and to accept a bid at a later date to finalize the actual principal amount of Bonds to be issued, the amortization schedule, the interest rates and underwriter’s compensation, provided that the net interest cost proposed for the Bonds does not exceed 2.00% per annum.

SECTION 3. FORM OF BONDS. The Bonds shall be in substantially the form attached as Exhibit B hereto.

SECTION 4. APPROVAL OF DOCUMENTS AND AUTHORIZATION FOR EXECUTION AND DELIVERY.

4.01. Bond Purchase Agreement. The execution of a Bond Purchase Agreement or other document setting forth such final terms (any such document, a “Bond Purchase Agreement”) by the President of the Board and Clerk is hereby approved and authorized and such execution shall be conclusive evidence of such agreement and shall be binding upon the Issuer. The provisions of the Bond Purchase Agreement as so executed, including all Exhibits and Appendices thereto, are incorporated herein by reference.

4.02. Official Statement. The Bonds will be offered for sale by means of an Official Statement. The President of the Board and Clerk, are authorized, in cooperation with AMKO Advisors, as the Issuer’s municipal advisor, and Bond Counsel, to prepare a Preliminary Official Statement to be distributed to prospective purchasers of the Bonds. The Clerk is hereby authorized on behalf of the Issuer to deem the Preliminary Official Statement a “final” official statement as of its date, in accordance with Rule 15c2-12(b)(1) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The President of the Board and the Clerk are hereby authorized and directed to approve, and, if requested, to execute the final Official Statement to be prepared substantially in the form of the Preliminary Official Statement, including final pricing terms. The Issuer hereby consents to the distribution of the Preliminary Official Statement and the Official Statement to prospective purchasers of the Bonds.

4.03. Approval and Execution of Documents. Upon the determination of the terms of the Bonds (within the limits set forth herein), the Bond Purchase Agreement, and such other documents and certificates shall be executed in the name and on behalf of the Issuer by the President of the Board and the Clerk, but with such changes therein, not inconsistent with this Resolution, as may be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof.

SECTION 5. TERMS, EXECUTION AND DELIVERY.

5.01. Maturities and Interest Rates. The Bonds shall be issued in the denomination of $5,000 each, or any integral multiple thereof, shall mature on the dates and in the respective years and amounts, and shall bear interest from date of original issue until paid or duly called for redemption payable on the dates and at the respective annual rates as set forth in the Bond Purchase Agreement. The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof shall be payable by check or draft issued by the Registrar described herein; provided that, so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 5.07 hereof, principal and interest shall be payable in accordance with the operational arrangements of the securities depository.

5.02. Dates and Interest Payment Dates. Each Bond shall bear a date of original issue as of the date on which the Bonds are delivered to the purchaser of the Bonds (the “Purchaser”). Upon initial delivery of the Bonds pursuant to Section 5.07 and upon any subsequent transfer or exchange pursuant to Section 5.05, the date of authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on the Bonds shall be payable on each May 1 and November 1, commencing November 1, 2021, each such date being referred to herein as an Interest Payment Date, to the persons in whose names the Bonds are registered on the Bond Register, as hereinafter defined, at the Registrar’s close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date, whether or not such day is a business day.

5.03. Redemption. The Bonds shall not be subject to optional redemption prior to their maturity.

2 5.04. Initial Registrar. Books for the registration and for the transfer of the Bonds as provided in this Resolution shall be kept by the Park District of the City of Grand Forks, North Dakota, which is hereby appointed the Bond Registrar, Transfer Agent and Paying Agent (the “Registrar”).

5.05. Registration. The effect of registration and the rights and duties of the Issuer and the Registrar with respect thereto shall be as follows:

(a) Register. The Registrar shall keep at its principal corporate trust office a bond register in which the Registrar shall provide for the registration of ownership of Bonds and the registration of transfers and exchanges of Bonds entitled to be registered, transferred or exchanged.

(b) Transfer of Bonds. Upon surrender for transfer of any Bond duly endorsed by the registered owner thereof or accompanied by a written instrument of transfer, in form satisfactory to the Registrar, duly executed by the registered owner thereof or by an attorney duly authorized by the registered owner in writing, the Registrar shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Bonds of a like aggregate principal amount and maturity, as requested by the transferor. The Registrar may, however, close the books for registration of any transfer after the fifteenth day of the month preceding each interest payment date and until such interest payment date.

(c) Exchange of Bonds. Whenever any Bonds are surrendered by the registered owner for exchange the Registrar shall authenticate and deliver one or more new Bonds of a like aggregate principal amount and maturity, as requested by the registered owner or the owner’s attorney in writing.

(d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the Issuer.

(e) Improper or Unauthorized Transfer. When any Bond is presented to the Registrar for transfer, the Registrar may refuse to transfer the same until it is satisfied that the endorsement on such Bond or separate instrument of transfer is valid and genuine and that the requested transfer is legally authorized. The Registrar shall incur no liability for the refusal, in good faith, to make transfers which it, in its judgment, deems improper or unauthorized.

(f) Persons Deemed Owners. The Issuer and the Registrar may treat the person in whose name any Bond is at any time registered in the bond register as the absolute owner of such Bond, whether such Bond shall be overdue or not, for the purpose of receiving payment of, or on account of, the principal of and interest on such Bond and for all other purposes, and all such payments so made to any such registered owner or upon the owner’s order shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid.

(g) Taxes, Fees and Charges. For every transfer or exchange of Bonds, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the

3 Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange.

(h) Mutilated, Lost, Stolen or Destroyed Bonds. In case any Bond shall become mutilated or be destroyed, stolen or lost, the Registrar shall deliver a new Bond of like amount, number, maturity date and tenor in exchange and substitution for and upon cancellation of any such mutilated Bond or in lieu of and in substitution for any such Bond destroyed, stolen or lost, upon the payment of the reasonable expenses and charges of the Registrar in connection therewith; and, in the case of a Bond destroyed, stolen or lost, upon filing with the Registrar of evidence satisfactory to it that such Bond was destroyed, stolen or lost, and of the ownership thereof, and upon furnishing to the Registrar of an appropriate bond or indemnity in form, substance and amount satisfactory to it, in which both the Issuer and the Registrar shall be named as obligees. All Bonds so surrendered to the Registrar shall be canceled by it and evidence of such cancellation shall be given to the Issuer. If the mutilated, destroyed, stolen or lost Bond has already matured or been called for redemption in accordance with its terms it shall not be necessary to issue a new Bond prior to payment.

5.06. Execution, Authentication and Delivery. The Bonds shall be prepared under the direction of the Clerk and shall be executed and authenticated on behalf of the Issuer by the signatures of the President of the Board and the Clerk. All signatures may be printed, lithographed or engraved facsimiles of the original. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on such Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. The Clerk shall deliver the Bonds to the Purchaser on receipt of the agreed upon purchase price.

5.07. Securities Depository. (a) For purposes of this section the following terms shall have the following meanings:

“Beneficial Owner” shall mean, whenever used with respect to a Bond, the person in whose name such Bond is recorded as the beneficial owner of such Bond by a Participant on the records of such Participant, or such person’s subrogee.

“Cede & Co.” shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds.

“DTC” shall mean The Depository Trust Company of New York, New York.

“Participant” shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository.

4 “Representation Letter” shall mean the Representation Letter pursuant to which the sender agrees to comply with DTC’s Operational Arrangements.

(b) The Bonds shall be initially issued as separately authenticated fully registered bonds, and one Bond shall be issued in the principal amount of each stated maturity of the Bonds. Upon initial issuance, the ownership of such Bonds shall be registered in the bond register in the name of Cede & Co., as nominee of DTC. The Registrar and the Issuer may treat DTC (or its nominee) as the sole and exclusive owner of the Bonds registered in its name for the purposes of payment of the principal of or interest on the Bonds, selecting the Bonds or portions thereof to be redeemed, if any, giving any notice permitted or required to be given to registered owners of Bonds under this resolution, registering the transfer of Bonds, and for all other purposes whatsoever; and neither the Registrar nor the Issuer shall be affected by any notice to the contrary. Neither the Registrar nor the Issuer shall have any responsibility or obligation to any Participant, any person claiming a beneficial ownership interest in the Bonds under or through DTC or any Participant, or any other person which is not shown on the bond register as being a registered owner of any Bonds, with respect to the accuracy of any records maintained by DTC or any Participant, with respect to the payment by DTC or any Participant of any amount with respect to the principal of or interest on the Bonds, with respect to any notice which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with DTC’s Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the Issuer to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof.

(c) In the event the Issuer determines that it is in the best interest of the Beneficial Owners that they be able to obtain Bonds in the form of bond certificates, the Issuer may notify DTC and the Registrar, whereupon DTC shall notify the Participants of the availability through DTC of Bonds in the form of certificates. In such event, the Bonds will be transferable in accordance with paragraph (e) hereof. DTC may determine to discontinue providing its services with respect to the Bonds at any time by giving notice to the Issuer and the Registrar and discharging its responsibilities with respect thereto under applicable law. In such event the Bonds will be transferable in accordance with paragraph (e) hereof.

(d) The execution and delivery of the Representation Letter to DTC by the Issuer is hereby confirmed and ratified.

5 (e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. Any successor depository must be both a “clearing corporation” as defined in North Dakota Century Code, Section 41-08-02 and a qualified and registered “clearing agency” as provided in Section 17A of the Securities Exchange Act of 1934, as amended.

SECTION 6. USE OF PROCEEDS.

6.01. Upon payment for the Bonds by the Purchaser, the Clerk shall deposit proceeds of the Bonds into the sinking funds for the Refunded Bonds in an amount sufficient, together with the amounts remaining in the debt service fund for the respective Refunded Bonds, to refund the Refunded Bonds on the Redemption Date. The remaining proceeds of the Bonds shall be applied to pay issuance expenses and any amount remaining after payment of all issuance expenses shall be deposited in the Bond Fund created pursuant to Section 7.01 hereof.

6.02. The Refunded Bonds are hereby called for redemption and prepayment on May 1, 2021 (the “Redemption Date”), and the Clerk is hereby authorized and directed to call the Refunded Bonds for redemption and prepayment on the Redemption Date and to give notices of redemption in accordance with the resolution under which the Refunded Bonds were issued.

SECTION 7. SECURITY PROVISIONS AND TAX LEVIES.

7.01. Sinking Fund. There shall be and is hereby created a special fund to be maintained by the Issuer separate and apart from all other funds of the Issuer, to be designated as the General Obligation Special Assessment Prepayment Refunding Bonds, Series 2021A Bond Fund (the “Bond Fund”) to be used for no purpose other than the payment of the principal and interest on the Bonds and such other general obligation bonds of the Issuer as have been or may be directed to be paid from the Bond Fund. If the balance in the Bond Fund is ever insufficient to pay all principal and interest then due on such Bonds, the Clerk shall nevertheless provide sufficient money from other funds of the Issuer which are available for that purpose, and such other funds shall be reimbursed from the proceeds of the taxes levied for the Bond Fund. The Clerk shall deposit in the Bond Fund the proceeds of all taxes levied and other money which may, at any time be received for or appropriated to the payment of such Bonds and interest, including the taxes levied by this Resolution.

7.02. Tax Levies. The full faith, credit and taxing powers of the Issuer are hereby irrevocably pledged for the prompt and full payment of the principal of and interest on the Bonds and on all other bonds made payable from the Bond Fund, as such principal and interest respectively become due. For the purpose of producing sums sufficient to pay the principal of

6 and interest on the Bonds when due, a direct, annual, ad valorem tax is levied upon all taxable property within the District, together with all taxes heretofore levied for the Bond Fund, to be spread upon the tax rolls of the Issuer in an amount sufficient to pay the principal and interest on such bonds due on each year.

Said tax shall be irrepealable so long as any of the Bonds are outstanding and unpaid; provided, that the Issuer reserves the right and power to reduce the levies in the manner and to the extent permitted by North Dakota Century Code, Section 21-03-15. The District recognizes its obligation under North Dakota Century Code, Section 21-03-15, in the event the taxes levied herein are not sufficient for the payment of the Bonds when due, to levy additional ad valorem taxes on all taxable property in the District, which additional taxes are not subject to any limit as to rate or amount. If the balance in the Bond Fund is ever insufficient to pay all principal and interest then due on the Bonds, the District shall nevertheless provide sufficient money from other funds of the District which are available for that purpose, and such other funds shall be reimbursed from the proceeds of the taxes levied for the Bond Fund.

The payment of the Refunded Bonds and interest thereon as they mature or are called for redemption having been provided for by the proceeds of the Bonds described in Section 6 hereof, the levy for payment of the Refunded Bonds is hereby repealed.

SECTION 8. DEFEASANCE. When all Bonds payable from the Bond Fund have been discharged as provided in this section (and thus are no longer “Outstanding” for purposes of this Resolution), all pledges, covenants and other rights granted by this resolution shall cease. The Issuer may discharge its obligations with respect to all Bonds due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof with interest in full; or if any Bond shall not be paid when due, the same may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The Issuer may also discharge its obligations with respect to all prepayable Bonds called for redemption on any date when they are prepayable according to their terms by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full, provided that notice of the redemption thereof has been duly given as provided in Section 5.03 hereof. The Issuer may also discharge its obligations with respect to all Bonds at any time by irrevocably depositing in escrow with a bank or trust company qualified by law to act as an escrow agent, for the purpose of paying all principal and interest due on such Bonds prior to a date upon which all of the same will be prepayable according to their terms and paying all remaining Bonds on that date, a sum of cash and securities of the types described in North Dakota Century Code, Section 40-27-13, in such aggregate amount, bearing interest at such rates and maturing or callable at the owner’s option on such dates as shall be required to provide funds sufficient for this purpose; provided that notice of the redemption of all prepayable Bonds on or before such date has been duly given as required by Section 5.03 hereof.

SECTION 9. CERTIFICATION OF PROCEEDINGS.

9.01. Authentication of Transcript. The officers of the Issuer are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits,

7 certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed representations of the Issuer as to the correctness of all statements contained therein.

9.02. Registration and Levy of Taxes. The Clerk is directed to file with the County Auditor of Grand Forks County a certified copy of this Resolution and a Certificate as to Terms of Bond Sale and Levy of Taxes to be executed by the President of the Board or the Clerk, or their respective designee, and to obtain from the County Auditor a certificate stating that this Resolution has been so filed and that the information required by Section 21-03-23, N.D.C.C. has been recorded in the office of the County Auditor.

SECTION 10. TAX COVENANTS; ARBITRAGE MATTERS; REIMBURSEMENT AND CONTINUING DISCLOSURE.

10.01. Arbitrage Certification. The President of the Board and the Clerk being the officers of the Issuer charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the purchaser of the Bonds a certificate in accordance with the provisions of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Treasury Regulations (the “Regulations”), stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations.

10.02. Rebate. The Issuer acknowledges that the Bonds are subject to the rebate requirements of Section 148(f) of the Code. The Issuer covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes, unless the Bonds qualify for one of the exceptions from the rebate requirement under Section 1.148-7 of the Regulations and no “gross proceeds” of the Bonds (other than amounts constituting a “bona fide debt service fund”) arise during or after the expenditure of the original proceeds thereof. In furtherance of the foregoing, the Clerk is hereby authorized and directed to execute a Rebate Certificate, in the form prescribed by Bond Counsel, and the Issuer hereby covenants and agrees to observe and perform the covenants and agreements contained therein, unless amended or terminated in accordance with the provisions thereof.

10.03. Qualified Tax Exempt Obligations. For purposes of section 265(b)(3) of the Code, the Issuer hereby acknowledges that the Bonds are designated or deemed designated as “qualified tax-exempt obligations.”

10.04. Covenant to Take Actions. The Issuer covenants and agrees with the registered owners from time to time of the Bonds that it will not take, or permit to be taken by any of its officers, employees or agents, any actions that would cause interest on the Bonds to become includable in gross income of the recipient under the Code and applicable Regulations and

8 covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations.

9.05. Continuing Disclosure. The Issuer is the sole obligated person with respect to the Bonds. The Issuer hereby agrees, in accordance with the provisions of Rule 15c2-12 (the “Rule”), promulgated by the Securities and Exchange Commission (the “Commission”) pursuant to the Securities Exchange Act of 1934, as amended, and a Continuing Disclosure Undertaking (the “Undertaking”) hereinafter described to:

(a) Provide or cause to be provided to the Municipal Securities Rulemaking Board (the “MSRB”) by filing at www.emma.msrb.org in accordance with the Rule, certain annual financial information and operating data in accordance with the Undertaking. The Issuer reserves the right to modify from time to time the terms of the Undertaking as provided therein.

(b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten (10) business days after the occurrence of the event, in accordance with the Undertaking.

(c) Provide or cause to be provided to the MSRB notice of a failure by the Issuer to provide the annual financial information with respect to the Issuer described in the Undertaking, in not more than ten (10) business days following such occurrence.

(d) The Issuer agrees that its covenants pursuant to the Rule set forth in this paragraph and in the Undertaking is intended to be for the benefit of the Holders of the Bonds and shall be enforceable on behalf of such Holders; provided that the right to enforce the provisions of these covenants shall be limited to a right to obtain specific enforcement of the Issuer's obligations under the covenants.

The President of the Board and Clerk, or any other officer of the Issuer authorized to act in their place (the “Officers”) are hereby authorized and directed to execute on behalf of the Issuer the Undertaking in substantially the form presented to the Board subject to such modifications thereof or additions thereto as are (i) consistent with the requirements under the Rule, (ii) required by the Purchaser of the Bonds, and (iii) acceptable to the Officers.

9 Dated: ______, 2021.

PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA

President of the Board

ATTEST:

Clerk

The motion for the adoption of the foregoing resolution was duly made by Commissioner ______, seconded by Commissioner ______, and upon vote being taken thereon, the following voted in favor: ; the following voted against the same: ; and the following were absent: ; whereupon said resolution was declared duly passed and adopted and was signed by the President of the Board and attested by the Clerk.

10 EXHIBIT A

TERMS OF OFFERING

A-1 EXHIBIT B

FORM OF SERIES 2021A BONDS

UNITED STATES OF AMERICA STATE OF NORTH DAKOTA COUNTY OF GRAND FORKS

PARK DISTRICT OF THE CITY OF GRAND FORKS

GENERAL OBLIGATION SPECIAL ASSESSMENT PREPAYMENT REFUNDING BOND, SERIES 2021A

R-[__] [$______]

Rate Maturity Date of Original Issue CUSIP

[____%] [May 1, 20__] [______, 2021] [______]

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: THOUSAND DOLLARS

THE PARK DISTRICT OF THE CITY OF GRAND FORKS, a duly organized and existing municipal corporation of Grand Forks County, North Dakota (the “Issuer”), acknowledges itself to be indebted and for value received promises to pay to the registered owner named above, or registered assigns, the principal amount specified above on the maturity date specified above and promises to pay interest thereon from the date of original issue specified above or from the most recent Interest Payment Date (as hereinafter defined) to which interest has been paid or duly provided for, at the annual rate specified above, payable on May 1 and November 1 in each year, commencing November 1, 2021 (each such date, an “Interest Payment Date”) all subject to the provisions referred to herein with respect to the redemption of the principal of this Bond before maturity. The interest so payable on any Interest Payment Date shall be paid to the person in whose name this Bond is registered at the close of business on the fifteenth day (whether or not a business day) of the calendar month next preceding such Interest Payment Date. Interest hereon shall be computed on the basis of a 360-day year composed of twelve 30-day months. The interest hereon and, upon presentation and surrender hereof, the principal hereof are payable in lawful money of the United States of America by check or draft drawn by the Issuer, who will serve as the Bond Registrar (the “Registrar”)

This Bond is one of an issue in the aggregate principal amount of $[3,500,000], all issued pursuant to a resolution adopted by the Board of Park Commissioners on March 2, 2021 (the “Resolution”), for the purpose of (i) refunding the Issuer’s outstanding General Obligation Special Assessment Prepayment Bonds, Series 2014A and General Obligation Special Assessment Prepayment Refunding Bonds, Series 2017A, and (ii) paying a portion of the costs of issuing the Bonds, all pursuant to and in full conformity with the Constitution and laws of the State of North Dakota thereunto enabling. The Bonds are issuable only in fully registered form in denominations of $5,000 or any multiple thereof, of single maturities. The Bonds are not subject to optional redemption prior to their date of maturity.

B-1 As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the Issuer at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the Issuer will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange.

The Issuer and the Bond Registrar may deem and treat the person in whose name this Bond is registered as the absolute owner hereof, whether this Bond is overdue or not, for the purpose of receiving payment and for all other purposes, and neither the Issuer nor the Bond Registrar shall be affected by any notice to the contrary.

Notwithstanding any other provisions of this Bond, so long as this Bond is registered in the name of Cede & Co., as nominee of The Depository Trust Company, or in the name of any other nominee of The Depository Trust Company or other securities depository, the Registrar shall pay all principal of and interest on this Bond, and shall give all notices with respect to this Bond, only to Cede & Co. or other nominee in accordance with the operational arrangements of The Depository Trust Company or other securities depository as agreed to by the Issuer.

This Bond shall not be valid or become obligatory for any purpose or be entitled to any security or benefit under the Resolution until the Certificate of Authentication hereon shall have been executed by the Bond Registrar by manual signature of one of its authorized representatives.

B-2 IN WITNESS WHEREOF, the Park District of the City of Grand Forks, Grand Forks County, North Dakota, by its Board of Park Commissioners, has caused this Bond to be executed and authenticated by the signatures of the President of the Board and the Clerk of the Issuer, all such signatures being authentic printed, engraved or lithographed facsimiles.

PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA

(Facsimile Signature – Clerk) (Facsimile Signature - President)

______

CERTIFICATE OF AUTHENTICATION

This is one of the Bonds delivered pursuant to the Resolution mentioned within.

Date of Authentication: ______

By Authorized Representative

______

The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM --as tenants in common UTMA ………….…. as Custodian for ………….….. (Cust) (Minor) TEN ENT --as tenants by the entireties under Uniform Transfers to Minors Act ...... ….. (State) JT TEN --as joint tenants with right of survivorship and not as tenants in common

Other abbreviations may also be used. ______

B-3 ASSIGNMENT

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto ______, the within Bond and all rights thereunder, and hereby irrevocably constitutes and appoints ______attorney to transfer the within Bond on the books kept for registration thereof, with full power of substitution in the premises.

Dated: ______

NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever.

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:

Signature Guaranteed:

Signature(s) must be guaranteed by an “eligible guarantor institution” meeting the requirements of the Registrar, which requirements include membership or participation in STAMP or such other “signature guaranty program” as may be determined by the Registrar in addition to or in substitution for STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

B-4 APPENDIX B -

BOND RESOLUTION

Refunding Improvement Bonds, Series 2021B CERTIFICATION

RESOLUTION PROVIDING FOR THE PUBLIC SALE OF AND APPROVING THE ISSUANCE OF NOT TO EXCEED $5,950,000 PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA REFUNDING IMPROVEMENT BONDS, SERIES 2021B

Adopted on March 2, 2021, by the Board of Park Commissioners

The undersigned further certifies that such resolution has not been amended, modified or supplemented by the Board and that such resolution remains in full force and effect as of the date hereof.

Dated this _____ day of March, 2021.

Clerk

4810-7462-6520\5

BE IT RESOLVED by the Board of Commissioners (the “Board”), of the Park District of the City of Grand Forks, North Dakota (the “Issuer” or the “District”), as follows:

SECTION 1. RECITALS.

1.01. Authorization. The Board has found and determined that it is desirable and in the best interest of the Issuer to authorize the issuance and sale of its Refunding Improvement Bonds, Series 2021B (the “Bonds”), in an amount not exceeding $5,950,000, to be used to refund, in a current refunding, the following bonds:

(a) the 2022 through 2037 maturities of the Board’s Refunding Improvement Bonds, Series 2011 in the aggregate principal amount of $2,965,000, dated, as originally issued, as of December 1, 2011 (the “Series 2011 Bonds”);

(b) the 2022 through 2033 maturities of the Board’s Refunding Improvement Bonds, Series 2013A in the aggregate principal amount of $1,365,000, dated, as originally issued, as of December 12, 2013 (the “Series 2013A Bonds”); and

(c) the 2022 through 2031 maturities of the Board’s Refunding Improvement Bonds, Series 2016 in the aggregate principal amount of $1,415,000, dated, as originally issued, as of May 26, 2016 (the “Series 2016 Bonds,” and together with the Series 2011 Bonds and the Series 2013A Bonds, the “Refunded Bonds”).

The Refunded Bonds will be called for redemption and paid on May 1, 2021 (the “Redemption Date”).

1.02. Issuance and Sale. The Board hereby authorizes the Issuer’s municipal advisor, AMKO Advisors, Fargo, North Dakota, to solicit bids for the purchase of the Bonds pursuant to the Terms of Offering attached hereto as Exhibit B. The Board hereby authorizes the Issuer to accept bids to purchase the Bonds upon the terms and conditions set forth in this resolution. The Board hereby delegates the power and authority to the President of the Board and the Clerk of the Issuer to review bids received for the purchase of the Bonds and to accept a bid at a later date to finalize the actual principal amount of Bonds to be issued, the amortization schedule, the interest rates and underwriter’s compensation, provided that the net interest cost proposed for the Bonds does not exceed 2.00% per annum.

SECTION 2. FORM OF BONDS. The Bonds shall be in substantially the form attached as Exhibit A hereto.

SECTION 3. APPROVAL OF DOCUMENTS AND AUTHORIZATION FOR EXECUTION AND DELIVERY.

3.01. Bond Purchase Agreement. The execution of a Bond Purchase Agreement or other document setting forth such final terms (any such document, a “Bond Purchase Agreement”) by the President of the Board and Clerk is hereby approved and authorized and such execution shall be conclusive evidence of such agreement and shall be binding upon the Issuer. The provisions of the Bond Purchase Agreement as so executed, including all Exhibits and Appendices thereto, are incorporated herein by reference.

3.02. Official Statement. The Bonds will be offered for sale by means of an Official Statement. The President of the Board and Clerk, are authorized, in cooperation with AMKO Advisors, as the Issuer’s municipal advisor and Bond Counsel, to prepare a Preliminary Official Statement to be distributed to prospective purchasers of the Bonds. The Clerk is hereby authorized on behalf of the Issuer to deem the Preliminary Official Statement a “final” official statement as of its date, in accordance with Rule 15c2-12(b)(1) promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1934. The President of the Board and the Clerk are hereby authorized and directed to approve, and, if requested, to execute the final Official Statement to be prepared substantially in the form of the Preliminary Official Statement, including final pricing terms. The Issuer hereby consents to the distribution of the Preliminary Official Statement and the Official Statement to prospective purchasers of the Bonds.

3.03. Approval and Execution of Documents. Upon the determination of the terms of the Bonds (within the limits set forth herein), the Bond Purchase Agreement, and such other documents and certificates shall be executed in the name and on behalf of the Issuer by the President of the Board and the Clerk, but with such changes therein, not inconsistent with this Resolution, as may be approved by the officers executing the same, which approval shall be conclusively evidenced by the execution thereof.

SECTION 4. TERMS, EXECUTION AND DELIVERY.

4.01. Maturities and Interest Rates. The Bonds shall be issued in the denomination of $5,000 each, or any integral multiple thereof, shall mature on the dates and in the respective years and amounts, and shall bear interest from date of original issue until paid or duly called for redemption payable on the dates and at the respective annual rates as set forth in the Bond Purchase Agreement. The Bonds shall be issuable only in fully registered form. The interest thereon and, upon surrender of each Bond, the principal amount thereof shall be payable by check or draft issued by the Registrar described herein; provided that, so long as the Bonds are registered in the name of a securities depository, or a nominee thereof, in accordance with Section 5.07 hereof, principal and interest shall be payable in accordance with the operational arrangements of the securities depository.

4.02. Dates and Interest Payment Dates. Each Bond shall bear a date of original issue as of the date on which the Bonds are delivered to the purchaser of the Bonds (the “Purchaser”).

2 Upon initial delivery of the Bonds pursuant to Section 5.07 and upon any subsequent transfer or exchange pursuant to Section 5.05, the date of authentication shall be noted on each Bond so delivered, exchanged or transferred. Interest on the Bonds shall be payable on each May 1 and November 1, commencing November 1, 2021, each such date being referred to herein as an Interest Payment Date, to the persons in whose names the Bonds are registered on the Bond Register, as hereinafter defined, at the Registrar’s close of business on the fifteenth day of the calendar month next preceding such Interest Payment Date, whether or not such day is a business day.

4.03. Redemption. Bonds maturing in 2030 and later years shall each be subject to redemption and prepayment at the option of the Issuer, in whole or in part and if in part, in such order as the Issuer shall determine and within a maturity by lot as selected by the Registrar (or, if applicable, by the bond depository in accordance with its customary procedures) in multiples of $5,000 on May 1, 2029, and on any date thereafter, at a price equal to the principal amount thereof and accrued interest to the date of redemption. Not less than 30 days before the date fixed for prepayment and redemption of any Bond the Bond Registrar shall cause notice of the call thereof for redemption to be mailed to the registered owner; provided that notice shall be given to any securities depository in accordance with its operational arrangements.

4.04. Initial Registrar. Books for the registration and for the transfer of the Bonds as provided in this Resolution shall be kept by the Park District of the City of Grand Forks, North Dakota, which is hereby appointed the Bond Registrar, Transfer Agent and Paying Agent (the “Registrar”).

4.05. Registration. The effect of registration and the rights and duties of the Issuer and the Registrar with respect thereto shall be as follows:

3 (d) Cancellation. All Bonds surrendered upon any transfer or exchange shall be promptly canceled by the Registrar and thereafter disposed of as directed by the Issuer.

(g) Taxes, Fees and Charges. For every transfer or exchange of Bonds, the Registrar may impose a charge upon the owner thereof sufficient to reimburse the Registrar for any tax, fee or other governmental charge required to be paid with respect to such transfer or exchange.

4.06. Additional Warrants and Bonds. The Issuer has reserved the right to issue additional warrants on the funds of the District in such amount, if any, as may be found necessary. The right is also reserved to refund any warrants so issued by the issuance of additional refunding improvement bonds, payable from the funds herein created and secured by all of the covenants and agreements contained in this resolution, on a parity in all respects with the Bonds. All references in this resolution to bonds, unless the context requires otherwise, include any additional bonds so issued.

4.07. Execution, Authentication and Delivery. The Bonds shall be prepared under the direction of the Clerk and shall be executed and authenticated on behalf of the Issuer by the

4 signatures of the President of the Board and the Clerk. All signatures may be printed, lithographed or engraved facsimiles of the original. In case any officer whose signature or a facsimile of whose signature shall appear on the Bonds shall cease to be such officer before the delivery of any Bond, such signature or facsimile shall nevertheless be valid and sufficient for all purposes, the same as if such officer had remained in office until delivery. Notwithstanding such execution, no Bond shall be valid or obligatory for any purpose or entitled to any security or benefit under this resolution unless and until a certificate of authentication on such Bond has been duly executed by the manual signature of an authorized representative of the Registrar. Certificates of authentication on different Bonds need not be signed by the same representative. The executed certificate of authentication on each Bond shall be conclusive evidence that it has been authenticated and delivered under this Resolution. The Clerk shall deliver the Bonds to the Purchaser on receipt of the agreed upon purchase price.

4.08. Securities Depository. (a) For purposes of this section the following terms shall have the following meanings:

“Cede & Co.” shall mean Cede & Co., the nominee of DTC, and any successor nominee of DTC with respect to the Bonds.

“DTC” shall mean The Depository Trust Company of New York, New York.

“Participant” shall mean any broker-dealer, bank or other financial institution for which DTC holds Bonds as securities depository.

“Representation Letter” shall mean the Representation Letter pursuant to which the sender agrees to comply with DTC’s Operational Arrangements.

5 which is permitted or required to be given to owners of Bonds under this resolution, with respect to the selection by DTC or any Participant of any person to receive payment in the event of a partial redemption of the Bonds, or with respect to any consent given or other action taken by DTC as registered owner of the Bonds. So long as any Bond is registered in the name of Cede & Co., as nominee of DTC, the Registrar shall pay all principal of and interest on such Bond, and shall give all notices with respect to such Bond, only to Cede & Co. in accordance with DTC’s Operational Arrangements, and all such payments shall be valid and effective to fully satisfy and discharge the Issuer’s obligations with respect to the principal of and interest on the Bonds to the extent of the sum or sums so paid. No person other than DTC shall receive an authenticated Bond for each separate stated maturity evidencing the obligation of the Issuer to make payments of principal and interest. Upon delivery by DTC to the Registrar of written notice to the effect that DTC has determined to substitute a new nominee in place of Cede & Co., the Bonds will be transferable to such new nominee in accordance with paragraph (e) hereof.

(d) The execution and delivery of the Representation Letter to DTC by the Issuer is hereby confirmed and ratified.

(e) In the event that any transfer or exchange of Bonds is permitted under paragraph (b) or (c) hereof, such transfer or exchange shall be accomplished upon receipt by the Registrar of the Bonds to be transferred or exchanged and appropriate instruments of transfer to the permitted transferee in accordance with the provisions of this resolution. In the event Bonds in the form of certificates are issued to owners other than Cede & Co., its successor as nominee for DTC as owner of all the Bonds, or another securities depository as owner of all the Bonds, the provisions of this resolution shall also apply to all matters relating thereto, including, without limitation, the printing of such Bonds in the form of bond certificates and the method of payment of principal of and interest on such Bonds in the form of bond certificates. Any successor depository must be both a “clearing corporation” as defined in North Dakota Century Code, Section 41-08-02 and a qualified and registered “clearing agency” as provided in Section 17A of the Securities Exchange Act of 1934, as amended.

SECTION 5. USE OF PROCEEDS.

5.01. Upon payment for the Bonds by the Purchaser, the Clerk shall deposit proceeds of the Bonds into the sinking funds for the Refunded Bonds in an amount sufficient, together with the amounts remaining in the debt service fund for the respective Refunded Bonds, to refund the

6 Refunded Bonds on the Redemption Date. The remaining proceeds of the Bonds shall be applied to pay issuance expenses and any amount remaining after payment of all issuance expenses shall be deposited in the Bond Fund created pursuant to Section 6.01 hereof.

5.02. The Refunded Bonds are hereby called for redemption and prepayment on May 1, 2021 (the “Redemption Date”), and the Clerk is hereby authorized and directed to call the Refunded Bonds for redemption and prepayment on the Redemption Date and to give notices of redemption in accordance with the resolution under which the Refunded Bonds were issued.

SECTION 6. SECURITY PROVISIONS.

6.01. Refunding Improvement Bonds, Series 2021B Bond Fund. There shall be and is hereby created a special fund to be maintained by the Issuer separate and apart from all other funds of the Issuer, to be designated as the Refunding Improvement Bonds, Series 2021B Bond Fund (the “Bond Fund”). To the Bond Fund shall be credited the improvement warrants of the District when received by the Issuer, which warrants shall thereupon become and shall thereafter be held as an asset of the Bond Fund, and the proceeds of all collections on the improvement warrants so acquired shall be held by the Issuer in trust for the use and benefit of the owners from time to time of the Bonds and additional bonds issued pursuant to Section 4.06 hereof. The fund of the District shall be continued and payments shall be made therefrom on the improvement warrants drawn thereon in the same manner as though none of the improvement warrants had been refunded. All payments of principal and interest made on the improvement warrants shall be credited to the Bond Fund and shall be used and applied in payment of the principal of and interest on the Bonds and additional bonds issued pursuant to Section 4.06 hereof as such principal and interest become due.

6.02. Covenants. The Issuer hereby covenants and agrees with the owners from time to time of the Bonds and additional bonds issued pursuant to Section 5.06 hereof:

(a) That it will use due diligence to collect the improvement warrants and to levy and collect the taxes and special assessments appropriated for their payment.

(b) That it will preserve and enforce for the benefit of the owners from time to time of the Bonds and additional bonds issued pursuant to Section 4.06 hereof all of the rights, powers and privileges reserved to the owners of the improvement warrants, and all of the covenants of the Issuer as provided in the resolution adopted on this date authorizing the issuance of the improvement warrants.

(c) That at the time and in the manner prescribed by Section 40-26-08, North Dakota Century Code, as amended, this Board will levy general taxes on all taxable property in the Issuer for the payment of any deficiency in any of the District funds and will cause the proceeds thereof to be applied in payment of the principal of and interest on the then unpaid improvement warrants drawn on the District fund; provided that the Issuer reserves the right to levy taxes in the manner and to the extent permitted by law for payment and discharge of any deficiency in any of the District funds prior to the date upon which it may become obligatory to levy such deficiency taxes and the amounts thereof shall be credited against the levies which the Issuer might otherwise have been obligated to make.

7 (d) That in the event the moneys in the Bond Fund should at any time be insufficient to meet all payments of principal and interest then due on all Bonds payable therefrom, the moneys shall be first used to pay the interest accrued on all outstanding Bonds issued pursuant to this resolution and the balance shall be applied in payment of the principal of the Bonds in order of their maturities; Bonds of the earliest maturity being paid first. The Issuer reserves the right and privilege of refunding any of such matured Bonds for the payment of which moneys are not at the time available by issuing new Bonds payable from the Bond Fund, which refunding bonds shall be on a parity with those theretofore issued as to interest charges thereon, but the maturity thereof shall be subsequent to the maturity of all Bonds payable from the Bond Fund and then outstanding, provided that no owner of Bonds shall be obligated to accept any such refunding bond in exchange for any of such matured Bonds held.

SECTION 7. DEFEASANCE. When all Bonds payable from the Bond Fund have been discharged as provided in this section (and thus are no longer “Outstanding” for purposes of this Resolution), all pledges, covenants and other rights granted by this resolution shall cease. The Issuer may discharge its obligations with respect to all Bonds due on any date by depositing with the Registrar on or before that date a sum sufficient for the payment thereof with interest in full; or if any Bond shall not be paid when due, the same may nevertheless be discharged by depositing with the Registrar a sum sufficient for the payment thereof in full with interest accrued from the due date to the date of such deposit. The Issuer may also discharge its obligations with respect to all prepayable Bonds called for redemption on any date when they are prepayable according to their terms by depositing with the Registrar on or before that date a sum sufficient for the payment thereof in full, provided that notice of the redemption thereof has been duly given as provided in Section 4.03 hereof. The Issuer may also discharge its obligations with respect to all Bonds at any time by irrevocably depositing in escrow with a bank or trust company qualified by law to act as an escrow agent, for the purpose of paying all principal and interest due on such Bonds prior to a date upon which all of the same will be prepayable according to their terms and paying all remaining Bonds on that date, a sum of cash and securities of the types described in North Dakota Century Code, Section 40-27-13, in such aggregate amount, bearing interest at such rates and maturing or callable at the owner’s option on such dates as shall be required to provide funds sufficient for this purpose; provided that notice of the redemption of all prepayable Bonds on or before such date has been duly given as required by Section 4.03 hereof.

SECTION 8. CERTIFICATION OF PROCEEDINGS.

8.01. Authentication of Transcript. The officers of the Issuer are hereby authorized and directed to prepare and furnish to the Purchaser and to Dorsey & Whitney LLP, Bond Counsel, certified copies of all proceedings and records relating to the Bonds and such other affidavits, certificates and information as may be required to show the facts relating to the legality and marketability of the Bonds, as the same appear from the books and records in their custody and control or as otherwise known to them, and all such certified copies, affidavits and certificates, including any heretofore furnished, shall be deemed representations of the Issuer as to the correctness of all statements contained therein.

8 SECTION 9. TAX COVENANTS; ARBITRAGE MATTERS; REIMBURSEMENT AND CONTINUING DISCLOSURE.

9.01. Arbitrage Certification. The President of the Board and the Clerk being the officers of the Issuer charged with the responsibility for issuing the Bonds pursuant to this resolution, are authorized and directed to execute and deliver to the Purchaser a certificate in accordance with the provisions of Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”) and applicable Treasury Regulations (the “Regulations”), stating the facts, estimates and circumstances in existence on the date of issue and delivery of the Bonds which make it reasonable to expect that the proceeds of the Bonds will not be used in a manner that would cause the Bonds to be arbitrage bonds within the meaning of the Code and Regulations.

9.02. Rebate. The Issuer acknowledges that the Bonds are subject to the rebate requirements of Section 148(f) of the Code. The Issuer covenants and agrees to retain such records, make such determinations, file such reports and documents and pay such amounts at such times as are required under said Section 148(f) and applicable Regulations to preserve the exclusion of interest on the Bonds from gross income for federal income tax purposes, unless the Bonds qualify for one of the exceptions from the rebate requirement under Section 1.148-7 of the Regulations and no “gross proceeds” of the Bonds (other than amounts constituting a “bona fide debt service fund”) arise during or after the expenditure of the original proceeds thereof. In furtherance of the foregoing, the Clerk is hereby authorized and directed to execute a Rebate Certificate, in the form prescribed by Bond Counsel, and the Issuer hereby covenants and agrees to observe and perform the covenants and agreements contained therein, unless amended or terminated in accordance with the provisions thereof.

9.03. Qualified Tax Exempt Obligations. For purposes of section 265(b)(3) of the Code, the Issuer hereby acknowledges that the Bonds are designated or deemed designated as “qualified tax-exempt obligations.”

9.04. Covenant to Take Actions. The Issuer covenants and agrees with the registered owners from time to time of the Bonds that it will not take, or permit to be taken by any of its officers, employees or agents, any actions that would cause interest on the Bonds to become includable in gross income of the recipient under the Code and applicable Regulations and covenants to take any and all actions within its powers to ensure that the interest on the Bonds will not become includable in gross income of the recipient under the Code and the Regulations.

9 (b) Provide or cause to be provided to the MSRB notice of the occurrence of certain events with respect to the Bonds in not more than ten (10) business days after the occurrence of the event, in accordance with the Undertaking.

10 Dated: ______, 2021.

PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA

President of the Board

ATTEST:

Clerk

11 EXHIBIT A

FORM OF SERIES 2021B BONDS

UNITED STATES OF AMERICA STATE OF NORTH DAKOTA COUNTY OF GRAND FORKS

PARK DISTRICT OF THE CITY OF GRAND FORKS

REFUNDING IMPROVEMENT BOND, SERIES 2021B

R-[__] [$______]

Rate Maturity Date of Original Issue CUSIP

[____%] [May 1, 20__] [______, 2021] [______]

REGISTERED OWNER: CEDE & CO.

PRINCIPAL AMOUNT: THOUSAND DOLLARS

This Bond is one of an issue in the aggregate principal amount of $[5,950,000], all issued pursuant to a resolution adopted by the Board of Park Commissioners on March 2, 2021 (the “Resolution”), for the purpose of refunding certain outstanding refunding improvement bonds of the City (the “Refunded Bonds”), all pursuant to and in full conformity with the Constitution and laws of the State of North Dakota thereunto enabling, including Chapters 22 through 28 of Title 40 of the North Dakota Century Code and acts amendatory thereof and supplemental thereto. The Bonds are issuable only in fully registered form in denominations of $5,000 or any multiple thereof, of single maturities.

A-1 Bonds maturing in 2029 and earlier years are not subject to redemption prior to maturity, but those maturing in 2030 and later years are each subject to redemption and prepayment at the option of the Issuer, in whole or in part and if in part, in such order as the Issuer shall determine and within a maturity by lot as selected by the Registrar (or, if applicable, by the bond depository in accordance with its customary procedures) in multiples of $5,000 on May 1, 2029, and on any date thereafter, at a price equal to the principal amount thereof plus accrued interest to the date of redemption. Not less than 30 days prior to the date specified for redemption and prepayment of any Bonds, the Issuer will mail notice of the call thereof to the registered owners thereof and to the bank at which principal and interest are then payable (or, if applicable, provided in accordance with the operational arrangements of the bond depository). Upon partial redemption of any Bond, a new Bond or Bonds will be delivered to the owner without charge, representing the remaining principal amount outstanding.

As provided in the Resolution and subject to certain limitations set forth therein, this Bond is transferable upon the books of the Issuer at the principal office of the Bond Registrar, by the registered owner hereof in person or by the owner’s attorney duly authorized in writing upon surrender hereof together with a written instrument of transfer satisfactory to the Bond Registrar, duly executed by the registered owner or the owner’s attorney; and may also be surrendered in exchange for Bonds of other authorized denominations. Upon such transfer or exchange, the Issuer will cause a new Bond or Bonds to be issued in the name of the transferee or registered owner, of the same aggregate principal amount, bearing interest at the same rate and maturing on the same date, subject to reimbursement for any tax, fee or governmental charge required to be paid with respect to such transfer or exchange.

IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND AGREED that all acts, conditions and things required by the Constitution and laws of the State of North Dakota to be done, to exist, to happen and to be performed precedent to and in the valid issuance of this Bond have been done, do exist, have happened and have been performed in regular and due form, time and manner as so required; that the Issuer has duly created the Refunding Improvement Bonds, Series 2021B Bond Fund (the “Bond Fund”) as a separate and special fund and has appropriated thereto the improvement warrants refunded by the Bonds and, from and after the redemption date of the Refunded Bonds, the improvement warrants pledged to the payment of the Refunded Bonds, on which improvement warrants payments are required by law to be made as though none of such warrants had been refunded, and will use due diligence to collect the improvement warrants and the special assessments and taxes appropriated for their payment; that the Issuer has reserved the right and privilege of issuing additional improvement warrants on the funds of the improvement districts, if and to the extent necessary, and the right and privilege of refunding such warrants by the issuance of additional series of refunding improvement bonds, payable on a parity with this issue of Bonds from the Bond Fund, provided that the total amount of special assessments and taxes appropriated for payment of the cost of Improvements shall be not less than the total amount of warrants issued with respect thereto; that the Board of Park Commissioners is required by law to levy a tax upon all of the taxable property in the Issuer, without limitation as to rate or amount, to meet any deficiency in any of the

A-2 improvement district funds for the payment of all warrants drawn thereon, with interest; and that all collections of special assessments and taxes appropriated for the payment of the improvement warrants are required by law to be credited to the Bond Fund and applied in payment of the principal of and interest on the Bonds and any other bonds issued pursuant to the authority reserved above; all as more fully stated in the Resolution, to which reference is hereby made for further details and other covenants of the Issuer with respect hereto.

A-3 IN WITNESS WHEREOF, the Park District of the City of Grand Forks, Grand Forks County, North Dakota, by its Board of Park Commissioners, has caused this Bond to be executed and authenticated by the signatures of the President of the Board and the Clerk of the Issuer, all such signatures being authentic printed, engraved or lithographed facsimiles.

PARK DISTRICT OF THE CITY OF GRAND FORKS, GRAND FORKS COUNTY, NORTH DAKOTA

(Facsimile Signature – Clerk) (Facsimile Signature - President)

______

CERTIFICATE OF AUTHENTICATION

This is one of the Bonds delivered pursuant to the Resolution mentioned within.

Date of Authentication: ______

By Authorized Representative

______

The following abbreviations, when used in the inscription on the face of this Bond, shall be construed as though they were written out in full according to applicable laws or regulations:

TEN COM --as tenants in common UTMA ………….…. as Custodian for ………….….. (Cust) (Minor) TEN ENT --as tenants by the entireties under Uniform Transfers to Minors Act ...... …….. (State) JT TEN --as joint tenants with right of survivorship and not as tenants in common

Other abbreviations may also be used.

______

A-4 ASSIGNMENT

Dated: ______

NOTICE: The signature to this assignment must correspond with the name as it appears upon the face of the within Bond in every particular, without alteration or enlargement or any change whatsoever.

PLEASE INSERT SOCIAL SECURITY NUMBER OR OTHER IDENTIFYING NUMBER OF ASSIGNEE:

Signature Guaranteed:

A-5 EXHIBIT B

TERMS OF OFFERING

B-1 APPENDIX B -

FINANCIAL STATEMENTS

General Obligation Special Assessment Refunding Bonds, Series 2021A & Refunding Improvement Bonds, Series 2021B PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS, NORTH DAKOTA

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2019 TABLE OF CONTENTS

Page

ROSTER OF DISTRICT OFFICIALS 1

INDEPENDENT AUDITOR'S REPORT 2

MANAGEMENT’S DISCUSSION AND ANALYSIS 5

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements:

Statement of Net Position 15

Statement of Activities 16

Fund Financial Statements:

Balance Sheet - Governmental Funds 17

Reconciliation of Governmental Funds Balance Sheet to Net Position of Governmental Activities 18

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 19

Reconciliation of the Changes in Fund Balance of Governmental Funds to the Statement of Activities 20

Statement of Net Position - Proprietary Funds 21

Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 23

Statement of Cash Flows - Proprietary Funds 24

Statement of Fiduciary Net Position – Fiduciary Funds 25

Statement of Changes in Fiduciary Net Position – Fiduciary Funds 26

Notes to the Basic Financial Statements 27

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of District’s Contributions to NDPERS/Single Employer Plans 62

Schedule of District’s and Non-Employer Proportionate Share of the Net Pension Liability 63

Schedule of Changes in the District's Net Pension Liability and Related Ratios 64 Schedule of District’s Contributions to OPEB Plan 65

Schedule of District’s Share of the OPEB Liability 66

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 67

Notes to the Required Supplementary Information 68

SUPPLEMENTARY INFORMATION

Combining Schedule of Balance Sheet - General Fund 70

Combining Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund 71

INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 72

* * * * * * * * * * * * * * * * * PARK DISTRICT OF THE CITY OF GRAND FORKS ROSTER OF DISTRICT OFFICIALS AS OF DECEMBER 31, 2019

Jay Panzer President

Tim Skarperud Vice-President

Paul Barta Board Member

Terry Dvorak Board Member

Greg LaDouceur Board Member

Bill Palmiscno Executive Director

* * * * * * * * * * * * * * *

-1- INDEPENDENT AUDITOR'S REPORT

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Park District of the City of Grand Forks as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks’ basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Make Every Day Count www.bradymartz.com -2- We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Park District of the City of Grand Forks, as of December 31, 2019, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of the District’s contributions to NDPERS/ single employer plans, schedule of District’s and non-employer proportionate share of the net pension liability, schedule of changes in the District’s net pension liability and related ratios, schedule of District’s contributions to OPEB plan, schedule of District’s share of the OPEB liability, and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Park District of the City of Grand Forks’ basic financial statements. The combining general fund statements are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining general fund statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining general fund statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole.

-3- Make Every Day Count www.bradymartz.com The roster of District officials has not been subjected to the auditing procedure applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on this schedule.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2020 on our consideration of the Park District of the City of Grand Forks' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Park District of the City of Grand Forks’ internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Park District of the City of Grand Forks' internal control over financial reporting and compliance.

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 26, 2020

-4- Make Every Day Count www.bradymartz.com PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

The discussion and analysis of the Park District of the City of Grand Forks’ (District) financial performance provides an overall review of the District’s financial activities for the year ended December 31, 2019 with comparisons for the year ended December 31, 2018. The intent of this discussion and analysis is to look at the District’s financial performance as a whole; readers should also review the basic financial statements to enhance their understanding of the District’s financial performance.

Financial Highlights

x The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $48,976,408 (net position). x The change in net position from current year activity was an increase of $2,483,297. x Total liabilities were $43,679,000 at December 31, 2019. This is a decrease of $4,113,322 from the balance at December 31, 2018. This result was due to bond payments and changes in pension liabilities.

Using this Annual Financial Report

This annual report consists of a series of financial statements and notes to those statements. These statements are prepared and organized so the reader can understand the District as a financial whole or as an entire operating entity. The statements then proceed to provide an increasingly detailed look at our specific financial conditions.

The Statement of Net Position and Statement of Activities provide information about the activities of the whole District, presenting both an aggregate view of the District’s finances and a longer-term view of those assets. The Statement of Activities shows net (expense) revenue and changes to net position related to each department of the District. Fund financial statements tell how services were financed in the short-term as well as what dollars remain for future spending.

Reporting on the District as a Whole

Statement of Net Position and the Statement of Activities

The Statement of Net Position and Statement of Activities include all assets and deferred outflows of resources and liabilities and deferred inflows of resources using the accrual basis of accounting similar to the accounting method used by the private sector. The basis for this accounting takes into account all of the current year’s revenues and expenses regardless of when the cash was received or paid.

These two statements report the District’s net position and the changes in net position. This change in position is important because it tells the reader whether, for the District as a whole, the financial position of the District has improved or diminished. However, in evaluating the overall position of the District, non-financial information such as changes in the District’s tax base and the condition of District capital assets will also need to be evaluated.

In the Statement of Net Position and the Statement of Activities, the District’s activities are reported as Governmental Activities and Business Type Activities.

-5- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Reporting on the District’s Most Significant Fund

Governmental Fund

The presentation for the District’s general fund focuses on how resources flow into and out of it and the balance that is left at year-end and available for spending in future periods. The general fund is reported using modified accrual accounting which measures cash and all other financial assets that are expected to be readily converted to cash. The governmental fund statements provide a detailed short-term view of the District’s general operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future on services provided to our District users. The relationship (or differences) between governmental activities (reported on the Statement of Net Position and the Statement of Activities) and the general fund is reconciled in the financial statements.

The Park District of the City of Grand Forks as a Whole

Recall that the Statement of Net Position looks at the District as a whole. Table 1 provides a summary of the District’s net position for 2019 and 2018:

Table 1 Statement of Net Position December 31, 2019

Governmental Business-Type Activities Activities Total Assets Current and Other Assets $ 1,811,660 $ 15,672,197 $ 17,483,857 Capital Assets, Net 43,540,110 31,894,136 75,434,246

Total Assets 45,351,770 47,566,333 92,918,103

Deferred Outflows of Resources 1,186,347 - 1,186,347

Liabilities Current Liabilities 1,010,818 1,008,265 2,019,083 Long-Term Liabilities: Due within One Year 1,214,313 1,976,000 3,190,313 Due in more than One Year 15,900,318 22,569,286 38,469,604

Total Liabilities 18,125,449 25,553,551 43,679,000

Deferred Inflows of Resources 1,449,042 - 1,449,042

Net Position Net Investment in Capital Assets 27,479,978 11,705,445 39,185,423 Restricted 695,026 4,515,049 5,210,075 Unrestricted (1,211,378) 5,792,288 4,580,910

Total Net Position $ 26,963,626 $ 22,012,782 $ 48,976,408

-6- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Table 1 Continued Statement of Net Position December 31, 2018

Governmental Business-Type Activities Activities Total Assets Current and Other Assets$ 304,912 $ 16,863,533 $ 17,168,445 Capital Assets, Net 42,548,217 32,668,035 75,216,252

Total Assets 42,853,129 49,531,568 92,384,697

Deferred Outflows of Resources 2,280,162 - 2,280,162

Liabilities Current Liabilities 664,957 905,883 1,570,840 Long-Term Liabilities: Due within One Year 1,178,577 1,949,933 3,128,510 Due in more than One Year 18,638,063 24,454,909 43,092,972

Total Liabilities 20,481,597 27,310,725 47,792,322

Deferred Inflows of Resources 379,426 - 379,426

Net Position Net Investment in Capital Assets 24,997,480 11,031,857 36,029,337 Restricted 549,932 5,187,285 5,737,217 Unrestricted (1,275,144) 6,001,701 4,726,557

Total Net Position $ 24,272,268 $ 22,220,843 $ 46,493,111

-7- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Table 2 Changes in Net Position As of December 31, 2019

Governmental Business-Type Activities Activities Total Revenues Program Revenues Charges for Services $ 1,111,381 $ 6,313,296 $ 7,424,677 Operating Grants and Contributions 74 - 74 Capital Grants and Contributions 326,045 69,144 395,189 General Revenues Property Taxes 8,660,127 - 8,660,127 State Revenues 993,704 - 993,704 Other 336,076 186,804 522,880 Total Revenues 11,427,407 6,569,244 17,996,651

Expenses Program Expenses Park Operations 7,491,590 - 7,491,590 Forestry 881,796 - 881,796 Recreation 594,699 - 594,699 Interest on Long-Term Debt 320,993 - 320,993 King's Walk Golf Course - 1,212,025 1,212,025 Lincoln Golf Course - 393,509 393,509 Choice Health & Fitness - 4,303,851 4,303,851 Foundation - 314,891 314,891 Total Expenses 9,289,078 6,224,276 15,513,354

Increase (Decrease) in Net Position Before Transfers 2,138,329 344,968 2,483,297

Transfers 553,029 (553,029) -

Increase (Decrease) in Net Position 2,691,358 (208,061) 2,483,297

Net Position Beginning of Year 24,272,268 22,220,843 46,493,111

Net Position End of Year $ 26,963,626 $ 22,012,782 $ 48,976,408

-8- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Table 2 Continued Changes in Net Position As of December 31, 2018 Governmental Business-Type Activities Activities Total

Revenues Program Revenues Charges for Services $ 1,047,876 $ 6,627,597 $ 7,675,473 Operating Grants and Contributions 9,249 - 9,249 Capital Grants and Contributions 329,778 210,830 540,608 General Revenues Property Taxes 8,547,970 - 8,547,970 State Revenues 941,675 - 941,675 Other 404,891 11,029 415,920 Total Revenues 11,281,439 6,849,456 18,130,895

Expenses Program Expenses Park Operations 7,866,120 - 7,866,120 Forestry 811,260 - 811,260 Recreation 605,811 - 605,811 Interest on Long-Term Debt 341,909 - 341,909 King's Walk Golf Course - 1,274,584 1,274,584 Lincoln Golf Course - 375,679 375,679 Choice Health & Fitness - 4,301,130 4,301,130 Foundation - 286,212 286,212 Total Expenses 9,625,100 6,237,605 15,862,705

Increase (Decrease) in Net Position Before Transfers 1,656,339 611,851 2,268,190

Transfers 57,076 (57,076) -

Increase (Decrease) in Net Position 1,713,415 554,775 2,268,190

Net Position Beginning of Year 22,558,853 21,666,068 44,224,921

Net Position End of Year $ 24,272,268 $ 22,220,843 $ 46,493,111

Choice Health & Fitness membership revenue increased almost $18,000 from the prior year. Choice Health & Fitness has a shared membership agreement with the Altru Family YMCA. Combined members for both organizations started the year with approximately 14,500 members and ended the year with approximately 14,700 members. Members are expected to remain close to the 15,000 level and the focus will continue to be on member retention for 2020. On the expense side, 2019 operating expenses were slightly more than the prior year. For 2020 we will continue to evaluate current programing and look to augment with fresh offerings that will allow us to provide great customer service with the financial levels needed to support it. King’s Walk Golf Course was open from late April to late October in 2019. Total operating revenue increased almost $60,000 from the 2018 level. Over 25,500 rounds were played in 2019, which was up around 600 rounds from the 2018 season. Golfers purchasing King’s Walk season memberships were again able to play Lincoln Golf Course at no extra cost and this

-9- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 policy will continue in 2020.

Lincoln Golf Course was open from late April to middle of October in 2019. Total operating revenue was down over $14,000 compared to the 2018 level. Almost 16,000 rounds were played in 2019, which was down over 1,300 rounds from the 2018 season. The Steve Mullally Youth Golf Course, located next to Lincoln Golf Course, was enjoyed by many families. This is a youth 9-hole golf course and is free for youth and families to play.

General Fund Budgetary Highlights

The District’s budget is prepared on the same basis of accounting as the financial statements.

There were no amendments to the District’s budget during the course of 2019.

Original and final budgeted revenues for the general fund in 2019 were $7,923,700 and the actual revenues were $8,463,845. The major factor contributing to the increase of actual revenues over budgeted revenues in 2019 was due to an increase of over $107,000 in local property taxes. This was attributed to a higher percentage of timely current year collections compared to the percentage budgeted. State aid received was over $183,000 over budget. This increase in state aid is directly related to an increase in sales tax collections for the state of ND tied to the rise of oil production in the western part of the state. Interest received was $125,000 over budget along with increased program revenue and general revenues of over $125,000 also contributed.

Original and final budgeted expenditures for the general fund in 2019 were $8,131,900 and the actual expenditures were $7,703,675. Actual expenses were less than budgeted mainly due to continuing to prioritize maintenance items and projects as well as expense control by managers in their departments.

-10- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Capital Assets

Table 3 Capital Assets at December 31, 2019 (Net of Depreciation)

Governmental Business-Type Activities Activities Total Land $ 4,254,623 $ 3,249,695 $ 7,504,318 Land Improvements 14,462,610 - 14,462,610 Buildings, Systems, and Structures 22,402,536 24,522,019 46,924,555 Golf Course - 3,428,471 3,428,471 Equipment 909,627 364,857 1,274,484 Vehicles 233,867 1,406 235,273 Tractors, Trailers, and Mowers 817,039 327,688 1,144,727 Construction in Progress 459,808 - 459,808

Totals $ 43,540,110 $ 31,894,136 $ 75,434,246

Capital Assets at December 31, 2018 (Net of Depreciation)

Governmental Business-Type Activities Activities Total Land $ 4,254,623 $ 3,249,695 $ 7,504,318 Land Improvements 13,888,535 - 13,888,535 Buildings, Systems, and Structures 22,354,547 25,145,076 47,499,623 Golf Course - 3,559,148 3,559,148 Equipment 984,887 399,212 1,384,099 Vehicles 263,318 - 263,318 Tractors, Trailers, and Mowers 593,597 314,904 908,501 Construction in Progress 208,710 - 208,710

Totals $ 42,548,217 $ 32,668,035 $ 75,216,252

Additional information on the District’s capital assets can be found in Note 3 of this report.

-11- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Long-Term Debt

At the end of the current fiscal year, the District had total bonded debt outstanding of $35,427,267, contract payable of $917,906, net pension liabilities of $4,631,727, net other postemployment benefit liabilities of $140,040, and compensated absences of $542,977.

Table 4 Outstanding Debt at December 31, 2019

Governmental Business-Type Activities Activities Total General Obligation Bonds $ 11,112,226 $ - $ 11,112,226 Revenue Bonds - 24,315,041 24,315,041 Contract Payable 917,906 - 917,906 Net Pension Liability 4,631,727 - 4,631,727 Net Other Postemployment Benefit Liability 140,040 - 140,040 Compensated Absences 312,732 230,245 542,977

Total $ 17,114,631 $ 24,545,286 $ 41,659,917

Outstanding Debt at December 31, 2018

Governmental Business-Type Activities Activities Total General Obligation Bonds $ 12,027,671 $ - $ 12,027,671 Revenue Bonds - 26,200,550 26,200,550 Contract Payable 1,011,038 - 1,011,038 Net Pension Liability 6,320,950 - 6,320,950 Net Other Postemployment Benefit Liability 133,025 - 133,025 Compensated Absences 323,956 204,292 528,248

Total $ 19,816,640 $ 26,404,842 $ 46,221,482

The District’s total debt decreased by $4,561,565 during the current fiscal year.

Additional information on the District’s long-term debt can be found in Note 6 of this report.

-12- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Long and Short-term Goals

The District is part of a growing community and knows it needs to review and expand parks and recreation services. Therefore, the District periodically evaluates current programs and facilities. Times change and new ideas bring requests for different types of recreation and other facilities. For the coming year, the District feels they will be able to address requests with its current budget. The District completed a Master Plan for the entire District in 2015 which showed the public is satisfied with the service of the District. Results also showed the District has an adequate number of parks, programs, and facilities.

For 2020, the District is continuing to expand and improve facilities to meet demand. Parking lot construction and maintenance projects will start in the spring. Altru Wellness Village will add a water fountain by the tennis courts and Kannowski Park will see the second phase of the skate park constructed. Veterans Memorial Park will have the memorial, a visitor center with a restroom and storage area, and sidewalks added. At Scheels Sports Complex, dugout roofs will be installed along with a parking lot expansion. Lighting will be upgraded to LED at the Park District shop and at Purpur and Gambucci Arenas. A shooting room will be completed at ICON Sports Center and the heating system at Eagles Arena will be converted to gas.

In terms of government funds, all indicators for the City of Grand Forks point to a steady growth situation, which means the tax base along with the value of the mill will increase. The tax revenues for its government funds will increase accordingly. The revenue sharing relationship, commonly called state aid, appears to have leveled off after the rapid escalation and then regression over the last number of years. The District budgeted to slightly increase the reserves in the government funds for 2020 to maintain the desired 15-25% reserve of budgeted expenses.

The enterprise funds are composed of activities where the District tries to balance fee structures to keep them affordable for families while using as little tax-based support as possible. Choice Health & Fitness saw a leveling off in memberships. The golf courses continue to see the number of rounds played and season memberships sold to be consistent with historical totals. The District’s enterprise funds performed well in 2019.

The success of the capital campaigns for Choice Health & Fitness, which opened in the fall of 2012, ICON Sports Center, which opened in the fall of 2014, and Scheels Sports Complex, which was fully playable in 2018, has taught the District that they have a great deal of opportunity to improve facilities through philanthropic means. Therefore, the District will continue to work with the Grand Forks Parks and Recreation Foundation (Foundation) to increase their donation revenue. The District’s emphasis on seeking sponsorships and donations within its organization promises to boost the District’s ability to meet demands for expanded services and facilities. The District also continues to expand and benefit from partnership developments, such as with Altru Health System and the Altru Family YMCA.

The District continues to look at its internal departments for increased efficiencies of resources. The District will continue to hire, train, and motivate staff to retain a positive work environment to maximize the productivity of its work force. The District will keep its pay scales competitive and will evaluate and reward staff for their contributions. Similarly, the District will continue to evaluate the services provided by vendors selecting those of highest quality and lowest pricing.

-13- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018

Performance Tools and Response to Change

The annual financial report provides measurement tools to judge the financial performance of each department, as well as the District as an agency.

Non-Tax Funds

Non-tax funds coming to the District are attributable to initiatives of District personnel and generosity of other organizations. There will be a continuing effort toward self-sufficiency of District golf courses, Choice Health & Fitness, and other program operations, and how these enterprises continue to provide earned revenue.

Contacting the District’s Treasurer’s Office

Annually the District makes available its financial reports and budget documents. The District publishes a variety of informative documents related to its operations. This financial report is designed to provide the District’s citizenry with the general overview of the District’s finances and show the District’s accountability for all money it receives, spends, or invests. If you have any questions about this report or need financial information, contact George Hellyer, Superintendent of Finance, Park District of the City of Grand Forks, 1060 47th Avenue South, Grand Forks, ND 58201.

-14- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION AS OF DECEMBER 31, 2019

Governmental Business-Type Activities Activities Total Assets Cash $ 4,762,508 $ 3,660,136 $ 8,422,644 Investments - 826,256 826,256 Restricted Cash & Investments with Fiscal Agent - 1,496,665 1,496,665 Accounts Receivable, Net 543,153 66,017 609,170 Pledges Receivable, Net - 5,376,721 5,376,721 Taxes Receivable 224,454 - 224,454 Contract and Sponsorships Receivable 311,545 - 311,545 Interest Receivable - 7,349 7,349 Inventory - 64,303 64,303 Internal Balances (4,030,000) 4,030,000 - Nondepreciable Capital Assets 19,177,041 3,249,695 22,426,736 Depreciable Capital Assets, Net 24,363,069 28,644,441 53,007,510 Assets Held for Sale - 144,750 144,750

Total Assets 45,351,770 47,566,333 92,918,103

Deferred Outflows of Resources Deferred Outflows of Resources - NDPERS 1,144,381 - 1,144,381 Deferred Outflows of Resources - OPEB NDPERS 41,966 - 41,966 Total Deferred Outflows of Resources 1,186,347 - 1,186,347

Liabilities Accounts Payable 485,291 5,722 491,013 Pledges Payable - 353,652 353,652 Sales Tax Payable 3,274 4,303 7,577 Gift Certificates/Cards Payable 29,677 63,153 92,830 Accrued Payroll 158,635 106,140 264,775 Accrued Interest Payable 49,028 90,040 139,068 Unearned Revenue 284,913 385,255 670,168 Non Current Liabilities: Due Within One Year 1,214,313 1,976,000 3,190,313 Due in More than One Year 15,900,318 22,569,286 38,469,604 Total Liabilities 18,125,449 25,553,551 43,679,000

Deferred Inflows of Resources Deferred Inflows of Resources - NDPERS 1,111,444 - 1,111,444 Deferred Inflows of Resources - Single Employer Plan 333,223 - 333,223 Deferred Inflows of Resources - OPEB NDPERS 4,375 - 4,375 Total Deferred Inflows of Resources 1,449,042 - 1,449,042

Net Position Net Investment in Capital Assets 27,479,978 11,705,445 39,185,423 Restricted: Non-expendable - Endowments - 204,067 204,067 Restricted for: Debt Service 695,026 1,396,184 2,091,210 Repairs and Replacement - 100,481 100,481 Pledges - 2,814,317 2,814,317 Unrestricted (1,211,378) 5,792,288 4,580,910

Total Net Position $ 26,963,626 $ 22,012,782 $ 48,976,408

See Notes to the Basic Financial Statements -15- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2019

Program Revenues Net (Expense) Revenue and Changes in Net Position

Operating Capital Grants Charges for Grants and and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total

Governmental Activities Park Operations $ 7,491,590 $ 902,555 $ - $ 326,045 $ (6,262,990) $ - $ (6,262,990) Forestry 881,796 2,750 - - (879,046) - (879,046) Recreation 594,699 206,076 74 - (388,549) - (388,549) Interest on Long-Term Debt 320,993 - - - (320,993) - (320,993) Total Governmental Activities 9,289,078 1,111,381 74 326,045 (7,851,578) - (7,851,578)

Business-Type Activities King's Walk Golf Course 1,212,025 1,208,361 - - - (3,664) (3,664) Lincoln Golf Course 393,509 284,054 - - - (109,455) (109,455) Choice Health & Fitness 4,303,851 4,127,321 - 69,144 - (107,386) (107,386) Foundation 314,891 693,560 - - - 378,669 378,669 Total Business- Type Activities 6,224,276 6,313,296 - 69,144 - 158,164 158,164 Total Primary Government $ 15,513,354 $ 7,424,677 $ 74 $ 395,189 (7,851,578) 158,164 (7,693,414)

General Revenues: Property Taxes - General 5,672,631 - 5,672,631 Property Taxes - Debt Service 1,907,475 - 1,907,475 Property Taxes - Capital Projects 1,080,021 - 1,080,021 Grants and Entitlements not Restricted to Specific Programs 993,704 - 993,704 Investment Earnings 225,037 182,217 407,254 Miscellaneous 111,039 - 111,039 Gain on Sale of Capital Assets - 3,229 3,229 Contributed Capital - 1,358 1,358 Transfers 553,029 (553,029) - Total General Revenues and Transfers 10,542,936 (366,225) 10,176,711

Change in Net Position 2,691,358 (208,061) 2,483,297

Net Position- Beginning 24,272,268 22,220,843 46,493,111 Net Position- End of Year $ 26,963,626 $ 22,012,782 $ 48,976,408

See Notes to the Basic Financial Statements -16- PARK DISTRICT OF THE CITY OF GRAND FORKS BALANCE SHEET – GOVERNMENTAL FUNDS AS OF DECEMBER 31, 2019

Total Debt Service Capital Governmental General Fund Fund Projects Fund Funds Assets Cash$ 3,135,828 $ 694,234 $ 932,446 $ 4,762,508 Accounts Receivable 543,153 - - 543,153 Taxes Receivable 146,125 49,820 28,509 224,454 Contract and Sponsorships Receivable 311,545 - - 311,545

Total Assets $ 4,136,651 $ 744,054 $ 960,955 $ 5,841,660

Liabilities Accounts Payable$ 455,307 $ - $ 29,984 $ 485,291 Advances From Other Funds - - 4,030,000 4,030,000 Sales Tax Payable 3,274 - - 3,274 Gift Certificate/Cards Payable 29,677 - - 29,677 Unearned Revenue 284,913 - - 284,913 Accrued Payroll 158,635 - - 158,635

Total Liabilities 931,806 - 4,059,984 4,991,790

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 126,264 43,473 24,902 194,639 Unavailable Revenue - Special Assessments 1,619 - - 1,619 Unavailable Revenue - Development Agreements 14,520 - - 14,520 Unavailable Revenue - Contracts and Sponsorships 311,545 - - 311,545

Total Deferred Inflows of Resources 453,948 43,473 24,902 522,323

Fund Balances Restricted For: Debt Service - 700,581 - 700,581 Unassigned 2,750,897 - (3,123,931) (373,034)

Total Fund Balances 2,750,897 700,581 (3,123,931) 327,547

Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 4,136,651 $ 744,054 $ 960,955 $ 5,841,660

See Notes to the Basic Financial Statements -17- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO NET POSITION OF GOVERNMENTAL ACTIVITIES AS OF DECEMBER 31, 2019

Total Governmental Funds Balance $ 327,547

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 43,540,110

Other long-term assets are not available to pay for current-period expenditures and therefore are unavailable in the governmental funds: Contract and Sponsorship Receivable$ 311,545 Special Assessments 1,619 Development Agreement 14,520 Property Taxes 194,639

Total 522,323

Long-term liabilities not due and payable in the current period and therefore are not included in the governmental funds: Accrued Interest (49,028) Compensated Absences (312,732) Contract Payable (917,906) Premium on Bonds Payable (137,226) Net Pension Liability - NDPERS (2,192,268) Net Pension Liability - Single Employer Plan (2,439,459) Net Other Postemployment Benefit Liability (140,040) General Obligation Bonds (10,975,000)

Total (17,163,659)

Net Position of Governmental Activities $ 26,963,626

See Notes to the Basic Financial Statements

-18- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019

Total Debt Service Capital Projects Governmental General Fund Fund Fund Funds Revenues Local Property Taxes$ 5,628,270 $ 1,907,475 $ 1,080,021 $ 8,615,766 State Revenues 993,704 - - 993,704 Program Income 1,241,339 - - 1,241,339 Investment Earnings 225,037 - - 225,037 Sponsorships 327,232 - - 327,232 Donations and Grants 74 - 63,728 63,802 Miscellaneous 48,189 101 - 48,290 Total Revenues 8,463,845 1,907,576 1,143,749 11,515,170

Expenditures Current: Park Operations 5,252,083 - - 5,252,083 Forestry 842,999 - - 842,999 Recreation 594,699 - - 594,699 Capital Outlay: Capital and Betterment 884,576 574,176 1,415,412 2,874,164 Debt Service: Principal Retirement 93,132 900,000 - 993,132 Interest Charges 36,186 303,251 - 339,437 Total Expenditures 7,703,675 1,777,427 1,415,412 10,896,514

Excess (Deficiency) of Revenues Over (Under) Expenditures 760,170 130,149 (271,663) 618,656

Other Financing Sources (Uses) Proceeds on Sale of Capital Assets 73,965 - - 73,965 Operating Transfers In 14,187 - 2,176,418 2,190,605 Operating Transfers Out (931,000) - (706,576) (1,637,576) Total Other Financing Sources (Uses) (842,848) - 1,469,842 626,994

Net Change in Fund Balances (82,678) 130,149 1,198,179 1,245,650 Fund Balance Beginning of Year 2,833,575 570,432 (4,322,110) (918,103)

Fund Balance End of Year $ 2,750,897 $ 700,581 $ (3,123,931) $ 327,547

See Notes to the Basic Financial Statements -19- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF THE CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2019

Net Change in Fund Balance - Total Governmental Funds $ 1,245,650

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Net Book Value of Disposed Capital Assets$ (105,008) Capital Asset Additions 2,311,750 Current Year Depreciation (1,214,849) Total 991,893

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds: Property Taxes 44,361 Special Assessments (2,165) Development Agreements (14,520) Contracts and Sponsorship Receivable (115,439)

Change in deferred outflows and inflows of resources related to: Net Pension Liability (2,172,925) Total OPEB Liability 9,494

Repayment of principal on long-term debt consumes the current financial resources of the governmental funds. However, there is no effect on net position. The following are changes in long-term liabilities during the year ended December 31, 2019: Accrued Interest Payable 3,000 Amortization of Bond Premium 15,445 Principal Payment on Bonds Payable 900,000 Principal Payment on Notes Payable 93,132 Change in Compensated Absences 11,224 Change in Net OPEB Liability (7,015) Change in Net Pension Liability 1,689,223

Total 2,705,009

Change in Net Position $ 2,691,358

See Notes to the Basic Financial Statements -20- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS AS OF DECEMBER 31, 2019

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Foundation Totals Assets Current Assets: Cash$ 1,636,561 $ 42,179 $ 879,987 $ 1,101,409 $ 3,660,136 Investments - - - 826,256 826,256 Accounts Receivable (Net) 21,236 - 44,624 157 66,017 Due From Other Funds - - 3,654,306 - 3,654,306 Advances To Other Funds - - - 440,000 440,000 Pledges Receivable (net) - - - 907,711 907,711 Interest Receivable - - 7,349 - 7,349 Inventory 56,600 7,703 - - 64,303 Total Current Assets 1,714,397 49,882 4,586,266 3,275,533 9,626,078

Non-Current Assets: Advances To Other Funds - - - 3,590,000 3,590,000 Restricted Cash & Investments with Fiscal Agent - - 1,496,665 - 1,496,665 Assets Held for Resale - - - 144,750 144,750 Pledges Receivable, Net of Current Portion - - - 4,469,010 4,469,010

Capital Assets: Land 618,820 21,640 2,609,235 - 3,249,695 Buildings, Systems, and Structures 2,263,476 1,009,959 26,621,302 - 29,894,737 Golf Course 5,553,039 560,680 - - 6,113,719 Equipment 1,011,015 8,000 373,222 - 1,392,237 Vehicles 21,095 5,000 - - 26,095 Tractors, Trailers, & Mowers 681,435 307,230 - - 988,665 Less Accumulated Depreciation (4,550,027) (807,833) (4,413,152) -(9,771,012) Total Capital Assets (Net of Accumulated Depreciation) 5,598,853 1,104,676 25,190,607 -31,894,136

Total Non-Current Assets 5,598,853 1,104,676 26,687,272 8,203,760 41,594,561 Total Assets 7,313,250 1,154,558 31,273,538 11,479,293 51,220,639

See Notes to the Basic Financial Statements -21- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS - CONTINUED AS OF DECEMBER 31, 2019

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Foundation Totals Liabilities Current Liabilities: Accounts Payable $ - $ - $ 5,650 $ 72 $ 5,722 Sales Tax Payable - - 4,303 - 4,303 Gift Certificate/Cards Payable 41,215 1,790 20,148 - 63,153 Due to Other Funds - - - 3,654,306 3,654,306 Accrued Payroll 24,076 2,350 79,714 - 106,140 Unearned Revenue - - 94,261 290,994 385,255 Compensated Absences 18,460 2,130 50,410 - 71,000 Bonds Payable 645,000 - 820,000 440,000 1,905,000 Pledges Payable - - - 353,652 353,652 Accrued Interest Payable 8,420 - 46,085 35,535 90,040 Total Current Liabilities 737,171 6,270 1,120,571 4,774,559 6,638,571

Non-Current Liabilities: Compensated Absences, Net of Current 35,650 10,592 113,003 - 159,245 Bonds Payable, Net of Current 1,851,384 - 16,872,307 3,686,350 22,410,041 Total Non-Current Liabilities 1,887,034 10,592 16,985,310 3,686,350 22,569,286 Total Liabilities 2,624,205 16,862 18,105,881 8,460,909 29,207,857

Net Position Net Investment in Capital Assets 3,102,469 1,104,676 7,498,300 - 11,705,445 Restricted: Non-expendable - Endowments - - - 204,067 204,067 Restricted for: Debt Service - - 1,396,184 - 1,396,184 Repairs and Replacement - - 100,481 - 100,481 Pledges - - - 2,814,317 2,814,317 Unrestricted 1,586,576 33,020 4,172,692 -5,792,288 Total Net Position $ 4,689,045 $ 1,137,696 $ 13,167,657 $ 3,018,384 $ 22,012,782

See Notes to the Basic Financial Statements -22- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019

Business-Type Activities - Enterprise Funds King's Walk Golf Lincoln Golf Choice Health & Course Course Fitness Foundation Totals Operating Revenues: Charges for Sales and Services: Sales $ 1,208,361 $ 284,054 $ 4,127,321 $ - $ 5,619,736 Donations/Sponsorships - - - 693,560 693,560 Total Operating Revenues 1,208,361 284,054 4,127,321 693,560 6,313,296

Operating Expenses: Costs of Sales and Services 501,703 217,389 2,193,879 169,289 3,082,260 Administration 411,234 113,852 935,711 - 1,460,797 Total Operating Expenses 912,937 331,241 3,129,590 169,289 4,543,057

Operating Income (Loss) before Depreciation 295,424 (47,187) 997,731 524,271 1,770,239

Depreciation and Amortization 249,668 62,268 608,627 - 920,563

Operating Income (Loss) 45,756 (109,455) 389,104 524,271 849,676

Non-Operating Revenues (Expenses): Donations/Sponsorships - - 69,144 - 69,144 Contributed Capital - 1,358 - - 1,358 Interest Income - - 57,836 124,381 182,217 Gain on Disposal of Fixed Assets 1,000 2,229 - - 3,229 Bond Interest Expense (49,420) - (565,634) (145,602) (760,656) Total Non-Operating Revenue (Expenses) (48,420) 3,587 (438,654) (21,221) (504,708)

Income (Loss) Before Transfers (2,664) (105,868) (49,550) 503,050 344,968

Transfers In 325,000 80,000 245,000 161,576 811,576 Transfers Out - - - (1,364,605) (1,364,605) Total Transfers 325,000 80,000 245,000 (1,203,029) (553,029)

Changes in Net Position 322,336 (25,868) 195,450 (699,979) (208,061)

Total Net Position - Beginning 4,366,709 1,163,564 12,972,207 3,718,363 22,220,843

Total Net Position - Ending $ 4,689,045 $ 1,137,696 $ 13,167,657 $ 3,018,384 $ 22,012,782

See Notes to the Basic Financial Statements -23- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019

Business-Type Activities - Enterprise Funds King's Walk Lincoln Choice Health Golf Course Golf Course & Fitness Foundation Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users$ 1,212,915 $ 283,493 $ 4,135,797 $ 1,908,725 $ 7,540,930 Payments to Suppliers (498,577) (212,886) (2,166,351) (260,895) (3,138,709) Payments to Employees (412,091) (104,843) (913,160) - (1,430,094) Net Cash Provided (Used) by Operating Activities 302,247 (34,236) 1,056,286 1,647,830 2,972,127 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Due from other Funds - - 336,818 - 336,818 Due to other Funds - - - (355,418) (355,418) Transfers from other Funds 325,000 80,000 245,000 161,576 811,576 Transfer to other Funds - - - (1,364,605) (1,364,605) Net Cash Provided (Used) by Non-Capital and Related Financing Activities 325,000 80,000 581,818 (1,558,447) (571,629) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal Paid on Bonds Payable (630,000) - (795,000) (430,000) (1,855,000) Proceeds from Advances To Other Funds - - - 430,000 430,000 Capital Donations - 1,358 69,144 - 70,502 Proceeds from Sale of Capital Assets 18,229 - - - 18,229 Purchases of Capital Assets (102,506) (25,058) (36,328) - (163,892) Gain on Sale of Capital Assets - 2,229 - - 2,229 Interest Paid on Capital Debt (64,785) - (576,875) (156,577) (798,237) Net Cash Provided (Used) by Capital and Related Financing Activities (779,062) (21,471) (1,339,059) (156,577) (2,296,169) CASH FLOWS FROM INVESTING ACTIVITIES Interest and Dividends Received - - 55,646 124,381 180,027 Net Cash Provided (Used) by Capital Investing Activities - - 55,646 124,381 180,027 Net Increase (Decrease) in Cash and Cash Equivalents (151,815) 24,293 354,691 57,187 284,356 Cash and Investments, January 1 1,788,376 17,886 2,021,961 1,870,478 5,698,701 Cash and Investments, December 31 $ 1,636,561 $ 42,179 $ 2,376,652 $ 1,927,665 $ 5,983,057

Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating Income (Loss) $ 45,756 $ (109,455) $ 389,104 $ 524,271 $ 849,676 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Expense 249,668 62,268 608,627 - 920,563 Effects on Operating Cash Flows Due to Changes in: Accounts Receivable 934 - 6,289 (157) 7,066 Pledges Receivable - - - 1,026,478 1,026,478 Inventories 6,456 4,503 - - 10,959 Prepaid Expense - - 21,979 - 21,979 Accounts Payable (3,330) - 5,549 (763) 1,456 Gift Certificate/Cards Payable 3,620 (561) 2,187 - 5,246 Accrued Payroll (5,207) 2,329 7,628 - 4,750 Pledges Payable - - - (90,843) (90,843) Compensated Absences 4,350 6,680 14,923 - 25,953 Unearned Revenue - - - 188,844 188,844 Total Adjustments 256,491 75,219 667,182 1,123,559 2,122,451 Net Cash Provided (Used) by Operating Activities $ 302,247 $ (34,236) $ 1,056,286 $ 1,647,830 $ 2,972,127

Reconciliation of Cash and Investments Cash$ 1,636,561 $ 42,179 $ 879,987 $ 1,101,409 $ 3,660,136 Investments - - - 826,256 826,256 Restricted Cash - - 1,496,665 - 1,496,665 $ 1,636,561 $ 42,179 $ 2,376,652 $ 1,927,665 $ 5,983,057 See Notes to the Basic Financial Statements -24- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AS OF DECEMBER 31, 2019

Pension Trust Fund ASSETS Investments, at Fair Value: Cash and Investment Funds$ 7,629,948

Total Assets $ 7,629,948

NET POSITION Held in Trust for Pension Benefits and Other Purposes$ 7,629,948

See Notes to the Basic Financial Statements -25- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2019

Pension Trust Fund ADDITIONS Contributions: Employer$ 318,000 Plan Members 65,266 Total Contributions 383,266

Investment Earnings: Investment Income 418,241 Net Change in the Fair Value of Investments 729,231 Administrative Expenses (24,185) Net Investment Earnings 1,123,287

Total Additions 1,506,553

DEDUCTIONS Benefits Paid 435,840

Total Deductions 435,840

Change in Net Position 1,070,713

Net Position - Beginning 6,559,235

Net Position - Ending $ 7,629,948

See Notes to the Basic Financial Statements -26- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS AS OF DECEMBER 31, 2019

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Park District of the City of Grand Forks (District) operates with its Board of Commissioners elected at large, authorized to levy taxes, issue debt, budget, and designate management. The District provides the following services: parks, recreation, forestry, and general administrative services.

A. Reporting Entity

The District includes all funds, organizations, institutions, agencies, departments, and offices that are not legally separate from it. Component units are legally separate organizations for which the elected officials of the District are financially accountable and are included within the basic statements because of the significance of their operations or financial relationships to the District.

The District is considered financially accountable for a component unit if it appoints a voting majority of the organization’s governing body and the District is able to impose its will on the organization by significantly influencing the programs, projects, activities, or level of services performed or provided by the organization, or if there is a potential for the organization to provide specific financial benefits to, or impose specific burdens on, the District. The Grand Forks Parks and Recreation Foundation (Foundation), a separate legal entity, of the Grand Forks Park District meets the criteria and is included as a blended component unit.

B. Basis of Presentation

The District’s basic financial statements consist of government-wide statements, including a statement of net position and a statement of activities, and fund financial statements which provide a more detailed level of financial information.

Government-wide and Fund Financial Statements

The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the District. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segments. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the District’s enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses.

-27- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements.

C. Measurement Focus/Basis of Accounting

The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the District considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. All revenue items are considered to be measurable and available only when cash is received by the District.

The District reports the following major governmental funds:

The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

The Capital Projects Fund is used to account for the proceeds of specific revenue resources that are legally restricted to expenditures for acquiring sites, constructing, and equipping new facilities and renovating existing facilities.

The District reports the following major proprietary funds:

The King’s Walk Golf Course Fund accounts for the activities of King’s Walk Golf Course.

The Lincoln Golf Course Fund accounts for the activities of Lincoln Golf Course.

The Choice Health & Fitness Fund accounts for the activities of Choice Health & Fitness.

The Foundation Fund accounts for the contributions to promote healthful lifestyles in our community through the development and enhancement of parks, playgrounds, recreational facilities, programs, and activities for all people in Grand Forks, regardless of age, physical ability, or economic position.

-28- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Additionally, the District reports the following fiduciary fund type:

The Pension Trust Fund accounts for the activities of the single employer defined benefit pension plan.

D. Budgetary Data

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

The budget is adopted through passage of a resolution. Management can authorize the transfer of budgeted amounts within any fund. Any revision that alters total expenditures of any fund must be approved by the Board of Commissioners.

The Board of Commissioners shall give preliminary approval of the District budget and give first reading of the annual appropriation ordinance by August 10 of each year. The Board of Commissioners will hold public hearings and may subtract from or change appropriations. Any changes in the budget must be with the revenues and reserves estimated as available by the Superintendent of Finance or the revenue estimates must be changed by an affirmative vote of a majority of the Board of Commissioners.

Supplemental appropriations must be passed by ordinance by the Board of Commissioners at fund level and may only be done within additional revenues or reserves that were not anticipated at the time of original adoption of the annual budget and appropriation ordinance.

It is the responsibility of the District to administer the budget in accordance with instructions of the Board of Commissioners. Strict management of the budget in accordance with the purchasing policies, ordinances, and goals established by the Board of Commissioners, will be honored by the Board of Commissioners. Any budget transfer between funds requires Board of Commissioners action. The Board of Commissioners will not authorize expenditures exceeding the total appropriations set forth in the final budget, unless approved by separate action of the Board of Commissioners.

The final budget must be adopted on or before October 7. The budget must be submitted to the county auditor by October 10. The budget may be amended during the year, except no amendment changing the taxes levied can be made after October 10.

All budgeted appropriations lapse at the end of the fiscal year.

E. Cash

The cash balances from all funds are pooled and invested. All certificates of deposit, no matter what the maturity date, and all highly liquid investments (including restricted assets) with maturity of three months or less, when purchased are considered cash equivalents and treated as such in the statement of cash flows.

-29- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

F. Fair Value Measurements

The District accounts for all assets and liabilities that are being measured and reported on a fair value basis in accordance with GAAP. GAAP defines fair value, establishes a framework for measuring fair value, and expands disclosure about fair value measurements.

When fair value measurements are required, various data is used in determining those values. This statement requires that assets and liabilities that are carried at fair value must be classified and disclosed in the following levels based on the nature of the data used.

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

G. Receivables and Payables

Receivables are stated on the balance sheet at estimated realizable values after provision for estimated uncollectible accounts. Management determines the allowance for uncollectible accounts by identifying troubled accounts and by using historical experience applied to an aging of accounts.

Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of the interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.”

H. Inventory

All inventories are stated at cost, determined on an average-cost basis.

I. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the District as assets with an initial, individual cost of more than $5,000 (amount not rounded) and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value at the date of donation.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed.

Property, plant, and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

-30- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Assets Years Buildings, Systems, and Structures 20-50 Golf Course 15-50 Equipment 5-10 Vehicles 5 Tractors, Trailers, and Mowers 5-15

J. Property Taxes

Property tax levies are set by the Board of Commissioners in October each year and are certified to Grand Forks County for collection in the following year. In North Dakota, counties act as collection agents for all property tax. Taxes are remitted monthly to the District.

The County spreads all levies over taxable property. Property taxes are attached as an enforceable lien on the real estate and become due on January 1 of the year following the assessment date.

A five (5) percent reduction on the taxes is allowed if the taxes are paid in full by February 15. Penalty and interest are added on March 1 if the first half of the taxes is not paid. Additional penalty and interest are added October 15 to those taxes that are not paid.

Property tax revenues are recognized when they become available. All other taxes are fully offset by deferred revenue because they are not known to be available to finance current expenditures.

K. Compensated Absences

All full-time employees of the District are covered by a compensated absences policy including vacation and sick leave. Unused vacation vests immediately and can be accumulated to a maximum of 360 hours with a maximum carryover of 200 hours to the next calendar year. If termination of employment occurs, employees receive 100 percent of their unused vacation pay at their rate of pay on the date of termination. Unused sick leave may be accumulated to an unlimited amount. If termination of employment occurs after five years of employment, employees receive 50 percent of their unused sick pay up to a maximum of 720 hours at their rate of pay on the date of termination.

L. Long-Term Obligations

In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discount on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures.

M. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and disclosure of contingent assets and liabilities at the date of the financial

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statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

N. Fund Balance

GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government’s fund balance more transparent. The following classifications describe the relative strength of the spending constraints and the purposes for which resources can be used:

Nonspendable – consists of amounts that are not in spendable form, such as inventory and prepaid items.

Restricted – consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by law through constitutional provisions or enabling legislation.

Committed – consists of internally imposed constraints. These constraints are established by formal action of the Board of Commissioners.

Assigned – consists of internally imposed constraints. These constraints reflect the specific purpose for which it is the District’s intended use. These constraints are established by the Board of Commissioners. Pursuant to Board resolution, the District’s Executive Director and Superintendent of Finance are authorized to establish assignments of fund balance.

Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds.

When committed, assigned, or unassigned resources are available for use, it is the District’s policy to use resources in the following order; 1) committed, 2) assigned, and 3) unassigned.

O. Net Position

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position, provides guidance for reporting deferred outflows of resources, deferred inflows of resources, and net position in accordance with Concepts Statement No. 4, Elements of Financial Statements.

Net position represents the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources in the District’s financial statements. Net investment in capital assets, consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any long-term debt attributable to the acquisition, construction, or improvement of those assets. Restricted Net Position consists of restricted assets reduced by liabilities and deferred inflows of resources related to those assets. Unrestricted Net Position is the net amount of assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the determination of net investment in capital assets or the restricted component of net position.

When both restricted and unrestricted resources are available for use, it is the District’s policy to first use restricted resources, and then use unrestricted resources as they are needed.

P. Net Position Flow Assumption

Sometimes the District will fund outlays for a particular purpose for both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted -32- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

net position and unrestricted net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

Q. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resource (expense/expenditure) until then. The District has two items reported on the statement of net position as Deferred Outflows of Resources which represents actuarial differences within OPEB and NDPERS Pension Plan as well as amounts paid to the plans after the measurement date.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has four types of items, which arise only under a modified accrual basis of accounting, that qualify for reporting in this category. Accordingly, unavailable revenue - property taxes, unavailable revenue - special assessments, unavailable revenue – development agreements, and unavailable revenue – contracts and sponsorships are reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The District also has three items reported on the statement of net position as Deferred Inflows of Resources which represents actuarial differences within OPEB, NDPERS Pension Plan, and Single Employer Pension Plan.

R. Sales Taxes

Sales taxes collected from customers and remitted to taxing authorities are excluded from revenues and cost of sales, respectively.

S. Pensions

For purposes of measuring the net pension liability and asset, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the North Dakota Public Employees Retirement System (NDPERS) and the Single Employer Pension Plan and additions to/deductions from NDPERS/Single Employer Pension Plan fiduciary net position have been determined on the same basis as they are reported by NDPERS/Single Employer Pension Plan except that NDPERS’ fiscal year is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

T. NDPERS - Other Postemployment Benefits (OPEB)

For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of NDPERS and additions to/deductions from NDPERS’ fiduciary net position have been determined on the same basis as they are reported by NDPERS. For this purpose, benefit payments are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

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U. Unearned Revenue

Unearned revenues represent resources that have been received but are not yet earned.

V. Pledge Receivable

Unconditional promises to give are recognized as revenues or gains in the period received as assets, decreases of liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. Unconditional promises expected to be collected in future years are recorded at the present value of expected future cash flows. The cash flows are discounted at a discount rate commensurate with the risks involved, at the date the promise was made. The rate used was 4% at year end. When considered necessary, an allowance is recorded based on management’s estimate of collectability including such factors as prior collection history, type of contribution, and the nature of fund-raising activity.

W. Assets Held for Sale

The District carries non-current available-for-sale financial assets, which are measured at market value. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the assets sold.

X. Income Taxes

The Foundation is organized as a North Dakota non-profit corporation and is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

The Foundation's policy is to evaluate the likelihood that its uncertain tax positions will prevail upon examination based on the extent to which those positions have substantial support within the Internal Revenue Code and Regulations, Revenue Rulings, court decisions, and other evidence. It is the opinion of management that the Foundation has no significant uncertain tax positions that would be subject to change upon examination. The federal income tax returns of the Foundation are subject to examination by the IRS, generally for three years after they were filed.

NOTE 2 CASH

A. Deposits

In accordance with North Dakota laws, the District maintains deposits at depositories authorized by the Board of Commissioners. The depositories are members of the Federal Reserve System.

Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. North Dakota laws require that securities pledged as collateral be held in safekeeping by the District or in a financial institution other than that furnishing the collateral.

At December 31, 2019, the carrying amount of the District's bank deposits was $8,422,644 and the bank balance was $8,486,383, of which all was covered by Federal Depository Insurance or collateral held in safekeeping in the District's name. In addition, there is $1,496,665 held with fiscal agent as

-34- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019 restricted cash for bond covenants. The balance consists entirely of cash. The cash is held at the Bank of New York Mellon and is covered by FDIC coverage.

B. Investments

As of December 31, 2019, $7,549,557 of the District’s pension trust funds were invested with the North Dakota State Investment Board and $80,391 of the pension trust funds were invested with Aetna Life Insurance Company. Both the North Dakota State Investment Board and Aetna Life Insurance Company are external investment pools.

As of December 31, 2019, the District, through the Foundation, had the following investments:

Quoted Prices in Active Markets for Identical Assets Investment Type (Level 1)

Equity Securities: Basic Materials$ 3,098 Consumer Cyclical 15,977 Consumer Non-Cyclical 7,829 Energy 1,446 Financial 17,556 Health Care 15,803 Industrials 11,262 Mutual Fund - Equity 110,260 Mutual Funds - International 68,349 Technology 38,713 Telecommunications 2,409 Utility 4,039 Mutual Funds 228,297 Total $ 525,038

The remaining $301,218 of investments are invested in Certificates of Deposits.

Investments – Pension Funds

All investments of the fund are deposited with the North Dakota State Investment Board (NDSIB). The District is responsible for establishing the investment policy for the fund assets, which includes setting investment goals and specifying the percentage of assets to be invested in various types of investments. The investment goals are viewed over the long term. The District recognized the plan’s performance objectives, benefit projections, and capital market expectation when it determined the asset allocation. The NDSIB is responsible for managing the plan’s investments in accordance with the investment policy.

Level 1 Level 2 Level 3 Total Global Equities$ 4,102,212 $ - $ - $ 4,102,212 Global Fixed Income - 1,931,104 -1,931,104 $ 4,102,212 $ 1,931,104 $ -$ 6,033,316

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Investments measured at the net asset value (NAV):

Pension Investments: Real Assets NAV: $ 1,472,521 Redemption Frequency: Quarterly, Not Eligible Redemption Notice Period: 30-90 days

The remaining $124,111 of the pension investments were cash deposits.

Permitted Investments for Restricted Investments

The 2015 Taxable Wellness Center Revenue Bonds Indenture restricts investments to the following: a) Governmental Obligations; b) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following federal agencies and provided such obligations are backed by the full faith and credit of the United States of America (and, in the case of stripped securities, only those stripped securities stripped by the federal agency itself): U.S. Export-Import Bank (Eximbank), as to direct obligations or fully guaranteed certificates of beneficial ownership; Federal Financing Bank; Federal Housing Administration Debentures (FHA); General Services Administration, as to participation certificates; U.S. Maritime Administration, as to Guaranteed Title XI financing; and U.S. Department of Housing and Urban Development (HUD), as to project notes, local authority bonds, new communities debentures-U.S. government guaranteed debentures, and U.S. public housing notes and bonds (as to U.S. government guaranteed public housing notes and bonds); c) bonds, debentures, notes or other evidence of indebtedness issued or guaranteed by any of the following government agencies of the United States of America (non-full faith and credit agencies, and, in the case of stripped securities, only those stripped securities stripped by the federal agency itself): Federal Home Loan Bank System, as to senior debt obligations; Student Loan Marketing Association (SLMA or "Sallie Mae"), as to senior debt obligations; Resolution Funding Corp. (REFCORP) obligations; and Farm Credit System, as to consolidated system-wide bonds and notes; d) direct and general obligations or of bonds or notes issued by, any state of the United States of America or any municipality or political subdivision of any such state, which obligations are rated in one of the two highest rating categories of either S&P or Moody's, or, upon the discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; e) commercial paper which matures not more than two hundred seventy (270) days after the date of purchase rated, at the time of purchase in the single highest classification, "A-l+" by S&P or "P-I" by Moody's, or, upon the discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; f) certificates of deposit secured at all times by collateral described in (a) and/or (b) above; provided that such certificates must be issued by commercial banks, savings and loan or mutual savings banks. Such collateral must be held by a third party and the owner must have a perfected security interest in the collateral, including those of the Trustee and its affiliates; g) certificates of deposit, savings accounts or deposit account which is fully insured by FDIC, including those of the Trustee and its affiliates; h) Investment Agreements, including guaranteed investment contracts entered into with a provider which has an unsecured, uninsured and unguaranteed obligation rating of "Prime -1 "or "A3" or better by Moody's and "A-I" or "A" or better by S&P, or upon discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; i) obligations of any state of the United States, any political subdivision thereof or any agency or instrumentality thereof, if such obligations are secured by Governmental Obligations the principal of

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and interest on which will be sufficient to pay when due the principal and interest on such obligations; j) shares or certificates in any short-term investment fund which is maintained by the Trustee and which fund invests solely in Governmental Obligations; k) federal funds or bankers acceptances with a maximum term of one (1) year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-l " or "A3" or better by Moody's and "A-I" or "A" or better by S&P, or upon discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; and l) deposits of the Bank of North Dakota which, as provided by Section 6-09-10 of the North Dakota Century Code, are guaranteed by the State.

Interest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from changing interest rates.

Credit Risk

In accordance with North Dakota Century Code, the District allows the following investments: a) Bonds, treasury bills and notes, or other securities that are a direct obligation of, or an obligation insured or guaranteed by, the treasury of the United States, or its agencies, instrumentalities, or organizations created by an act of Congress. b) Securities sold under agreements to repurchase written by a financial institution in which the underlying securities for the agreement to repurchase are of the type listed above. c) Certificates of Deposit fully insured by the Federal Deposit Insurance Corporation or the state. d) Obligations of the state.

Concentration of Credit Risk

The District places no limit on the amount the District may invest in any one issuer.

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NOTE 3 CAPITAL ASSETS Capital asset activity for the year ended December 31, 2019 was as follows:

Balance Transfers/ Balance 01/01/19 Additions Deletions Adjustments 12/31/19 Governmental Activities Capital Assets Not Being Depreciated: Land$ 4,254,623 $ - $ - $ - $ 4,254,623 Land Improvements 13,888,535 574,075 - - 14,462,610 Construction in Progress 208,710 459,808 - (208,710) 459,808 Total Capital Assets Not Being Depreciated 18,351,868 1,033,883 - (208,710) 19,177,041

Capital Assets Being Depreciated: Buildings, Systems, and Structures 34,895,251 817,172 (90,023) 208,710 35,831,110 Equipment 2,416,675 30,695 - - 2,447,370 Vehicles 1,127,232 66,771 (54,908) - 1,139,095 Tractors, Trailers, and Mowers 1,452,431 363,229 (181,956) - 1,633,704 Total Capital Assets Being Depreciated 39,891,589 1,277,867 (326,887) 208,710 41,051,279

Less Accumulated Depreciation: Buildings, Systems, and Structures (12,540,704) (897,998) 10,128 - (13,428,574) Equipment (1,431,788) (105,955) - - (1,537,743) Vehicles (863,914) (90,596) 49,282 - (905,228) Tractors, Trailers, and Mowers (858,834) (120,300) 162,469 - (816,665) Total Accumulated Depreciation (15,695,240) (1,214,849) 221,879 - (16,688,210)

Total Capital Assets Being Depreciated, Net 24,196,349 63,018 (105,008) 208,710 24,363,069

Governmental Capital Assets, Net $ 42,548,217 $ 1,096,901 $ (105,008) $ -$ 43,540,110

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Balance Transfers/ Balance 01/01/19 Additions Deletions Adjustments 12/31/19 Business-Type Activities Capital Assets Not Being Depreciated: Land$ 3,249,695 $ - $ -$ -$ 3,249,695

Capital Assets Being Depreciated: Buildings, Systems, and Structures 29,880,388 14,348 - - 29,894,736 Golf Course 6,113,719 - - - 6,113,719 Equipment 1,347,888 44,349 - - 1,392,237 Vehicles 19,000 21,095 (14,000) - 26,095 Tractors, Trailers, and Mowers 941,066 84,100 (36,500) - 988,666 Total Capital Assets Being Depreciated 38,302,061 163,892 (50,500) - 38,415,453

Less Accumulated Depreciation: Buildings, Systems, and Structures (4,735,312) (637,405) - - (5,372,717) Golf Course (2,554,571) (130,677) - - (2,685,248) Equipment (948,676) (78,704) - - (1,027,380) Vehicles (19,000) (2,461) 14,000 (17,228) (24,689) Tractors, Trailers, and Mowers (626,162) (71,316) 36,500 - (660,978) Total Accumulated Depreciation (8,883,721) (920,563) 50,500 (17,228) (9,771,012)

Total Capital Assets Being Depreciated, Net 29,418,340 (756,671) - (17,228) 28,644,441

Business-Type Activities Capital Assets, Net$ 32,668,035 $ (756,671) $ -$ (17,228) $ 31,894,136

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities: Park Operations$ 1,176,052 Forestry 38,797 Total Depreciation Expense - Governmental Activities$ 1,214,849

Business-Type Activities: King's Walk Golf Course$ 249,668 Lincoln Golf Course 62,268 Choice Health & Fitness 608,627 Total Depreciation Expense - Business-Type Activities$ 920,563

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NOTE 4 CONTRACT AND SPONSORSHIPS RECEIVABLE

Annually the District enters into contracts with various sponsors for advertising within the Park District locations. Contract and sponsorships receivable will be received in periodic installments in accordance with the individual contracts through December 31, 2024 as follows:

2020$ 117,162 2021 72,349 2022 43,825 2023 40,002 2024 38,207 $ 311,545

NOTE 5 PLEDGES RECEIVABLE

Pledges receivable consist of unconditional promises to give from individuals, businesses, and private foundations. These contributions are restricted for construction of Choice Health & Fitness, Scheels Sports Complex, ICON Sports Center, Rydell Skatepark, and Veterans Memorial Park and are due according to the following schedule:

Receivable in less than one year $ 907,711 Receivable in one to five years 1,980,574 Receivable in more than five years 2,488,436 $ 5,376,721

Unconditional promises to give due in more than one year are reflected at the present value of estimated future cash flows using a discount rate of 4%. The unamortized discount for promises due in more than one year was $1,775,811 at December 31, 2019.

Management estimates an allowance for uncollectible pledges to be $95,931 at December 31, 2019.

The Foundation owes other organizations $2,655 at December 31, 2019 for donations received but not yet remitted to the other organizations.

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NOTE 6 LONG-TERM DEBT

The District issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit and unlimited taxing powers of the District.

The District issues refunding improvement bonds to provide funds for improvements within the District. Refunding improvement bonds are payable from special assessments levied against benefited properties, and, in certain instances, ad valorem taxes levied against all taxable property within the District.

The District has entered into contracts payable with ICON Holding, LLC for the purchase of capital assets. The District has also entered into a contract payable with the City of Grand Forks for tapping fees associated with District property.

The District also issues revenue bonds where it pledges income derived from the acquired or constructed assets to pay debt service.

The Foundation issued Lease Revenue Bonds, Series 2009 and 2013B to provide permanent financing for improvements at the District facilities. The Foundation will lease Elks Pool and ICON Sports Center to the District pursuant to the lease agreements.

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/19 Governmental Activities: Refunding Improvement Bonds, Series 2011 12/1/2011$ 4,500,000 2.00%-3.75% 5/1/2037$ 3,330,000 Refunding Improvement Bonds, Series 2013A 12/12/2013 1,985,000 2.00%-4.00% 5/1/2033 1,550,000 Special Assessment Prepayment Bonds, Series 2014A 1/7/2014 3,065,000 2.00%-3.25% 5/1/2028 2,085,000 Refunding Improvement Bonds, Series 2016 5/26/2016 2,025,000 2.00%-2.25% 5/1/2031 1,665,000 Refunding Improvement Bonds, Series 2017A 2/9/2017 3,215,000 2.00%-2.50% 5/1/2026 2,345,000 Contracts Payable - ICON Holdings, LLC 9/2/2014 716,750 4.50% 12/31/2024 398,300

Contracts Payable - City of Grand Forks 6/6/2017 590,461 3.00% 12/31/2041 519,606 Total Governmental Activities $ 16,097,211 $ 11,892,906

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/19 Business-Type Activities: Refunding Improvement Bonds, Series 2009C 9/3/2009$ 485,000 1.20%-4.00% 12/1/2021$ 100,000 Taxable Refunding Improvement Bonds, Series 2009D 9/3/2009 510,000 2.25%-5.40% 12/1/2021 105,000 Lease Revenue Bonds, Series 2009 12/30/2009 1,855,000 2.00%-3.50% 12/16/2020 45,000 Lease Revenue Bonds, Series 2013B 12/12/2013 6,845,000 3.00%-4.25% 10/1/2033 3,985,000 Refunding Improvement Bonds, Series 2014B 2/26/2014 4,820,000 2.00%-2.15% 5/1/2023 2,245,000 Wellness Center Revenue Refunding Bonds, Series 2015 4/28/2015 20,975,000 2.00%-3.50% 12/1/2036 17,535,000 Total Business-Type Activities $ 35,490,000 $ 24,015,000

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Pledged Revenues

The District’s revenues in Choice Health & Fitness as noted as charges for sales, donations, and interest income are pledged for Taxable Wellness Center Revenue Bonds, Series 2015. The Bonds and any additional bonds are payable from and secured by a pledge and lien in (i) the revenues derived from operations of the District’s revenue producing facilities, (ii) the pledged revenues, as defined, and (iii) investment income derived from the funds created under the Indenture, all as defined and provided in the Indenture.

Annual debt service requirements to maturity for bonds are as follows:

Governmental Activities Refunding ImprovementRefunding Improvement Special Assessment Year Ending Bonds, Series 2011 Bonds, Series 2013A Prepayment Bonds, Series 2014A December 31, Principal Interest Principal Interest Principal Interest

2020 $ 180,000 $ 98,460 $ 90,000 $ 47,616 $ 210,000 $ 54,543 2021 185,000 94,442 95,000 45,766 215,000 50,024 2022 190,000 90,035 95,000 43,628 220,000 45,130 2023 195,000 85,317 100,000 41,190 225,000 39,730 2024 200,000 80,230 100,000 38,690 230,000 33,815 2025-2029 935,000 318,446 555,000 145,845 985,000 64,213 2030-2034 855,000 185,089 515,000 41,525 - - 2035-2039 590,000 33,608 - - - - 2040-2041 ------$ 3,330,000 $ 985,627 $ 1,550,000 $ 404,260 $ 2,085,000 $ 287,454

Governmental Activities Refunding Improvement Refunding Improvement ICON Holdings, LLC Year Ending Bonds, Series 2016 Bonds, Series 2017A Contracts Payable December 31, Principal Interest Principal Interest Principal Interest

2020 $ 125,000 $ 32,813 $ 315,000 $ 51,450 $ 72,695 $ 16,708 2021 125,000 30,312 320,000 44,700 76,022 13,381 2022 130,000 27,762 325,000 37,444 79,501 9,902 2023 130,000 25,162 335,000 30,018 83,139 6,264 2024 135,000 22,512 340,000 22,000 86,943 2,459 2025-2029 715,000 70,762 710,000 17,875 - - 2030-2034 305,000 6,921 - - - - 2035-2039 ------2040-2041 ------$ 1,665,000 $ 216,244 $ 2,345,000 $ 203,487 $ 398,300 $ 48,714

-42- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Governmental Activities City of Grand Forks Year Ending Contracts Payable Total December 31, Principal Interest Principal Interest

2020 $ 23,618 $ 15,588 $ 1,016,313 $ 317,178 2021 23,618 14,880 1,039,640 293,505 2022 23,618 14,171 1,063,119 268,072 2023 23,618 13,463 1,091,757 241,144 2024 23,618 12,754 1,115,561 212,460 2025-2029 118,090 53,141 4,018,090 670,282 2030-2034 118,090 35,427 1,793,090 268,962 2035-2039 118,090 17,714 708,090 51,322 2040-2041 47,246 2,125 47,246 2,125 $ 519,606 $ 179,263 $ 11,892,906 $ 2,325,049

-43- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Business-Type Activities Refunding Improvement Refunding Improvement Lease Revenue Bonds, Year Ending Bonds, Series 2009C Bonds, Series 2009D Series 2009 December 31, Principal Interest Principal Interest Principal Interest

2020 $ 50,000 $ 3,900 $ 50,000 $ 5,596 $ 45,000 $ 1,575 2021 50,000 2,000 55,000 2,970 - - 2022 ------2023 ------2024 ------2025-2029 ------2030-2034 ------2035-2036 ------$ 100,000 $ 5,900 $ 105,000 $ 8,566 $ 45,000 $ 1,575

Business-Type Activities Lease Revenue Bonds, Refunding Improvement Wellness Center Revenue Refunding Year Ending Series 2013B Bonds, Series 2014B Bonds, Series 2015 December 31, Principal Interest Principal Interest Principal Interest

2020 $ 395,000 $ 141,876 $ 545,000 $ 40,320 $ 820,000 $ 553,025 2021 410,000 130,026 555,000 29,320 840,000 528,425 2022 420,000 117,726 565,000 18,120 865,000 503,225 2023 390,000 105,126 580,000 6,235 890,000 477,275 2024 200,000 93,426 - - 915,000 450,575 2025-2029 1,110,000 357,002 - - 4,975,000 1,825,225 2030-2034 1,060,000 114,180 - - 5,700,000 1,013,675 2035-2036 - - - - 2,530,000 131,969 $ 3,985,000 $ 1,059,362 $ 2,245,000 $ 93,995 $ 17,535,000 $ 5,483,394

Business-Type Activities

Year Ending Total December 31, Principal Interest

2020 $ 1,905,000 $ 746,292 2021 1,910,000 692,741 2022 1,850,000 639,071 2023 1,860,000 588,636 2024 1,115,000 544,001 2025-2029 6,085,000 2,182,227 2030-2034 6,760,000 1,127,855 2035-2036 2,530,000 131,969 $ 24,015,000 $ 6,652,792

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Changes in Long-Term Liabilities

Long-term liability activity for the year ended December 31, 2019, was as follows:

Balance Balance Due Within 1/1/2019 Issued Retired 12/31/2019 One Year Governmental Activities: Bonds Payable: Bonds$ 11,875,000 $ - $ (900,000) $ 10,975,000 $ 920,000 Unamortized Bond Premium 152,671 - (15,445) 137,226 - Contract Payable 1,011,038 - (93,132) 917,906 96,313 Net Pension Liability: Single Employer Plan 3,284,857 - (845,398) 2,439,459 - NDPERS 3,036,093 - (843,825) 2,192,268 - Net OPEB Liability 133,025 7,015 - 140,040 - Compensated Absences 323,956 186,953 (198,177) 312,732 198,000

Governmental Activities Long-Term Liabilities$ 19,816,640 $ 193,968 $ (2,895,977) $ 17,114,631 $ 1,214,313

Business Type Activities: Bonds Payable: Revenue Bonds$ 25,870,000 $ - $ (1,855,000) $ 24,015,000 $ 1,905,000 Unamortized Bond Premium 332,817 - (31,287) 301,530 - Unamortized Bond Discount (2,267) - 778 (1,489) - Compensated Absences 204,292 97,150 (71,197) 230,245 71,000

Business-Type Activities Long-Term Liabilities$ 26,404,842 $ 97,150 $ (1,956,706) $ 24,545,286 $ 1,976,000

State statutes limit the amount of general obligation indebtedness that is supported by tax levies; the District may issue to one percent or less of the total assessed valuation of taxable property. The current value of the District’s indebtedness is 0.45% of the total assessed value of taxable property.

Compensated absences in governmental activities will be funded primarily through the General Fund.

NOTE 7 RESTRICTED RESERVES

Wellness Center Revenue Refunding Bond, Series 2015 requires a reserve for future repairs and replacements. The Bond also requires reserve amounts based on future debt requirements. As of December 31, 2019, the reserve account was properly funded with an ending balance of $1,496,665.

-45- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

NOTE 8 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The composition of interfund balances as of December 31, 2019, is as follows:

Due from / to other funds:

Receivable Payable Amount Choice Health & Fitness Foundation $ 3,654,306

The interfund balance between Choice Health & Fitness and the Foundation relates to pledges within the Foundation that will be paid to Choice Health & Fitness once they are collected.

Advances to / from:

Advances From Advances To Amount Foundation Capital Projects Fund$ 4,030,000

The Foundation issued Lease Revenue Bonds, Series 2009 and Series 2013B, to provide permanent financing for improvements at the District facilities. The debt service will be paid by the Foundation from transfers from the Capital Projects Fund. The future payments and receipts for the advances are as follows:

Year Ending December 31, Principal Interest

2020 $ 440,000 $ 143,451 2021 410,000 130,026 2022 420,000 117,726 2023 390,000 105,126 2024 200,000 93,426 2025-2029 1,110,000 357,002 2030-2033 1,060,000 114,180 $ 4,030,000 $ 1,060,937

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Interfund transfers were as follows:

Transfer Transfer Fund In Out

General Fund $ 14,187 $ 931,000 Capital Projects Fund 2,176,418 706,576 Lincoln Golf Course 80,000 - King's Walk Golf Course 325,000 - Choice Health & Fitness 245,000 - Foundation 161,576 1,364,605 Total $ 3,002,181 $ 3,002,181

In accordance with the agreement between the Foundation and the Capital Projects Fund, the Capital Projects fund transferred $161,576 to the Foundation for the current year interest payment on the Series 2009 and Series 2013B debt issuances. The Foundation transferred pledges collected by donors to the Capital Project Fund and Choice Health & Fitness. The remaining interfund transfers are to cover expenditures paid in one fund on behalf of another fund.

NOTE 9 ASSETS HELD FOR SALE

The Foundation has received donations of 325,000 cubic yards of clay. As of December 31, 2019, the Foundation has 193,000 cubic feet of clay remaining which has been valued at $0.75 per cubic foot, for a total value of $144,750.

NOTE 10 FUND BALANCE

Minimum Fund Balance Policy

The Board of Commissioners has formally adopted a fund balance policy for the General Fund. The policy establishes the District will strive to maintain a minimum general fund balance (unassigned, assigned, and committed only) of 15% of the operating expenditures.

Deficit Fund Balance

At December 31, 2019, the Capital Projects Fund had a deficit fund balance of $3,123,931. This deficit will be eliminated with future transfers in and property tax revenues.

NOTE 11 ENDOWMENT

The Foundation's endowment consists of funds established for a variety of purposes in support of the Foundation. As required by accounting principles generally accepted in the United States of America, net assets associated with the endowment funds are classified and reported based on the existence or absence of donor-imposed restrictions.

The Board of Directors of the Foundation has interpreted the North Dakota Uniform Prudent Management of Institutional Funds Act (UPMIFA) as requiring the preservation of the fair value of the original gift as of the gift date of the donor-restricted endowment funds absent explicit donor stipulations to the contrary. As a result of this interpretation, the Foundation classifies as permanently restricted net assets (a) the original value of gifts donated to the permanent endowment, (b) the original value of subsequent gifts to the permanent endowment, and (c) accumulations to the permanent endowment made in accordance with the direction of the applicable donor gift instrument. -47- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

1. The duration and preservation of the endowment fund. 2. The purposes of the Foundation and the donor-restricted endowment fund. 3. General economic conditions. 4. The possible effect of inflation or deflation. 5. The expected total return from income and appreciation of investments. 6. Other resources of the Foundation. 7. The investment policies of the Foundation.

Description of Amounts Classified as Non-expendable (Endowment Only) as of December 31, 2019

Non-expendable Donations:

The portion of perpetual endowment funds that is required to be retained permanently by donor stipulation$ 204,067

Total endowment funds classified as non-expendable $ 204,067

Return Objectives and Risk Parameters

The Foundation has adopted investment and spending policies for endowment assets that attempt to provide a predictable stream of funding to programs supported by its endowment while seeking to maintain the purchasing power of the endowment assets. Endowment assets include those assets of donor-restricted funds that the Foundation must hold in perpetuity. Under this policy, as approved by the Board of Directors, the endowment assets are invested in a manner that is intended to produce results that allow for distributions of dividends and interest income while maintaining the purchasing power of the investment portfolio. Actual returns in any given year may vary from this amount.

Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation to achieve its long- term return objectives within prudent risk constraints.

Spending Policy and How the Investment Objectives Relate to Spending Policy

The Foundation has a policy of distributing the dividend and interest income annually to the beneficiaries while maintaining the purchasing power of the investment portfolio. Accordingly, over the long-term, the Foundation expects the current spending policy to allow its endowment to grow at an average of inflation. This is consistent with the Foundation’s objective to maintain the purchasing power of the endowment assets held in perpetuity.

-48- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

NOTE 12 UNEARNED REVENUE

Unearned revenue has been recorded in the funds for the following:

Government-Wide Business-Type Activities Activities Prepaid Lease Agreement $ - $ 84,261 Prepaid Contract Agreements 91,598 - Prepaid Sponsorship Agreements 4,350 - Prepaid and Scheduled Ice Time 188,965 - Advanced Grant Proceeds - 10,000 Advanced Deposits - 290,994 Total $ 284,913 $ 385,255

NOTE 13 UNAVAILABLE REVENUE

Unavailable revenue has been recorded in the governmental funds for the following:

Governmental Activities Taxes Receivable $ 194,638 Special Assessments Receivable 1,619 Development Agreement 14,520 Sponsorship Receivable 291,546 Contracts Receivable 20,000 Total $ 522,323

Sponsorship receivable consists of sponsorships paid and contracts signed for the years following December 31, 2019.

NOTE 14 DEFINED BENEFIT PENSION PLAN – SINGLE EMPLOYER

A. Plan Description

Substantially all full-time employees of the District were eligible to belong to a pension plan administered by the District. Effective January 1, 2010, the plan was closed to new employees. New employees are eligible to be part of NDPERS. The cost to administer the plan is financed through the contributions and investment earnings of the plan.

Responsibility for administration of the closed plan rests with the Board of Commissioners of the District.

Eligibility

All employees became a member of the pension plan at the time they started employment with the District, if the following conditions were met:

1. All employees of the District were eligible to participate in the plan if they were employed prior to age 60.

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2. All employees hired after 7/1/1973 were required to join the pension plan provided they were employed prior to age 60. 3. An employee became a contributing participant on the first day of the month after one year of service. However, the employee receives credit for this past one year in calculating years of service in the plan. 4. Past service benefit is limited to ten years prior to 7/1/1973.

“Rule of 90” is a combination of years of service and age that equal 90 years. Participants qualifying for the “Rule of 90” are eligible for full-retirement benefits based on current pension formula.

The Board of Commissioners approved adopting an Early Retirement Benefit plan under the rule of 90. If an employee chooses to retire after reaching the rule of 90, that employee will be eligible to receive 12.5% of the final monthly salary, which will be paid monthly over a four-year period, or until they reach age 65, whichever comes first. If an employee does not choose to retire after reaching the rule of 90, that employee may continue to work and remain in the pension plan until he or she chooses to retire.

Pension and Death Benefits

The Pension Plan provides retirement benefits as well as death benefits. All benefits vest after 5 years of vesting service. Retirement benefits at normal retirement date are as follows:

a. 2% of monthly earnings at 7/1/1973, times years of past benefit service (maximum 10 years); plus. b. 2% of final average monthly earnings up to monthly covered compensation, times future benefit service.

If an employee leaves covered employment or dies before 5 years of credited service, accumulated employee contributions plus related investment earnings are refunded to the employee or designated beneficiary.

Benefit and contribution provisions are established by District resolution and may be amended only by the Board of Commissioners.

Employees Covered by Benefit Terms

At December 31, 2019, the following employees were covered by the benefit terms:

Inactive Employees or beneficiaries currently receiving benefits 22 Inactive Employees entitled to but not yet receiving benefits 8 Active Employees 22 52

Member Contributions

Contributions to the plan are required as follows:

All participants contribute 3.7% or 5.9% of monthly earnings, depending on years of service.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2019, the District reported a liability of $2,439,459 for the net pension liability. The net pension liability was measured as of December 31, 2019, and the total pension liability used to -50- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019 calculate the net pension liability was determined by an actuarial valuation as of January 1, 2019 and rolled forward to December 31, 2019.

For the year ended December 31, 2019, the District recognized pension expense of ($662,793). At December 31, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ - $ 26,001 Changes in actuarial assumptions - 9,348 Difference between projected and actual investment earnings - 297,874 Total $ - $ 333,223

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Pension Expense Year ending December 31: Amount 2020 $ 113,945 2021 92,119 2022 (11,166) 2023 138,325

Actuarial Assumptions

The total pension liability in the January 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.0% Salary increases 2.0% Investment rate of return 7.0%, net of investment expenses Cost-of-living adjustments None

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2014 Combined Healthy Mortality Table.

The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Fund’s target asset allocation are summarized in the following table:

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Long-Term Expected Asset Class Target Allocation Real Rate of Return Domestic Stocks 27.00% 6.40% International Stocks 20.00% 7.20% Private Equity 7.50% 8.40% Domestic Fixed Income 25.50% 2.60% Global Real Assets 20.00% 6.50%

Discount Rate

The discount rate used to measure the total pension liability was 7.0 percent as of December 31, 2019. The projection of cash flows used to determine the discount rate assumes that member and employer contributions will be made at rates equal to those based on the January 1, 2019 Actuarial Valuation Report.

Changes in the Net Pension Liability

Increase (Decrease) Total Plan Net Position Fiduciary Position Liability Net Position Liability (a) (b) (a) - (b) Balances at 1/1/2019 $ 9,844,092 $ 6,559,235 $ 3,284,857 Changes for the Year: Service Cost 69,068 - 69,068 Interest 678,667 - 678,667 Contributions - Employer - 318,000 (318,000) Contributions - Employee - 65,266 (65,266) Net Investment Income - 1,148,064 (1,148,064) Differences Between Expected and Actual Experience (63,683) - (63,683) Changes of Assumptions (22,897) - (22,897) Benefit Payments, Including Refunds of Employee Contributions (435,840) (435,840) - Administrative Expenses - (24,777) 24,777 Net Changes 225,315 1,070,713 (845,398) Balances at 12/31/2019 $ 10,069,407 $ 7,629,948 $ 2,439,459

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the District's net pension liability calculated using the discount rate of 7.0 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.0 percent) or 1 percentage point higher (8.0 percent) than the current rate:

1% Decrease in 1% Increase in Discount Discount Rate (6.0%) Discount Rate (7.0%) Rate (8.0%)

District's proportionate share of the Single Employer net pension liability: $ 3,491,737 $ 2,439,459 $ 1,541,084

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NOTE 15 DEFINED BENEFIT PENSION PLANS - STATEWIDE

North Dakota Public Employees’ Retirement System - Main System - (NDPERS) The following brief description of NDPERS is provided for general information purposes only. Participants should refer to NDCC Chapter 54-52 for more complete information.

NDPERS is a cost-sharing multiple-employer defined benefit pension plan that covers substantially all employees of the State of North Dakota, its agencies, and various participating political subdivisions. NDPERS provides for pension, death, and disability benefits. The cost to administer the plan is financed through the contributions and investment earnings of the plan.

Responsibility for administration of the NDPERS defined benefit pension plan is assigned to a Board comprised of nine members. The Board consists of a Chairman, who is appointed by the Governor; one member appointed by the Attorney General; one member appointed by the State Health Officer; three members elected by the active membership of the NDPERS system; one member elected by the retired public employees; and two members of the legislative assembly appointed by the chairman of the legislative management.

Pension Benefits Benefits are set by statute. NDPERS has no provision or policies with respect to automatic and ad hoc post-retirement benefit increases. Members of the Main System are entitled to unreduced monthly pension benefits beginning when the sum of age and years of credited service equal or exceed 85 (Rule of 85), or at normal retirement age (65). For members hired on or after January 1, 2016, the Rule of 85 will be replaced with the Rule of 90 with a minimum age of 60. The monthly pension benefit is equal to 2.00% of their average monthly salary, using the highest 36 months out of the last 180 months of service, for each year of service. For members hired on or after January 1, 2020 the 2.00% multiplier was replaced with a 1.75% multiplier. The plan permits early retirement at ages 55-64 with three or more years of service.

Members may elect to receive the pension benefits in the form of a single life, joint and survivor, term- certain annuity, or partial lump sum with ongoing annuity. Members may elect to receive the value of their accumulated contributions, plus interest, as a lump sum distribution upon retirement or termination, or they may elect to receive their benefits in the form of an annuity. For each member electing an annuity, total payment will not be less than the members’ accumulated contributions plus interest.

Death and Disability Benefits

Death and disability benefits are set by statute. If an active member dies with less than three years of service for the Main System, a death benefit equal to the value of the member’s accumulated contributions, plus interest, is paid to the member’s beneficiary. If the member has earned more than three years of credited service for the Main System, the surviving spouse will be entitled to a single payment refund, life-time monthly payments in an amount equal to 50% of the member’s accrued normal retirement benefit, or monthly payments in an amount equal to the member’s accrued 100% Joint and Survivor retirement benefit if the member had reached normal retirement age prior to date of death. If the surviving spouse dies before the member’s accumulated pension benefits are paid, the balance will be payable to the surviving spouse’s designated beneficiary.

Eligible members who become totally disabled after a minimum of 180 days of service, receive monthly disability benefits equal to 25% of their final average salary with a minimum benefit of $100. To qualify under this section, the member has to become disabled during the period of eligible employment and apply for benefits within one year of termination. The definition for disabled is set by the NDPERS in the North Dakota Administrative Code. -53- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Refunds of Member Account Balance

Upon termination, if a member of the NDPERS Main System is not vested (is not 65 or does not have three years of service), they will receive the accumulated member contributions and vested employer contributions, plus interest, or may elect to receive this amount at a later date. If the member has vested, they have the option of applying for a refund or can remain as a terminated vested participant. If a member terminated and withdrew their accumulated member contribution and is subsequently reemployed, they have the option of repurchasing their previous service.

Member and Employer Contributions

Member and employer contributions paid to NDPERS are set by statute and are established as a percent of salaries and wages. Member contribution rates are 7% and employer contribution rates are 7.12% of covered compensation. For members hired on or after January 1, 2020 member contribution rates are 7% and employer contribution rates are 8.26% of covered compensation.

The member’s account balance includes the vested employer contributions equal to the member’s contributions to an eligible deferred compensation plan. The minimum member contribution is $25 and the maximum may not exceed the following:

1 to 12 months of service – Greater of one percent of monthly salary or $25 13 to 24 months of service – Greater of two percent of monthly salary or $25 25 to 36 months of service – Greater of three percent of monthly salary or $25 Longer than 36 months of service – Greater of four percent of monthly salary or $25

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2019, the District reported a liability of $2,192,268 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2019, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District's proportion of the net pension liability was based on the District's share of covered payroll in the Main System pension plan relative to the covered payroll of all participating Main System employers. At June 30, 2019, the District's proportion was 0.187042%. At June 30, 2018, the District’s proportion was 0.179905%.

For the year ended December 31, 2019, the District recognized pension expense of $478,579. At December 31, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ 1,298 $ 397,855 Changes in actuarial assumptions 819,192 703,348 Difference between projected and actual investment earnings 38,195 - Changes in proportion 213,224 10,241 Contributions paid to NDPERS subsequent to the measurement date 72,472 - Total $ 1,144,381 $ 1,111,444

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The $72,472 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2020.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Pension Expense Year ending December 31: Amount 2020 $ 151,713 2021 73,923 2022 (31,413) 2023 (175,226) 2024 (58,532) Actuarial Assumptions

The total pension liability in the July 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50% Service At Non-State Salary increases Beginning of Year Employee 0 15.00% 1 10.00% 2 8.00%

Age Under 30 10.00% 30-39 7.50% 40-49 6.75% 50-59 6.50% 60+ 5.25%

*Age-based salary increase rates apply for employees with three or more years of service

Investment rate of 7.50%, net of investment expenses return Cost-of-living None adjustments

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2000 Combined Healthy Mortality Table set back two years for males and three years for females, projected generationally using the SSA 2014 Intermediate Cost scale from 2014. For disabled retirees, mortality rates were based on the RP-2000 Disabled Retiree Mortality Table set back one year for males (no setback for females) multiplied by 125%.

The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the Fund’s target -55- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

asset allocation are summarized in the following table:

Long-Term Expected Asset Class Target Allocation Real Rate of Return Domestic Equity 30.00% 6.25% International Equity 21.00% 6.95% Private Equity 7.00% 10.15% Domestic Fixed Income 23.00% 2.11% Global Real Assets 19.00% 5.41%

Discount Rate

For NDPERS, GASB Statement No. 67 includes a specific requirement for the discount rate that is used for the purpose of the measurement of the Total Pension Liability. This rate considers the ability of the System to meet benefit obligations in the future. To make this determination, employer contributions, employee contributions, benefit payments, expenses and investment returns are projected into the future. The current employer and employee fixed rate contributions are assumed to be made in each future year. The Plan Net Position (assets) in future years can then be determined and compared to its obligation to make benefit payments in those years. In years where assets are not projected to be sufficient to meet benefit payments, which is the case for the NDPERS plan, the use of a municipal bond rate is required.

The Single Discount Rate (SDR) is equivalent to applying these two rates to the benefits that are projected to be paid during the different time periods. The SDR reflects (1) the long-term expected rate of return on pension plan investments (during the period in which the fiduciary net position is projected to be sufficient to pay benefits) and (2) a tax-exempt municipal bond rate based on an index of 20-year general obligation bonds with an average AA credit rating as of the measurement date (to the extent that the contributions for use with the long-term expected rate of return are not met).

For the purpose of this valuation, the expected rate of return on pension plan investments is 7.50%; the municipal bond rate is 3.13%; and the resulting Single Discount Rate is 7.50%.

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 7.50 percent, as well as what the Employer's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.50 percent) or 1 percentage point higher (8.50 percent) than the current rate:

1% Decrease in 1% Increase in Discount Discount Rate (6.50%) Discount Rate (7.50%) Rate (8.50%) District's proportionate share of the NDPERS net pension liability: $ 3,143,240 $ 2,192,268 $ 1,393,285

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued NDPERS financial report.

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NOTE 16 NDPERS OTHER POSTEMPLOYMENT BENEFITS (OPEB)

The following brief description of NDPERS is provided for general information purposes only. Participants should refer to NDAC Chapter 71-06 for more complete information.

NDPERS OPEB plan is a cost-sharing multiple-employer defined benefit OPEB plan that covers members receiving retirement benefits from the PERS, the HPRS, and Judges retired under Chapter 27-17 of the North Dakota Century Code a credit toward their monthly health insurance premium under the state health plan based upon the member's years of credited service. Effective July 1, 2015, the credit is also available to apply towards monthly premiums under the state dental, vision and long-term care plan and any other health insurance plan. Effective August 1, 2019 the benefit may be used for any eligible health, prescription drug plan, dental, vision, or long-term care plan premium expense. The Retiree Health Insurance Credit Fund (RHIC) is advance-funded on an actuarially determined basis.

Responsibility for administration of the NDPERS defined benefit OPEB plan is assigned to a Board comprised of nine members. The Board consists of a Chairman, who is appointed by the Governor; one member appointed by the Attorney General; one member appointed by the State Health Officer; three members elected by the active membership of the NDPERS system, one member elected by the retired public employees and two members of the legislative assembly appointed by the chairman of the legislative management.

OPEB Benefits

The employer contribution for the PERS, the HPRS, and the Defined Contribution Plan is set by statute at 1.14% of covered compensation. The employer contribution for employees of the state board of career and technical education is 2.99% of covered compensation for a period of eight years ending October 1, 2015. Employees participating in the retirement plan as part-time/temporary members are required to contribute 1.14% of their covered compensation to the RHIC Fund. Employees purchasing previous service credit are also required to make an employee contribution to the Fund. The benefit amount applied each year is shown as "prefunded credit applied" on the Statement of Changes in Plan Net Position for the OPEB trust funds. Beginning January 1, 2020, members first enrolled in the NDPERS Main System and the Defined Contribution Plan on or after that date will not be eligible to participate in RHIC. Therefore, RHIC will become for the most part a closed plan. There were no other benefit changes during the year.

Retiree health insurance credit benefits and death and disability benefits are set by statute. There are no provisions or policies with respect to automatic and ad hoc post-retirement benefit increases. Employees who are receiving monthly retirement benefits from the PERS, the HPRS, the Defined Contribution Plan, the Chapter 27-17 judges or an employee receiving disability benefits, or the spouse of a deceased annuitant receiving a surviving spouse benefit or if the member selected a joint and survivor option are eligible to receive a credit toward their monthly health insurance premium under the state health plan.

Effective July 1, 2015, the credit is also available to apply towards monthly premiums under the state dental, vision and long-term care plan and any other health insurance plan. Effective August 1, 2019 the benefit may be used for any eligible health, prescription drug plan, dental, vision, or long-term care plan premium expense. The benefits are equal to $5.00 for each of the employee’s or deceased employee's years of credited service not to exceed the premium in effect for selected coverage. The retiree health insurance credit is also available for early retirement with reduced benefits.

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OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At December 31, 2019, the District reported a liability of $140,040 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2019, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date. The Employer's proportion of the net OPEB liability was based on the District's share of covered payroll in the OPEB plan relative to the covered payroll of all participating OPEB employers. At June 30, 2019, the District's proportion was 0.174355 percent, which was an increase of .005449 from its proportion measured as of June 30, 2018.

For the year ended December 31, 2019, the District recognized OPEB expense of $20,817. At December 31, 2019, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ 3,459 $ 4,375 Changes in actuarial assumptions 16,690 - Difference between projected and actual earnings on OPEB plan investments 156 - Changes in proportion and differences between employer contributions and proportionate share of contributions 10,057 - Employer Contributions subsequent to the measurement date 11,604 - Total $ 41,966 $ 4,375

The $11,604 reported as deferred outflows of resources related to OPEB resulting from Employer contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending December 31, 2020.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEBs will be recognized in OPEB expense as follows:

Year ending December 31: Pension Expense Amount 2020 $ 4,348 2021 4,348 2022 5,652 2023 5,413 2024 3,922 2025 1,986 Thereafter 318

-58- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

Actuarial assumptions. The total OPEB liability in the July 1, 2019 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50% Salary increases Not applicable Investment rate of return 7.25%, net of investment expenses Cost-of-living adjustments None

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2000 Combined Healthy Mortality Table set back two years for males and three years for females, projected generationally using the SSA 2014 Intermediate Cost scale from 2014. For disabled retirees, mortality rates were based on the RP-2000 Disabled Mortality Table set back one year for males (no setback for females) multiplied by 125%.

The long-term expected investment rate of return assumption for the RHIC fund was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of RHIC investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Estimates of arithmetic real rates of return, for each major asset class included in the RHIC’s target asset allocation as of July 1, 2019 are summarized in the following table:

Long-Term Expected Asset Class Target Allocation Real Rate of Return Large Cap Domestic Equities 33.00% 6.00% Small Cap Domestic Equities 6.00% 7.30% Domestic Fixed Income 40.00% 2.07% International Equities 21.00% 6.95%

Discount rate. The discount rate used to measure the total OPEB liability was 7.25%. The projection of cash flows used to determine the discount rate assumed plan member and statutory/Board approved employer contributions will be made at rates equal to those based on the July 1, 2018, and July 1, 2017, HPRS actuarial valuation reports. For this purpose, only employer contributions that are intended to fund benefits of current RHIC members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs of future plan members and their beneficiaries are not included. Based on those assumptions, the RHIC fiduciary net position was projected to be sufficient to make all projected future benefit payments of current plan members. Therefore, the long- term expected rate of return on RHIC investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Sensitivity of the Employer's proportionate share of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the Plans as of June 30, 2019, calculated using the discount rate of 7.25%, as well as what the RHIC net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.25 percent) or 1-percentage- point higher (8.25 percent) than the current rate:

-59- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

1% Decrease in Discount 1% Increase in Discount Rate (6.25%) Discount Rate (7.25%) Rate (8.25%) District's proportionate share of the net OPEB liability: $ 178,742 $ 140,040 $ 106,910

NOTE 17 DEFERRED COMPENSATION PLAN AND TRUST

The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to eligible District employees, permits them to defer a portion of their salary until future years. There are two types of deferrals, pre-tax deferrals and Roth post- tax deferrals. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.

All amounts of compensation deferred under the plan, all property and rights purchased with those amounts, and all income attributable to those amounts, property, or rights are (until paid or made available to the employee or other beneficiary) solely the property and rights of the employees. Accordingly, the plan/trust assets have been excluded from the District’s reported assets.

NOTE 18 RISK MANAGEMENT

In the normal course of the business, the District is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the District carries commercial insurance. Claims resulting from these risks did not exceed insurance coverage in any of the past three years.

NOTE 19 MEMBERSHIP SHARING WITH ALTRU FAMILY YMCA

The District is a party in an agreement with the Altru Family YMCA, in which the two parties share membership revenues based on the agreement.

NOTE 20 NEW PRONOUNCEMENTS

GASB Statement No. 87, Leases, establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. This Statement requires recognition of certain lease assets and liabilities for leases that were previously classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. Under this Statement, a lessee is required to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance and consistency of information about governments’ leasing activities. This Statement is effective for reporting periods beginning after December 15, 2019. Earlier application is encouraged.

GASB Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period, establishes accounting requirements for interest cost incurred before the end of a construction period. This Statement requires that interest cost incurred before the end of a construction period be recognized as an expense in the period in which the cost is incurred for financial statements prepared using the economic resources measurement focus. As a result, interest cost incurred before the end of a construction period will not be included in the historical cost of a capital asset reported in a business- type activity or enterprise fund. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. Earlier application is encouraged.

GASB Statement No. 91, Conduit Debt Obligations, provides a single method of reporting conduit debt obligations by issuers and eliminates diversity in practice associated with (1) commitments extended by -60- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2019

issuers, (2) arrangements associated with conduit debt obligations, and (3) related note disclosures. This Statement clarifies the existing definition of a conduit debt obligation; establishes that a conduit debt obligation is not a liability of the issuer; establishes standards for accounting and financial reporting of additional commitments and voluntary commitments extended by issuers and arrangements associated with conduit debt obligations; and improves required note disclosures. This Statement also addresses arrangements—often characterized as leases—that are associated with conduit debt obligations. The requirements of this Statement are effective for reporting periods beginning after December 15, 2020. Earlier application is encouraged.

GASB Statement No. 92, Omnibus 2020, provides additional guidance to improve consistency of authoritative literature by addressing practice issues identified during the application of certain GASB statements. This statement provides accounting and financial reporting requirements for specific issues related to leases, intra-entity transfers of assets, postemployment benefits, government acquisitions, risk financing and insurance-related activity of public entity risk pools, fair value measurements and derivative instruments. The requirements of this Statement are effective for reporting periods beginning after December 15, 2019. Earlier application is encouraged.

Management has not yet determined the effect these statements will have on the District’s financial statements.

NOTE 21 SUBSEQUENT EVENTS

No significant events have occurred subsequent to the District’s year end. Subsequent events have been evaluated through March 26, 2020, which is the date these financial statements were available to be issued.

* * * * * * * * * * * * *

-61- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S CONTRIBUTIONS TO NDPERS/SINGLE EMPLOYER PLANS LAST 10 YEARS

Actuarial Determined or Statutorily Required Contribution Deficiency Contributions as a % of Year Ended Contributions District's Contributions (Excess) District's Covered Payroll Covered Payroll Single Employer Plan 2015$ 208,429 $ 210,000 $ 1,571 $ 1,351,786 15.54% 2016 276,944 210,000 (66,944) 1,347,615 15.58% 2017 288,286 210,000 (78,286) 1,305,429 16.09% 2018 238,562 318,000 79,438 1,211,584 26.25% 2019 390,073 318,000 (72,073) 1,229,825 25.86%

NDPERS 2015 132,843 132,843 - 1,865,772 7.12% 2016 120,358 120,358 - 1,690,424 7.12% 2017 129,449 129,449 - 1,818,101 7.12% 2018 137,219 137,219 - 1,927,227 7.12% 2019 145,488 145,488 - 2,043,367 7.12% The amounts presented for each fiscal year were determined as of the District’s year end which is December 31.

The single employer pension plan does not have statutorily required contributions; contributions are made based on recommendations from the actuarial study performed annually.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-62- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S AND NON-EMPLOYER PROPORTIONATE SHARE OF THE NET PENSION LIABILITY LAST 10 YEARS

District's Proportionate District's Share of the Net Pension Plan Fiduciary Net District's Proportion of Proportionate Share of Liability (Asset) as a Position as a Percentage the Net Pension the Net Pension District's Covered Percentage of its Covered of the Total Pension Year Ended Liability (Asset) Liability (Asset) Payroll Payroll Liability NDPERS 2015 0.163035%$ 1,108,610 $ 1,452,445 76.33% 77.15% 2016 0.156803% 1,528,198 1,580,206 96.71% 70.46% 2017 0.166376% 2,674,208 1,698,443 157.45% 61.98% 2018 0.179905% 3,036,093 1,848,194 164.27% 62.80% 2019 0.187042% 2,192,268 1,945,558 112.68% 71.66%

The amounts presented for each fiscal year were determined as of the measurement date of the District’s net pension liability which is June 30 of the previous fiscal year for NDPERS.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-63- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF CHANGES IN THE DISTRICT’S NET PENSION LIABILITY AND RELATED RATIOS LAST 10 YEARS

2019 2018 2017 2016 2015 Total Pension Liability Service Cost $ 69,068 $ 55,532 $ 51,356 $ 53,042 $ 65,304 Interest 678,667 701,298 639,065 613,350 600,859 Differences Between Expected and Actual Experience (63,683) (395,310) 47,709 177,548 - Changes of Assumptions (22,897) 665,934 743,710 - - Benefit Payments, Including Refunds of Employee Contributions (435,840) (353,667) (496,980) (544,647) (450,874) Net Changes 225,315 673,787 984,860 299,293 215,289 Total Pension Liability - Beginning 9,844,092 9,170,305 8,185,445 7,886,152 7,670,863 Total Pension Liability - Ending (a) $ 10,069,407 $ 9,844,092 $ 9,170,305 $ 8,185,445 $ 7,886,152

Total Fiduciary Net Position Contributions - Employer $ 318,000 $ 318,000 $ 210,000 $ 210,000 $ 210,000 Contributions - Employee 65,266 68,781 69,545 74,628 79,340 Net Investment Income 1,148,064 (222,691) 987,588 392,405 67,259 Benefit Payments, Including Refunds of Employee Contributions (435,840) (353,667) (496,980) (544,647) (450,874) Administrative Expenses (24,777) (11,652) (15,570) (13,466) (18,795) Net Changes in Plan Fiduciary Net Position 1,070,713 (201,229) 754,583 118,920 (113,070) Plan Fiduciary Net Position - Beginning 6,559,235 6,760,464 6,005,881 5,886,961 6,000,031 Plan Fiduciary Net Position - Ending (b) $ 7,629,948 $ 6,559,235 $ 6,760,464 $ 6,005,881 $ 5,886,961

District's Net Pension Liability - Ending (a) - (b) $ 2,439,459 $ 3,284,857 $ 2,409,841 $ 2,179,564 $ 1,999,191

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 75.77% 66.63% 73.72% 73.37% 74.65%

Covered Employee Payroll $ 1,229,825 $ 1,211,584 $ 1,305,429 $ 1,347,615 $ 1,351,786

District's Net Pension Liability as a Percentage of Covered Employee Payroll 198.36% 271.12% 184.60% 161.73% 147.89%

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-64- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S CONTRIBUTIONS TO OPEB PLAN LAST 10 YEARS

Contributions in Relation to the Statutorily Required Statutorily Required Contribution Deficiency Contributions as a % of Year Ended Contribution Contribution (Excess) District's Covered Payroll Covered Payroll 2018 $ 21,970 $ 21,970 - $ 1,927,227 1.14% 2019 23,294 23,294 - 2,043,367 1.14%

The amounts presented for each fiscal year were determined as of the District’s year end which is December 31.

The District implemented GASB Statement No. 75 for its year ended December 31, 2018. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-65- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S SHARE OF THE OPEB LIABILITY LAST 10 YEARS District’s Proportionate Share of the Net OPEB Plan Fiduciary Net District’s Proportion of District’s Proportionate Liability (Asset) as a Position as a Percentage the Net OPEB Liability Share of the Net District's Covered Percentage of its Covered of the Total OPEB Year Ended (Asset) OPEB Liability (Asset) Payroll Payroll Liability 2018 0.168906%$ 133,025 $ 1,848,194 7.20% 61.89% 2019 0.174355% 140,040 1,945,558 7.20% 63.13%

The amounts presented for each fiscal year were determined as of the measurement date of the District’s other postemployment benefit liability which is June 30 of the previous fiscal year for NDPERS.

The District implemented GASB Statement No. 75 for its year ended December 31, 2018. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-66- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2019

Variance with Final Budget Original and Positive Final Budget Actual (Negative) REVENUES Local Property Taxes$ 5,521,000 $ 5,628,270 $ 107,270 State Revenues 810,000 993,704 183,704 Program Income 1,134,000 1,241,339 107,339 Investment Earnings 100,000 225,037 125,037 Sponsorship 320,000 327,232 7,232 Donations 8,700 74 (8,626) Miscellaneous 30,000 48,189 18,189

Total Revenues 7,923,700 8,463,845 540,145

EXPENDITURES Current: Park Operations 5,742,500 5,252,083 490,417 Forestry 830,200 842,999 (12,799) Recreation 640,400 594,699 45,701 Capital Outlay: Capital and Betterment 878,800 884,576 (5,776) Debt Service: Principal Retirement 40,000 93,132 (53,132) Interest Charges - 36,186 (36,186)

Total Expenditures 8,131,900 7,703,675 428,225

Excess (Deficiency) of Revenues over Expenditures (208,200) 760,170 968,370

OTHER FINANCING SOURCES (USES) Proceeds on Sale of Capital Assets - 73,965 73,965 Transfers In - 14,187 14,187 Transfers Out (60,000) (931,000) (871,000)

Total Other Financing Sources (Uses) (60,000) (842,848) (782,848)

Net Change in Fund Balances (268,200) (82,678) 185,522

Fund Balances - Beginning of Year 2,833,575 2,833,575 -

Fund Balances - End of Year $ 2,565,375 $ 2,750,897 $ 185,522

See Notes to the Required Supplementary Information

-67- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2019

NOTE 1 BUDGETARY DATA

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

All budgeted appropriations lapse at the end of the fiscal year.

NOTE 2 CHANGES OF ASSUMPTIONS AND BENEFIT TERMS

NDPERS PENSION

Changes of benefit terms. The interest rate earned on member contributions will decrease from 7.25 percent to 7.00 percent effective January 1, 2020 (based on the adopted decrease in the investment return assumption). New Main System members who are hired on or after January 1, 2020 will have a benefit multiplier of 1.75 percent (compared to the current benefit multiplier of 2.00 percent). The fixed employer contribution for new members of the Main System will increase from 7.12 percent to 8.26 percent. For members who terminate after December 31, 2019, final average salary is the higher of the final average salary calculated on December 31, 2019 or the average salary earned in the three highest periods of twelve consecutive months employed during the last 180 months of employment. There have been no other changes in plan provisions since the previous actuarial valuation as of July 1, 2018.

-68- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION - CONTINUED FOR THE YEAR ENDED DECEMBER 31, 2019

Changes of assumptions. The Board approved the following changes to the actuarial assumptions beginning with the July 1, 2019 valuation:

• The investment return assumption was lowered from 7.75% to 7.50%

All other actuarial assumptions and the actuarial cost method are unchanged from the last actuarial valuation as of July 1, 2018.

OPEB

Changes of benefit terms. Beginning January 1, 2020, members first enrolled in the NDPERS Main System and the Defined Contribution Plan on or after that date will not be eligible to participate in RHIC. Therefore, RHIC will become for the most part a closed plan. There have been no other changes in plan provisions since the previous actuarial valuation as of July 1, 2018.

Changes of assumptions. The Board approved the following changes to the actuarial assumptions beginning with the July 1, 2019 valuation:

• The investment return assumption was lowered from 7.50% to 7.25%

All other actuarial assumptions and the actuarial cost method are unchanged from the last actuarial valuation as of July 1, 2018.

-69- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING SCHEDULE OF BALANCE SHEET – GENERAL FUND AS OF DECEMBER 31, 2019

Forestry Recreation Total General General Fund Fund Fund Funds Assets Cash$ 2,481,531 $ 489,469 $ 164,828 $ 3,135,828 Accounts Receivable 543,153 - - 543,153 Taxes Receivable 111,055 24,485 10,585 146,125 Contract and Sponsorships Receivable 311,545 - - 311,545

Total Assets $ 3,447,284 $ 513,954 $ 175,413 $ 4,136,651

Liabilities Accounts Payable$ 455,307 $ - $ - $ 455,307 Unearned Revenue 284,913 - - 284,913 Sales Tax Payable 3,100 - 174 3,274 Gift Certificate/Card Payable 29,677 - - 29,677 Accrued Payroll 118,926 19,058 20,651 158,635

Total Liabilities 891,923 19,058 20,825 931,806

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 96,983 20,013 9,268 126,264 Unavailable Revenue - Special Assessments - 1,619 - 1,619 Unavailable Revenue - Development Agreement 14,520 - - 14,520 Unavailable Revenue - Contracts and Sponsorships 311,545 - - 311,545

Total Deferred Inflows of Resources 423,048 21,632 9,268 453,948

Fund Balances Unassigned 2,132,313 473,264 145,320 2,750,897

Total Fund Balances 2,132,313 473,264 145,320 2,750,897

Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 3,447,284 $ 513,954 $ 175,413 $ 4,136,651

-70- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2019

Recreation Total General General Fund Forestry Fund Fund Funds Revenues Local Property Taxes$ 4,330,449 $ 887,039 $ 410,782 $ 5,628,270 State Revenues 993,704 - - 993,704 Program Income 1,032,513 2,750 206,076 1,241,339 Investment Earnings 225,037 - - 225,037 Sponsorships 325,867 - 1,365 327,232 Donations - - 74 74 Miscellaneous 37,252 2,651 8,286 48,189 Total Revenues 6,944,822 892,440 626,583 8,463,845

Expenditures Current: Park Operations 5,252,083 - - 5,252,083 Forestry - 842,999 - 842,999 Recreation - - 594,699 594,699 Capital Outlay: Capital and Betterment 728,190 156,386 - 884,576 Debt Service: Principal Retirement 93,132 - - 93,132 Interest Charges 36,186 - - 36,186 Total Expenditures 6,109,591 999,385 594,699 7,703,675

Excess (Deficiency) of Revenues Over (Under) Expenditures 835,231 (106,945) 31,884 760,170

Other Financing Sources (Uses) Proceeds on Sale of Capital Assets 55,510 18,455 - 73,965 Operating Transfers In - 2,484 11,703 14,187 Operating Transfers Out (851,000) - (80,000) (931,000) Total Other Financing Sources (Uses) (795,490) 20,939 (68,297) (842,848)

Net Change in Fund Balances 39,741 (86,006) (36,413) (82,678) Fund Balance Beginning of Year 2,092,572 559,270 181,733 2,833,575

Fund Balance End of Year $ 2,132,313 $ 473,264 $ 145,320 $ 2,750,897

-71- INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Park District of the City of Grand Forks, as of and for the year ended December 31, 2019, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks' basic financial statements and have issued our report thereon dated March 26, 2020.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Park District of the City of Grand Forks’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of Park District of the City of Grand Forks’ internal control. Accordingly, we do not express an opinion on the effectiveness of the Park District of the City of Grand Forks’ internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Make Every Day Count www.bradymartz.com -72- Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether Park District of the City of Grand Forks’ financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards.

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose.

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 26, 2020

-73- Make Every Day Count www.bradymartz.com

PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS, NORTH DAKOTA

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2018

TABLE OF CONTENTS

Page

ROSTER OF DISTRICT OFFICIALS 1

INDEPENDENT AUDITOR'S REPORT 2

MANAGEMENT’S DISCUSSION AND ANALYSIS 5

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements:

Statement of Net Position 15

Statement of Activities 16

Fund Financial Statements:

Balance Sheet - Governmental Funds 17

Reconciliation of Governmental Funds Balance Sheet to Net Position of Governmental Activities 18

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 19

Reconciliation of the Changes in Fund Balance of Governmental Funds to the Statement of Activities 20

Statement of Net Position - Proprietary Funds 21

Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 23

Statement of Cash Flows - Proprietary Funds 24

Statement of Fiduciary Net Position – Fiduciary Funds 25

Statement of Changes in Fiduciary Net Position – Fiduciary Funds 26

Notes to the Basic Financial Statements 27

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of District’s Contributions to NDPERS/Single Employer Plans 63

Schedule of District’s and Non-Employer Proportionate Share of the Net Pension Liability 64

Schedule of Changes in the District's Net Pension Liability and Related Ratios 65

Schedule of District’s Contributions to OPEB Plan 66

Schedule of District’s Share of the OPEB Liability 67

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 68

Notes to the Required Supplementary Information 69

SUPPLEMENTARY INFORMATION

Combining Schedule of Balance Sheet - General Fund 70

Combining Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund 71

* * * * * * * * * * * * * * * * *

PARK DISTRICT OF THE CITY OF GRAND FORKS ROSTER OF DISTRICT OFFICIALS AS OF DECEMBER 31, 2018

Jay Panzer President

Tim Skarperud Vice-President

Paul Barta Board Member

Terry Dvorak Board Member

Greg LaDouceur Board Member

Bill Palmiscno Executive Director

* * * * * * * * * * * * * * *

-1-

INDEPENDENT AUDITOR'S REPORT

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities and each major fund of the Park District of the City of Grand Forks as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks’ basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Auditor's Responsibility

Make Every Day Count www.bradymartz.com -2-

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities and each major fund of the Park District of the City of Grand Forks, as of December 31, 2018, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Emphasis of Matters

As discussed in Note 21 to the financial statements, the District adopted the provisions of Governmental Accounting Standards Board Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. As discussed in Note 21 to the financial statements, the District has retroactively restated the previously reported Net Position in accordance with this statement.

The District has changed the presentation of the Foundation Fund from a discretely presented component unit to a blended component unit due to a change in Board structure. As discussed in Note 21 to the financial statements, the District has retroactively restated the previously reported Net Position in accordance with this change.

Our opinions are not modified with respect to these matters.

Other Matters

Required Supplementary Information

-3- Make Every Day Count www.bradymartz.com

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Park District of the City of Grand Forks’ financial statements. The combining general fund statements are presented for purposes of additional analysis and are not a required part of the basic financial statements.

In accordance with Government Auditing Standards, we have also issued our report dated March 15, 2019 on our consideration of the Park District of the City of Grand Forks' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the Park District of the City of Grand Forks’ internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Park District of the City of Grand Forks' internal control over financial reporting and compliance.

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 15, 2019

-4- Make Every Day Count www.bradymartz.com PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

The discussion and analysis of the Park District of the City of Grand Forks’ (the “District”) financial performance provides an overall review of the District’s financial activities for the year ended December 31, 2018 with comparisons for the year ended December 31, 2017. The intent of this discussion and analysis is to look at the District’s financial performance as a whole; readers should also review the basic financial statements to enhance their understanding of the District’s financial performance.

Financial Highlights

 The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $46,493,111 (net position).  The change in net position from current year activity was an increase of $2,268,190. The District also saw an increase in net position of $1,449,983 due to a prior period adjustment, see note 21 for additional information on the prior period adjustment.  Total liabilities were $47,792,322 at December 31, 2018. This is a decrease of $743,207 from the balance at December 31, 2017. This result was due to bond payments.

Using this Annual Financial Report

Reporting on the District as a Whole

Statement of Net Position and the Statement of Activities

In the Statement of Net Position and the Statement of Activities, the District’s activities are reported as Governmental Activities and Business Type Activities.

-5- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Reporting on the District’s Most Significant Fund

Governmental Fund

The Park District of the City of Grand Forks as a Whole

Recall that the Statement of Net Position looks at the District as a whole. Table 1 provides a summary of the District’s net position for 2018 and 2017:

Table 1 Statement of Net Position December 31, 2018

Governmental Business-Type Activities Activities Total Assets Current and Other Assets $ 304,912 $ 16,863,533 $ 17,168,445 Capital Assets, Net 42,548,217 32,668,035 75,216,252

Total Assets 42,853,129 49,531,568 92,384,697

Deferred Outflows of Resources 2,280,162 - 2,280,162

Liabilities Current Liabilities 664,957 905,883 1,570,840 Long-Term Liabilities: Due within One Year 1,178,577 1,949,933 3,128,510 Due in more than One Year 18,638,063 24,454,909 43,092,972

Total Liabilities 20,481,597 27,310,725 47,792,322

Deferred Inflows of Resources 379,426 - 379,426

Net Position Net Investment in Capital Assets 24,997,480 11,031,857 36,029,337 Restricted 549,932 5,187,285 5,737,217 Unrestricted (1,275,144) 6,001,701 4,726,557

Total Net Position $ 24,272,268 $ 22,220,843 $ 46,493,111

-6- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Table 1 Continued Statement of Net Position December 31, 2017

Governmental Business-Type Activities Activities Total Assets Current and Other Assets$ 6,172,209 $ 8,121,824 $ 14,294,033 Capital Assets, Net 42,196,902 33,420,692 75,617,594

Total Assets 48,369,111 41,542,516 89,911,627

Deferred Outflows of Resources 1,879,821 - 1,879,821

Liabilities Current Liabilities 625,402 303,358 928,760 Long-Term Liabilities: Due within One Year 1,640,089 1,462,000 3,102,089 Due in more than One Year 22,727,476 21,777,204 44,504,680

Total Liabilities 24,992,967 23,542,562 48,535,529

Deferred Inflows of Resources 295,832 - 295,832

Net Position Net Investment in Capital Assets 23,217,657 10,367,026 33,584,683 Restricted 2,617,573 1,423,433 4,041,006 Unrestricted (875,097) 6,209,495 5,334,398

Total Net Position $ 24,960,133 $ 17,999,954 $ 42,960,087

-7- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Table 2 Changes in Net Position As of December 31, 2018

Governmental Business-Type Activities Activities Total Revenues Program Revenues Charges for Services $ 1,047,876 $ 6,627,597 $ 7,675,473 Operating Grants and Contributions 9,249 - 9,249 Capital Grants and Contributions 329,778 210,830 540,608 General Revenues Property Taxes 8,547,970 - 8,547,970 State Revenues 941,675 - 941,675 Other 404,891 11,029 415,920 Total Revenues 11,281,439 6,849,456 18,130,895

Increase (Decrease) in Net Position Before Transfers 1,656,339 611,851 2,268,190

Transfers 57,076 (57,076) -

Increase (Decrease) in Net Position 1,713,415 554,775 2,268,190

Net Position as Originally Stated 24,960,133 17,999,954 42,960,087 Prior Period Adjustments - See Note 21 (2,401,280) 3,666,114 1,264,834

Net Position Beginning of Year 22,558,853 21,666,068 44,224,921

Net Position End of Year $ 24,272,268 $ 22,220,843 $ 46,493,111

-8- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Table 2 Continued Changes in Net Position As of December 31, 2017

Governmental Business-Type Activities Activities Total

Revenues Program Revenues Charges for Services $ 1,254,042 $ 5,632,382 $ 6,886,424 Operating Grants and Contributions 8,671 - 8,671 Capital Grants and Contributions 169,972 171,811 341,783 General Revenues Property Taxes 8,385,069 - 8,385,069 State Revenues 816,622 - 816,622 Other 158,632 12,301 170,933 Total Revenues 10,793,008 5,816,494 16,609,502

Expenses Program Expenses Park Operations 6,855,087 - 6,855,087 Forestry 832,487 - 832,487 Recreation 698,343 - 698,343 Interest on Long-Term Debt 705,433 - 705,433 King's Walk Golf Course - 1,500,557 1,500,557 Lincoln Golf Course - 368,744 368,744 Choice Health & Fitness - 4,350,737 4,350,737 Total Expenses 9,091,350 6,220,038 15,311,388

Increase (Decrease) in Net Position Before Transfers 1,701,658 (403,544) 1,298,114

Transfers (613,953) 613,953 -

Increase (Decrease) in Net Position 1,087,705 210,409 1,298,114

Net Position Beginning of Year 23,872,428 17,789,545 41,661,973

Net Position End of Year $ 24,960,133 $ 17,999,954 $ 42,960,087

Choice Health & Fitness membership revenue decreased almost $48,000 from the prior year. Choice Health & Fitness has a shared membership agreement with the Altru Family YMCA. Combined members for both organizations started the year with approximately 14,900 members and ended the year with approximately 14,700 members. Members are expected to remain close to the 15,000 level and the focus will continue to be on member retention for 2019. On the expense side, 2018 operating expenses were less than the prior year. For 2019 we will continue to evaluate current programing and look to augment with fresh offerings that will allow us to provide great customer service with the financial levels needed to support it.

King’s Walk Golf Course was open from late April to late October in 2018. Total operating revenue increased just over $5,000 from the 2017 level. Almost 25,000 rounds were played in 2018, which was down around 1,700 rounds from the 2017 season. Golfers purchasing King’s Walk season memberships were again able to play Lincoln Golf Course at no extra cost and this policy will continue in 2019.

-9- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Lincoln Golf Course was open from late April to late October in 2018. Total operating revenue was within $5,500 of the 2018 level. Over 17,300 rounds were played in 2018, which was down over 2,000 rounds from the 2017 season. The Steve Mullally Youth Golf Course, located next to Lincoln Golf Course, was enjoyed by many families. This is a youth 9-hole golf course and is free for youth and families to play.

General Fund Budgetary Highlights

The District’s budget is prepared on the same basis of accounting as the financial statements.

There were no amendments to the District’s budget during the course of 2018.

Original and final budgeted revenues for the general fund in 2018 were $7,939,500 and the actual revenues were $8,331,034. The major factor contributing to the increase of actual revenues over budgeted revenues in 2018 was due to an increase of almost $162,000 in local property taxes. This was attributed to a higher percentage of timely current year collections compared to the percentage budgeted. State aid received was over $81,000 over budget. This increase in state aid is directly related to an increase in sales tax collections for the state of ND tied to the rise of oil production in the western part of the state. Interest received was $89,000 over budget along with increased program revenue of over $60,000 also contributed.

Original and final budgeted expenditures for the general fund in 2018 were $7,705,600 and the actual expenditures were $7,605,815. Actual expenses were less than budgeted mainly due to continuing to prioritize maintenance items and projects as well as expense control by managers in their departments.

-10- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Capital Assets

Table 3 Capital Assets at December 31, 2018 (Net of Depreciation)

Totals $ 42,548,217 $ 32,668,035 $ 75,216,252

Capital Assets at December 31, 2017 (Net of Depreciation)

Governmental Business-Type Activities Activities Total Land $ 4,845,084 $ 3,249,695 $ 8,094,779 Land Improvements 13,006,855 - 13,006,855 Buildings, Systems, and Structures 22,613,856 25,781,285 48,395,141 Golf Course - 3,677,972 3,677,972 Equipment 973,009 466,866 1,439,875 Vehicles 259,425 140 259,565 Tractors, Trailers, and Mowers 476,037 244,734 720,771 Construction in Progress 22,636 - 22,636

Totals $ 42,196,902 $ 33,420,692 $ 75,617,594

Additional information on the District’s capital assets can be found in Note 3 of this report.

-11- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Long-Term Debt

At the end of the current fiscal year, the District had total bonded debt outstanding of $38,228,221, contract payable of $1,011,038, net pension liabilities of $6,320,950, net other postemployment benefit liabilities of $133,025, and compensated absences of $528,248.

Table 4 Outstanding Debt at December 31, 2018

Total $ 19,816,640 $ 26,404,842 $ 46,221,482

Outstanding Debt at December 31, 2017

Governmental Business-Type Activities Activities Total General Obligation Bonds$ 12,923,117 $ - $ 12,923,117 Revenue Bonds - 23,053,666 23,053,666 Contract Payable 6,056,128 - 6,056,128 Net Pension Liability 5,208,235 - 5,208,235 Compensated Absences 304,271 185,538 489,809

Total $ 24,491,751 $ 23,239,204 $ 47,730,955

The District’s total debt decreased by $1,509,473 during the current fiscal year.

Additional information on the District’s long-term debt can be found in Note 6 of this report.

-12- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Long and Short-term Goals

For 2019, the District is continuing to expand and improve facilities to meet demand. Altru Wellness Village will be adding sidewalk lighting and additional playground equipment will be installed at Kiwanis Park South. The second phase of the skate park will be constructed at Kannowski Park. At Scheels Sports Complex, the dugout fences and roofs will be installed along with a shelter that will be constructed. Bringewatt Park will see sand volleyball improvements and the memorial and sidewalks will be added to Veterans Memorial Park. Court resurfacing is also planned at Lincoln and University Parks.

In terms of government funds, all indicators for the City of Grand Forks point to a steady growth situation, which means the tax base along with the value of the mill will increase. The tax revenues for its government funds will increase accordingly. The revenue sharing relationship, commonly called state aid, appears to have leveled off after the rapid escalation and then regression over the last number of years. The District budgeted to slightly spend down the reserves in the government funds for 2019 to maintain the desired 15-25% reserve of budgeted expenses.

The enterprise funds are composed of activities where the District tries to balance fee structures to keep them affordable for families while using as little tax based support as possible. Choice Health & Fitness saw a leveling off in memberships. The golf courses continue to see the number of rounds played and season memberships sold to be consistent with historical totals. The District’s enterprise funds performed well in 2018.

Performance Tools and Response to Change

The annual financial report provides measurement tools to judge the financial performance of each department, as well as the District as an agency.

-13- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2018 AND 2017

Non-Tax Funds

Contacting the District’s Treasurer’s Office

-14- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION AS OF DECEMBER 31, 2018

Governmental Business-Type Activities Activities Total Assets Cash $ 3,748,326 $ 3,221,884 $ 6,970,210 Investments - 1,007,895 1,007,895 Restricted Cash & Investments with Fiscal Agent - 1,468,922 1,468,922 Accounts Receivable, Net 407,820 73,083 480,903 Pledges Receivable, Net - 6,403,199 6,403,199 Taxes Receivable 163,182 - 163,182 Contract Receivable 426,984 - 426,984 Interest Receivable - 5,159 5,159 Prepaid Expenses - 21,979 21,979 Inventory - 75,262 75,262 Internal Balances (4,441,400) 4,441,400 - Nondepreciable Capital Assets 18,351,868 3,249,695 21,601,563 Depreciable Capital Assets, Net 24,196,349 29,418,340 53,614,689 Assets Held for Sale - 144,750 144,750

Total Assets 42,853,129 49,531,568 92,384,697

Deferred Outflows of Resources Deferred Outflows of Resources - NDPERS 1,387,000 - 1,387,000 Deferred Outflows of Resources - Single Employer Plan 859,455 - 859,455 Deferred Outflows of Resources - OPEB NDPERS 33,707 - 33,707 Total Deferred Outflows of Resources 2,280,162 - 2,280,162

Liabilities Accounts Payable 280,075 4,128 284,203 Pledges Payable - 444,495 444,495 Sales Tax Payable 2,360 4,441 6,801 Gift Certificates/Cards Payable 25,761 57,907 83,668 Accrued Payroll 143,941 101,390 245,331 Accrued Interest Payable 52,028 97,111 149,139 Unearned Revenue 160,792 196,411 357,203 Non Current Liabilities: Due Within One Year 1,178,577 1,949,933 3,128,510 Due in More than One Year 18,638,063 24,454,909 43,092,972 Total Liabilities 20,481,597 27,310,725 47,792,322

Deferred Inflows of Resources Deferred Inflows of Resources - NDPERS 177,154 - 177,154 Deferred Inflows of Resources - Single Employer Plan 196,662 - 196,662 Deferred Inflows of Resources - OPEB NDPERS 5,610 - 5,610 Total Deferred Inflows of Resources 379,426 - 379,426

Net Position Net Investment in Capital Assets 24,997,480 11,031,857 36,029,337 Restricted: Non-expendable - Endowments - 201,967 201,967 Restricted for: Debt Service 549,932 1,394,136 1,944,068 Repairs and Replacement - 74,786 74,786 Pledges - 3,516,396 3,516,396 Unrestricted (1,275,144) 6,001,701 4,726,557

Total Net Position$ 24,272,268 $ 22,220,843 $ 46,493,111 See Notes to the Basic Financial Statements

-15- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2018

Program Revenues Net (Expense) Revenue and Changes in Net Position

Operating Capital Grants Charges for Grants and and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total

Governmental Activities Park Operations$ 7,866,120 $ 814,596 $ - $ 329,778 $ (6,721,746) $ - $ (6,721,746) Forestry 811,260 2,500 - - (808,760) - (808,760) Recreation 605,811 230,780 9,249 - (365,782) - (365,782) Interest on Long-Term Debt 341,909 - - - (341,909) - (341,909) Total Governmental Activities 9,625,100 1,047,876 9,249 329,778 (8,238,197) - (8,238,197)

Business-Type Activities King's Walk Golf Course 1,274,584 1,149,589 - - - (124,995) (124,995) Lincoln Golf Course 375,679 298,198 - - - (77,481) (77,481) Choice Health & Fitness 4,301,130 4,120,743 - 210,830 - 30,443 30,443 Foundation 286,212 1,059,067 - - - 772,855 772,855 Total Business- Type Activities 6,237,605 6,627,597 - 210,830 - 600,822 600,822 Total Primary Government$ 15,862,705 $ 7,675,473 $ 9,249 $ 540,608 (8,238,197) 600,822 (7,637,375)

General Revenues: Property Taxes - General 5,725,875 - 5,725,875 Property Taxes - Debt Service 1,756,570 - 1,756,570 Property Taxes - Capital Projects 1,065,525 - 1,065,525 Grants and Entitlements not Restricted to Specific Programs 941,675 - 941,675 Investment Earnings 124,357 11,029 135,386 Miscellaneous 280,534 - 280,534 Transfers 57,076 (57,076) - Total General Revenues and Transfers 9,951,612 (46,047) 9,905,565

Change in Net Position 1,713,415 554,775 2,268,190

Net Position- Beginning 24,960,133 17,999,954 42,960,087 Prior Period Adjustment - See Note 21 (2,401,280) 3,666,114 1,264,834

Net Position-Beginning, as Restated 22,558,853 21,666,068 44,224,921 Net Position- End of Year$ 24,272,268 $ 22,220,843 $ 46,493,111 See Notes to the Basic Financial Statements

-16- PARK DISTRICT OF THE CITY OF GRAND FORKS BALANCE SHEET – GOVERNMENTAL FUNDS AS OF DECEMBER 31, 2018

Total Debt Service Capital Governmental General Fund Fund Projects Fund Funds Assets Cash$ 3,061,642 $ 568,545 $ 118,139 $ 3,748,326 Accounts Receivable 407,820 - - 407,820 Taxes Receivable 109,534 33,415 20,233 163,182 Contract Receivable 426,984 - - 426,984 Due From Other Funds - - 18,600 18,600

Total Assets$ 4,005,980 $ 601,960 $ 156,972 $ 4,764,912

Liabilities Accounts Payable$ 280,075 $ - $ - $ 280,075 Advances From Other Funds - - 4,460,000 4,460,000 Sales Tax Payable 2,360 - - 2,360 Gift Certificate/Cards Payable 25,761 - - 25,761 Unearned Revenue 160,792 - - 160,792 Accrued Payroll 143,941 - - 143,941

Total Liabilities 612,929 - 4,460,000 5,072,929

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 99,668 31,528 19,082 150,278 Unavailable Revenue - Special Assessments 3,784 - - 3,784 Unavailable Revenue - Development Agreements 29,040 - - 29,040 Unavailable Revenue - Contracts 426,984 - - 426,984

Total Deferred Inflows of Resources 559,476 31,528 19,082 610,086

Fund Balances Restricted For: Debt Service - 570,432 - 570,432 Unassigned 2,833,575 - (4,322,110) (1,488,535)

Total Fund Balances 2,833,575 570,432 (4,322,110) (918,103)

Total Liabilities, Deferred Inflows of Resources and Fund Balances $ 4,005,980 $ 601,960 $ 156,972 $ 4,764,912

See Notes to the Basic Financial Statements

-17- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO NET POSITION OF GOVERNMENTAL ACTIVITIES AS OF DECEMBER 31, 2018

Total Governmental Funds Balance $ (918,103)

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 42,548,217

Other long-term assets are not available to pay for current-period expenditures and therefore are unavailable in the governmental funds: Contract Receivable $ 426,984 Special Assessments 3,784 Development Agreement 29,040 Property Taxes 150,278

Total 610,086

Long-term liabilities not due and payable in the current period and therefore are not included in the governmental funds: Accrued Interest (52,028) Compensated Absences (323,956) Notes Payable (1,011,038) Premium on Bonds Payable (152,671) Net Pension Liability - PERS (3,036,093) Net Pension Liability - Single Employer Plan (3,284,857) Net Other Postemployment Benefit Liability (133,025) Bonds Payable (11,875,000)

Total (19,868,668)

Net Position of Governmental Activities$ 24,272,268

See Notes to the Basic Financial Statements

-18- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2018

Total Debt Service Capital Projects Governmental General Fund Fund Fund Funds Revenues Local Property Taxes$ 5,701,064 $ 1,756,570 $ 1,065,525 $ 8,523,159 State Revenues 941,675 - - 941,675 Program Income 1,175,410 - - 1,175,410 Investment Earnings 124,357 - - 124,357 Sponsorships 326,570 - - 326,570 Donations and Grants 9,249 - 227,728 236,977 Miscellaneous 52,709 96 - 52,805 Total Revenues 8,331,034 1,756,666 1,293,253 11,380,953

Expenditures Current: Park Operations 5,315,076 - - 5,315,076 Forestry 773,520 - - 773,520 Recreation 605,811 - - 605,811 Capital Outlay: Capital and Betterment 781,381 290,994 908,362 1,980,737 Debt Service: Principal Retirement 90,315 880,000 - 970,315 Interest Charges 39,712 320,970 - 360,682 Total Expenditures 7,605,815 1,491,964 908,362 10,006,141

Excess (Deficiency) of Revenues Over (Under) Expenditures 725,219 264,702 384,891 1,374,812

Other Financing Sources (Uses) Operating Transfers In 98,473 - 892,240 990,713 Operating Transfers Out (250,986) - (682,651) (933,637) Total Other Financing Sources (Uses) (152,513) - 209,589 57,076

Net Change in Fund Balances 572,706 264,702 594,480 1,431,888 Fund Balance Beginning of Year 2,260,869 305,730 38,410 2,605,009

Prior Period Adjustment - See Note 21 - - (4,955,000) (4,955,000)

Fund Balance Beginning of Year, as Restated 2,260,869 305,730 (4,916,590) (2,349,991)

Fund Balance End of Year$ 2,833,575 $ 570,432 $ (4,322,110) $ (918,103)

See Notes to the Basic Financial Statements

-19- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF THE CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2018

Net Change in Fund Balance - Total Governmental Funds $ 1,431,888

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Loss on Disposal of Capital Assets$ (5,334) Capital Asset Additions 1,507,146 Current Year Depreciation (1,150,496) Total 351,316

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds: Property Taxes 24,811 Special Assessments (3,208) Development Agreements 29,040 Contracts and Pledges Receivable (150,158)

Change in deferred outflows and inflows of resources related to the net pension liability 288,650 Net Pension Liability 17,639 Total OPEB Liability

Repayment of principal on long-term debt consumes the current financial resources of the governmental funds. However, there is no effect on net position. The following are changes in long-term liabilities during the year ended December 31, 2018: Accrued Interest Payable 3,326 Amortization of Bond Premium 15,446 Principal Payment on Bonds Payable 880,000 Principal Payment on Notes Payable 90,090 Change in Compensated Absences (19,685) Change in Net OPEB Liability (8,839) Change in Net Pension Liability (1,236,901)

Total (276,563)

Change in Net Position$ 1,713,415

See Notes to the Basic Financial Statements

-20- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS AS OF DECEMBER 31, 2018

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Foundation Totals Assets Current Assets: Cash$ 1,788,376 $ 17,886 $ 553,039 $ 862,583 $ 3,221,884 Investments - - - 1,007,895 1,007,895 Accounts Receivable 22,170 - 53,913 - 76,083 Allowance for Doubtful Accounts - - (3,000) - (3,000) Due From Other Funds - - 3,991,124 - 3,991,124 Advances To Other Funds - - - 430,000 430,000 Pledges Receivable (net) - - - 881,403 881,403 Interest Receivable - - 5,159 - 5,159 Prepaid Expenses - - 21,979 - 21,979 Inventory 63,056 12,206 - - 75,262 Total Current Assets 1,873,602 30,092 4,622,214 3,181,881 9,707,789

Non-Current Assets: Advances To Other Funds - - - 4,030,000 4,030,000 Restricted Cash & Investments with Fiscal Agent - - 1,468,922 - 1,468,922 Assets Held for Resale - - - 144,750 144,750 Pledges Receivable, Net of Current Portion - - - 5,521,796 5,521,796

Capital Assets: Land 618,820 21,640 2,609,235 - 3,249,695 Buildings, Systems, and Structures 2,263,476 1,009,959 26,606,953 - 29,880,388 Golf Course 5,553,039 560,680 - - 6,113,719 Equipment 988,645 8,000 351,243 - 1,347,888 Vehicles 7,000 12,000 - - 19,000 Tractors, Trailers, & Mowers 650,394 290,672 - - 941,066 Less Accumulated Depreciation (4,318,131) (761,065) (3,804,525) - (8,883,721) Total Capital Assets (Net of Accumulated Depreciation) 5,763,243 1,141,886 25,762,906 - 32,668,035

Total Non-Current Assets 5,763,243 1,141,886 27,231,828 9,696,546 43,833,503 Total Assets 7,636,845 1,171,978 31,854,042 12,878,427 53,541,292

See Notes to the Basic Financial Statements

-21- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS - CONTINUED AS OF DECEMBER 31, 2018

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Foundation Totals Liabilities Current Liabilities: Accounts Payable $ 3,278 $ - $ 15 $ 835 $ 4,128 Sales Tax Payable 52 - 4,389 - 4,441 Gift Certificate/Cards Payable 37,595 2,351 17,961 - 57,907 Due to Other Funds - - - 4,009,724 4,009,724 Accrued Payroll 29,283 21 72,086 - 101,390 Unearned Revenue - - 94,261 102,150 196,411 Compensated Absences 20,280 2,340 55,380 - 78,000 Bonds Payable 637,680 - 804,253 430,000 1,871,933 Pledges Payable - - - 444,495 444,495 Accrued Interest Payable 10,550 - 48,073 38,488 97,111 Total Current Liabilities 738,718 4,712 1,096,418 5,025,692 6,865,540

Non-Current Liabilities: Compensated Absences 29,480 3,702 93,110 - 126,292 Bonds Payable, Net of Current 2,501,938 - 17,692,307 4,134,372 24,328,617 Total Non-Current Liabilities 2,531,418 3,702 17,785,417 4,134,372 24,454,909 Total Liabilities 3,270,136 8,414 18,881,835 9,160,064 31,320,449

Net Position Net Investment in Capital Assets 2,623,625 1,141,886 7,266,346 - 11,031,857 Restricted: Non-expendable - Endowments - - - 201,967 201,967 Restricted for: Debt Service - - 1,394,136 - 1,394,136 Repairs and Replacement - - 74,786 - 74,786 Pledges - - - 3,516,396 3,516,396 Unrestricted 1,743,084 21,678 4,236,939 - 6,001,701 Total Net Position$ 4,366,709 $ 1,163,564 $ 12,972,207 $ 3,718,363 $ 22,220,843

See Notes to the Basic Financial Statements

-22- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2018

Business-Type Activities - Enterprise Funds King's Walk Golf Lincoln Golf Choice Health & Course Course Fitness Foundation Totals Operating Revenues: Charges for Sales and Services: Sales $ 1,149,589 $ 298,198 $ 4,120,743 $ - $ 5,568,530 Donations/Sponsorships - - - 1,059,067 1,059,067 Total Operating Revenues 1,149,589 298,198 4,120,743 1,059,067 6,627,597

Operating Expenses: Costs of Sales and Services 528,671 203,519 2,140,266 126,023 2,998,479 Administration 417,915 111,324 974,284 - 1,503,523 Total Operating Expenses 946,586 314,843 3,114,550 126,023 4,502,002

Operating Income (Loss) before Depreciation 203,003 (16,645) 1,006,193 933,044 2,125,595

Depreciation and Amortization 264,132 57,997 604,658 - 926,787

Operating Income (Loss) (61,129) (74,642) 401,535 933,044 1,198,808

Non-Operating Revenues (Expenses): Donations/Sponsorships - - 210,830 - 210,830 Interest Income - - 29,041 (18,013) 11,028 Loss on Disposal of Fixed Assets - (2,839) - - (2,839) Bond Interest Expense (63,866) - (581,922) (160,189) (805,977) Total Non-Operating Revenue (Expenses) (63,866) (2,839) (342,051) (178,202) (586,958)

Income (Loss) Before Transfers (124,995) (77,481) 59,484 754,842 611,850

Transfers In 310,000 60,400 221,000 171,651 763,051 Transfers Out - - - (820,127) (820,127) Total Transfers 310,000 60,400 221,000 (648,476) (57,076)

Changes in Net Position 185,005 (17,081) 280,484 106,366 554,774

Total Net Position - Beginning 4,181,704 1,180,645 12,637,605 1,290,187 19,290,141

Prior Period Adjustment - See Note 21 - - 54,118 2,321,810 2,375,928

Total Net Position - Beginning as Restated 4,181,704 1,180,645 12,691,723 3,611,997 21,666,069

Total Net Position - Ending$ 4,366,709 $ 1,163,564 $ 12,972,207 $ 3,718,363 $ 22,220,843

See Notes to the Basic Financial Statements

-23- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2018

Business-Type Activities - Enterprise Funds King's Walk Lincoln Choice Health Golf Course Golf Course & Fitness Foundation Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users$ 1,140,134 $ 299,382 $ 4,120,026 $ 1,571,770 $ 7,131,312 Payments to Suppliers (528,857) (207,210) (2,126,920) (202,746) (3,065,733) Payments to Employees (404,587) (110,770) (978,698) - (1,494,055) Net Cash Provided (Used) by Operating Activities 206,690 (18,598) 1,014,408 1,369,024 2,571,524 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Due from other Funds - - 203,405 - 203,405 Due to other Funds - - - (174,804) (174,804) Transfers from other Funds 310,000 60,400 221,000 171,651 763,051 Transfer to other Funds - - - (820,127) (820,127) Net Cash Provided (Used) by Non-Capital and Related Financing Activities 310,000 60,400 424,405 (823,280) (28,475) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal Paid on Bonds Payable (615,000) - (780,000) (495,000) (1,890,000) Proceeds from Advances To Other Funds - - - 495,000 495,000 Capital Donations - - 210,830 - 210,830 Proceeds from Sale of Capital Assets - 3,000 - - 3,000 Purchases of Capital Assets (82,370) (87,054) (10,546) - (179,970) Interest Paid on Capital Debt (79,166) - (592,475) (171,651) (843,292) Net Cash Provided (Used) by Capital and Related Financing Activities (776,536) (84,054) (1,172,191) (171,651) (2,204,432) CASH FLOWS FROM INVESTING ACTIVITIES Interest and Dividends Received - - 26,949 (18,013) 8,936 Net Cash Provided (Used) by Capital Investing Activities - - 26,949 (18,013) 8,936 Net Increase (Decrease) in Cash and Cash Equivalents (259,846) (42,252) 293,571 356,080 347,553 Cash and Investments, January 1 2,048,222 60,138 1,728,390 1,514,398 5,351,148 Cash and Investments, December 31 $ 1,788,376 $ 17,886 $ 2,021,961 $ 1,870,478 $ 5,698,701

Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating Income (Loss)$ (61,129) $ (74,642) $ 401,535 $ 933,044 $ 1,198,808 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Expense 264,132 57,997 604,658 - 926,787 Effects on Operating Cash Flows Due to Changes in: Accounts Receivable 1,102 - (947) - 155 Pledges Receivable - - - 516,691 516,691 Inventories (3,212) (3,691) - - (6,903) Prepaid Expese - - (21,979) - (21,979) Accounts Payable 3,026 - (124) (3,142) (240) Gift Certificate/Cards Payable (10,557) 1,184 230 - (9,143) Accrued Payroll 9,405 21 3,267 - 12,693 Pledges Payable - - - (73,581) (73,581) Compensated Absences 3,923 533 14,298 - 18,754 Unearned Revenue - - 13,470 (3,988) 9,482 Total Adjustments 267,819 56,044 612,873 435,980 1,372,716 Net Cash Provided (Used) by Operating Activities $ 206,690 $ (18,598) $ 1,014,408 $ 1,369,024 $ 2,571,524

Reconciliation of Cash and Investments Cash $ 1,788,376 $ 17,886 $ 553,039 $ 862,583 $ 3,221,884 Investments - - - 1,007,895 1,007,895 Restricted Cash - - 1,468,922 - 1,468,922 $ 1,788,376 $ 17,886 $ 2,021,961 $ 1,870,478 $ 5,698,701

See Notes to the Basic Financial Statements

-24- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AS OF DECEMBER 31, 2018

Pension Trust Fund ASSETS Investments, at Fair Value: Cash and Investment Funds$ 6,559,235

Total Assets $ 6,559,235

NET POSITION Held in Trust for Pension Benefits and Other Purposes$ 6,559,235

See Notes to the Basic Financial Statements

-25- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2018

Pension Trust Fund ADDITIONS Contributions: Employer$ 318,000 Plan Members 68,781 Total Contributions 386,781

Investment Earnings: Investment Income 345,968 Net Change in the Fair Value of Investments (561,515) Administrative Expenses (11,259) Net Investment Earnings (226,806)

Total Additions 159,975

DEDUCTIONS Benefits Paid 353,667

Total Deductions 353,667

Change in Net Position (193,692)

Net Position - Beginning 6,752,927

Net Position - Ending $ 6,559,235

See Notes to the Basic Financial Statements

-26- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS AS OF DECEMBER 31, 2018

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Park District of the City of Grand Forks (District) operates with its Board of Commissioners elected at large, authorized to levy taxes, issue debt, budget, and designate management. The District provides the following services as authorized by its charter: parks, golf courses, recreation, forestry, and general administrative services.

A. Reporting Entity

B. Basis of Presentation

Government-wide and Fund Financial Statements

-27- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

C. Measurement Focus/Basis of Accounting

The District reports the following major governmental funds:

The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

The District reports the following major proprietary funds:

The King’s Walk Golf Course Fund accounts for the activities of King’s Walk Golf Course.

The Lincoln Golf Course Fund accounts for the activities of Lincoln Golf Course.

The Choice Health & Fitness Fund accounts for the activities of Choice Health & Fitness.

-28- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Additionally, the District reports the following fund types:

The Pension Trust Fund accounts for the activities of the single employer defined benefit pension plan.

D. Budgetary Data

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

All budgeted appropriations lapse at the end of the fiscal year.

E. Cash

-29- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

F. Fair Value Measurements

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

G. Receivables and Payables

H. Inventory

All inventories are stated at cost, determined on an average-cost basis.

I. Capital Assets

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

Property, plant, and equipment of the District are depreciated using the straight-line method over the following estimated useful lives:

-30- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Assets Years Buildings, Systems, and Structures 20-50 Golf Course 15-50 Equipment 5-10 Vehicles 5 Tractors, Trailers, and Mowers 5-15

J. Property Taxes

The County spreads all levies over taxable property. Property taxes are attached as an enforceable lien on the real estate and become due on January 1 of the year following the assessment date.

Property tax revenues are recognized when they become available. All other taxes are fully offset by deferred revenue because they are not known to be available to finance current expenditures.

K. Compensated Absences

L. Long-Term Obligations

M. Use of Estimates

-31- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

N. Fund Balance

Nonspendable – consists of amounts that are not in spendable form, such as inventory and prepaid items.

Committed – consists of internally imposed constraints. These constraints are established by formal action of the Board of Commissioners.

Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds.

When both restricted and unrestricted resources are available for use, it is the District’s policy to first use restricted resources, and then use unrestricted resources as they are needed.

When committed, assigned, or unassigned resources are available for use, it is the District’s policy to use resources in the following order; 1) committed, 2) assigned, and 3) unassigned.

O. Net Position

P. Net Position Flow Assumption

Sometimes the District will fund outlays for a particular purpose for both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted -32- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Q. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resource (expense/expenditure) until then. The District has three items reported on the statement of net position as Deferred Outflows of Resources which represents actuarial differences within OPEB, NDPERS, and the Single Employer Pension Plan as well as amounts paid to the plans after the measurement date.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has four types of items, which arise only under a modified accrual basis of accounting, that qualify for reporting in this category. Accordingly, unavailable revenue - property taxes, unavailable revenue - special assessments, unavailable revenue – development agreements, and unavailable revenue - contracts are reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The District also has three items reported on the statement of net position as Deferred Inflows of Resources which represents actuarial differences within OPEB, NDPERS plan, and Single Employer Pension Plan.

R. Sales Taxes

Sales taxes collected from customers and remitted to taxing authorities are excluded from revenues and cost of sales, respectively.

S. Pensions

T. Other Postemployment Benefits (OPEB)

-33- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

U. Unearned Revenue

Unearned revenues represent resources that have been received but are not yet earned.

V. Pledge Receivable

W. Assets Held for Sale

X. Income Taxes

The Foundation is organized as a North Dakota non-profit corporation and is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

NOTE 2 CASH

A. Deposits

In accordance with North Dakota laws, the District maintains deposits at depositories authorized by the Board of Commissioners. The depositories are members of the Federal Reserve System.

North Dakota laws require that all public deposits be protected by insurance, surety bond, or collateral. The market value of collateral pledged must equal at least 110% of the deposits not covered by insurance or bonds. Authorized collateral includes the legal investments described below, as well as certain first mortgage notes, and certain other state or local government obligations. North Dakota laws require that securities pledged as collateral be held in safekeeping by the District or in a financial institution other than that furnishing the collateral.

At December 31, 2018, the carrying amount of the District's bank deposits was $6,947,989 and the bank balance was $7,079,847, of which all was covered by Federal Depository Insurance or collateral held in safekeeping in the District's name. In addition, there is $1,468,922 held with fiscal agent as restricted cash for bond covenants. The balance consists entirely of cash. The cash is held at the Bank of New York Mellon and is covered by FDIC coverage. -34- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

B. Investments

As of December 31, 2018, $6,499,482 of the District’s pension trust funds were invested with the North Dakota State Investment Board and $59,753 of the pension trust funds were invested with Aetna Life Insurance Company. Both the North Dakota State Investment Board and Aetna Life Insurance Company are external investment pools.

As of December 31, 2018, the District, through the Foundation, had the following investments:

Quoted Prices in Active Markets for Identical Assets Investment Type (Level 1)

Equity Securities: Basic Materials$ 3,233 Consumer Cyclical 11,796 Consumer Non-Cyclical 6,138 Energy 3,607 Financial 13,735 Health Care 16,443 Industrials 9,044 Mutual Fund - Equity 96,847 Mutual Funds - International 56,929 Technology 24,113 Telecommunications 1,424 Utility 900 Mutual Funds 207,510 Total$ 451,719

The remaining $556,176 of investments are invested in Certificates of Deposits.

Investments – Pension Funds

Level 1 Level 2 Level 3 Total Global Equities$ 3,533,078 $ - $ - $ 3,533,078 Global Fixed Income - 1,632,109 - 1,632,109 $ 3,533,078 $ 1,632,109 $ -$ 5,165,187

-35- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Investments measured at the net asset value (NAV):

Pension Investments: Real assets NAV: $ 1,292,010 Redemption frequency: Quarterly, not eligible Redmption Notice Period: 30-90 days

The remaining $102,038 of the pension investments were cash deposits.

Permitted Investments for Restricted Investments

-36- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Interest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from changing interest rates.

Credit Risk

Concentration of Credit Risk

The District places no limit on the amount the District may invest in any one issuer.

-37- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 3 CAPITAL ASSETS

Capital asset activity for the year ended December 31, 2018 was as follows:

Balance Transfers/ Balance 01/01/18 Additions Deletions Adjustments 12/31/18 Governmental Activities Capital Assets Not Being Depreciated: Land$ 4,845,084 $ - $ - $ (590,461) $ 4,254,623 Land Improvements 13,006,855 291,219 - 590,461 13,888,535 Construction in Progress 22,636 208,710 (22,636) - 208,710 Total Capital Assets Not Being Depreciated 17,874,575 499,929 (22,636) - 18,351,868

Capital Assets Being Depreciated: Buildings, Systems, and Structures 34,278,757 616,494 - - 34,895,251 Equipment 2,391,260 115,806 (90,391) - 2,416,675 Vehicles 1,050,061 83,971 (6,800) - 1,127,232 Tractors, Trailers, and Mowers 1,302,861 213,582 (64,012) - 1,452,431 Total Capital Assets Being Depreciated 39,022,939 1,029,853 (161,203) - 39,891,589

Less Accumulated Depreciation: Buildings, Systems, and Structures (11,664,901) (875,803) - - (12,540,704) Equipment (1,418,251) (103,928) 90,391 - (1,431,788) Vehicles (790,636) (80,078) 6,800 - (863,914) Tractors, Trailers, and Mowers (826,824) (90,687) 58,677 - (858,834) Total Accumulated Depreciation (14,700,612) (1,150,496) 155,868 - (15,695,240)

Total Capital Assets Being Depreciated, Net 24,322,327 (120,643) (5,335) - 24,196,349

Governmental Capital Assets, Net$ 42,196,902 $ 379,286 $ (27,971) $ -$ 42,548,217

-38- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Balance Transfers/ Balance 01/01/18 Additions Deletions Adjustments 12/31/18 Business-Type Activities Capital Assets Not Being Depreciated: Land$ 3,249,695 $ - $ -$ -$ 3,249,695

Capital Assets Being Depreciated: Buildings, Systems, and Structures 29,880,388 - - - 29,880,388 Golf Course 6,086,819 26,900 - - 6,113,719 Equipment 1,337,343 10,545 - - 1,347,888 Vehicles 19,000 - - - 19,000 Tractors, Trailers, and Mowers 830,392 142,524 (31,850) - 941,066 Total Capital Assets Being Depreciated 38,153,942 179,969 (31,850) - 38,302,061

Less Accumulated Depreciation: Buildings, Systems, and Structures (4,099,103) (636,209) - - (4,735,312) Golf Course (2,408,847) (145,724) - - (2,554,571) Equipment (870,477) (78,199) - - (948,676) Vehicles (18,860) (140) - - (19,000) Tractors, Trailers, and Mowers (585,658) (66,514) 26,010 - (626,162) Total Accumulated Depreciation (7,982,945) (926,786) 26,010 - (8,883,721)

Total Capital Assets Being Depreciated, Net 30,170,997 (746,817) (5,840) - 29,418,340

Business-Type Activities Capital Assets, Net$ 33,420,692 $ (746,817) $ (5,840) $ -$ 32,668,035

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities: Park Operations$ 1,115,790 Forestry 34,706 Total Depreciation Expense - Governmental Activities$ 1,150,496

Business-Type Activities: King's Walk Golf Course$ 264,132 Lincoln Golf Course 57,997 Choice Health & Fitness 604,657 Total Depreciation Expense - Business-Type Activities$ 926,786

-39- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 4 CONTRACT RECEIVABLE

Annually the District enters into contracts with various sponsors for advertising within the Park District locations. Contract receivable will be received in periodic installments in accordance with the individual contracts through December 31, 2023 as follows:

2019$ 302,864 2020 77,378 2021 31,492 2022 13,000 2023 2,250 $ 426,984

NOTE 5 PLEDGES RECEIVABLE

Pledges receivable consist of unconditional promises to give from individuals, businesses, and private foundations. These contributions are restricted for construction of Choice Health & Fitness, Scheels Sports Complex, ICON Sports Center, and Veterans Memorial Park and are due according to the following schedule:

Receivable in less than one year $ 881,403 Receivable in one to five years 2,735,874 Receivable in more than five years 2,785,922 $ 6,403,199

Management estimates an allowance for uncollectible pledges to be $204,452 at December 31, 2018.

The Foundation owes other organizations $26,613 at December 31, 2018 for donations received but not yet remitted to the other organizations.

-40- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 6 LONG-TERM DEBT

The District also issues revenue bonds where it pledges income derived from the acquired or constructed assets to pay debt service.

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/18 Governmental Activities: General Obligation Refunding Improvement Bonds, Series 2011 12/1/2011$ 4,500,000 2.00%-3.75% 5/1/2037$ 3,510,000 General Obligation Refunding Improvement Bonds, Series 2013A 12/12/2013 1,985,000 2.00%-4.00% 5/1/2033 1,640,000 General Obligation Special Assessment Prepayment Bonds, Series 2014A 1/7/2014 3,065,000 2.00%-3.25% 5/1/2028 2,290,000 General Obligation Refunding Improvement Bonds, Series 2016 5/26/2016 2,025,000 2.00%-2.25% 5/1/2031 1,785,000 General Obligation Refunding Improvement Bonds, Series 2017A 2/9/2017 3,215,000 2.00%-2.50% 5/1/2026 2,650,000 Contracts Payable - ICON Holdings, LLC 9/2/2014 716,750 4.50% 12/31/2024 467,814

Contracts Payable - City of Grand Forks 6/6/2017 590,461 3.00% 12/31/2041 543,224 Total Governmental Activities $ 16,097,211 $ 12,886,038

-41- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/18 Business-Type Activities: General Obligation Refunding Improvement Bonds, Series 2009C 9/3/2009$ 485,000 1.20%-4.00% 12/1/2021$ 145,000 General Obligation Taxable Refunding Improvement Bonds, Series 2009D 9/3/2009 510,000 2.25%-5.40% 12/1/2021 155,000 Lease Revenue Bonds, Series 2009 12/30/2009 1,855,000 2.00%-3.50% 12/16/2020 90,000 Lease Revenue Bonds, Series 2013B 12/12/2013 6,845,000 3.00%-4.25% 10/1/2033 4,370,000 General Obligation Refunding Improvement Bonds, Series 2014B 2/26/2014 4,820,000 2.00%-2.15% 5/1/2023 2,780,000 Wellness Center Revenue Refunding Bonds, Series 2015 4/30/2015 20,975,000 2.00%-3.50% 12/1/2036 18,330,000 Total Business-Type Activities$ 35,490,000 $ 25,870,000

Pledged Revenues

The District’s revenues in Choice Health & Fitness as noted as Charges for Sales, Donations and Interest income are pledged for Taxable Wellness Center Revenue Bonds, Series 2015. The Bonds and any additional bonds are payable from and secured by a pledge and lien in (i) the revenues derived from operations of the District’s revenue producing facilities, (ii) the pledged revenues, as defined, and (iii) investment income derived from the funds created under the Indenture, all as defined and provided in the Indenture.

Annual debt service requirements to maturity for bonds are as follows:

Governmental Activities G.O. Refunding ImprovementG.O. Refunding Improvement G.O. Special Assessment Year Ending Bonds, Series 2011 Bonds, Series 2013A Prepayment Bonds, Series 2014A December 31, Principal Interest Principal Interest Principal Interest

2019 $ 180,000 $ 102,150 $ 90,000 $ 49,416 $ 205,000 $ 58,693 2020 180,000 98,460 90,000 47,616 210,000 54,543 2021 185,000 94,442 95,000 45,766 215,000 50,024 2022 190,000 90,035 95,000 43,628 220,000 45,130 2023 195,000 85,317 100,000 41,190 225,000 39,730 2024-2028 980,000 345,481 535,000 162,645 1,215,000 98,028 2029-2033 825,000 213,114 635,000 63,415 - - 2034-2038 775,000 58,778 - - - - 2039-2041 ------$ 3,510,000 $ 1,087,777 $ 1,640,000 $ 453,676 $ 2,290,000 $ 346,146

-42- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Governmental Activities G.O. Refunding Improvement G.O. Refunding Improvement ICON Holdings, LLC Year Ending Bonds, Series 2016 Bonds, Series 2017A Contracts Payable December 31, Principal Interest Principal Interest Principal Interest

2019 $ 120,000 $ 35,262 $ 305,000 $ 57,650 $ 69,514 $ 19,890 2020 125,000 32,813 315,000 51,450 72,695 16,708 2021 125,000 30,312 320,000 44,700 76,022 13,381 2022 130,000 27,762 325,000 37,444 79,501 9,902 2023 130,000 25,162 335,000 30,018 83,139 6,264 2024-2028 700,000 84,911 1,050,000 39,875 86,943 2,459 2029-2033 455,000 15,284 - - - - 2034-2038 ------2039-2041 ------$ 1,785,000 $ 251,506 $ 2,650,000 $ 261,137 $ 467,814 $ 68,604

Governmental Activities City of Grand Forks Year Ending Contracts Payable Total December 31, Principal Interest Principal Interest

2019 $ 23,617 $ 16,298 $ 993,131 $ 339,359 2020 23,618 15,588 1,016,313 317,178 2021 23,618 14,880 1,039,640 293,505 2022 23,618 14,171 1,063,119 268,072 2023 23,618 13,463 1,091,757 241,144 2024-2028 118,090 56,684 4,685,033 790,083 2029-2033 118,090 38,970 2,033,090 330,783 2034-2038 118,090 21,256 893,090 80,034 2039-2041 70,865 4,251 70,865 4,251 $ 543,224 $ 195,561 $ 12,886,038 $ 2,664,407

-43- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Business-Type Activities Refunding Improvement Refunding Improvement Refunding Improvement Year Ending Bonds, Series 2009C Bonds, Series 2009D Bonds, Series 2014B December 31, Principal Interest Principal Interest Principal Interest

2019 $ 45,000 $ 5,520 $ 50,000 $ 8,146 $ 535,000 $ 51,120 2020 50,000 3,900 50,000 5,596 545,000 40,320 2021 50,000 2,000 55,000 2,970 555,000 29,320 2022 - - - - 565,000 18,120 2023 - - - - 580,000 6,235 2024-2028 ------2029-2033 ------2034-2036 ------$ 145,000 $ 11,420 $ 155,000 $ 16,712 $ 2,780,000 $ 145,115

Business-Type Activities Wellness Center Revenue Refunding Lease Revenue Bonds, Lease Revenue Bonds, Year Ending Bonds, Series 2015 Series 2009 Series 2013B December 31, Principal Interest Principal Interest Principal Interest

2019 $ 795,000 $ 576,875 $ 45,000 $ 3,150 $ 385,000 $ 153,426 2020 820,000 553,025 45,000 1,575 395,000 141,876 2021 840,000 528,425 - - 410,000 130,026 2022 865,000 503,225 - - 420,000 117,726 2023 890,000 477,275 - - 390,000 105,126 2024-2028 4,840,000 1,970,425 - - 1,070,000 396,220 2029-2033 5,540,000 1,191,219 - - 1,300,000 168,388 2034-2036 3,740,000 259,800 - - - - $ 18,330,000 $ 6,060,269 $ 90,000 $ 4,725 $ 4,370,000 $ 1,212,788

Business-Type Activities

Year Ending Total December 31, Principal Interest

2019 $ 1,855,000 $ 798,237 2020 1,905,000 746,292 2021 1,910,000 692,741 2022 1,850,000 639,071 2023 1,860,000 588,636 2024-2028 5,910,000 2,366,645 2029-2033 6,840,000 1,359,607 2034-2036 3,740,000 259,800 $ 25,870,000 $ 7,451,029

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Changes in Long-Term Liabilities

Long-term liability activity for the year ended December 31, 2018, was as follows:

As Restated Balance Balance Due Within 1/1/2018 Issued Retired 12/31/2018 One Year Governmental Activities: Bonds Payable: General Obligation Bonds$ 12,755,000 $ - $ (880,000) $ 11,875,000 $ 900,000 Unamortized Bond Premium 168,117 - (15,446) 152,671 15,445 Contract Payable 1,101,128 - (90,090) 1,011,038 93,132 Net Pension Liability: Single Employer Plan 2,409,841 875,016 - 3,284,857 - PERS 2,674,208 361,885 - 3,036,093 - Net OPEB Liability 124,186 8,839 - 133,025 - Compensated Absences 304,271 189,797 (170,112) 323,956 170,000

Governmental Activities Long-Term Liabilities$ 19,536,751 $ 1,435,537 $ (1,155,648) $ 19,816,640 $ 1,178,577

Business Type Activities: Bonds Payable: Revenue Bonds$ 27,760,000 $ - $ (1,890,000) $ 25,870,000 $ 1,855,000 Unamortized Bond Premium 364,107 - (31,290) 332,817 23,266 Unamortized Bond Discount (3,045) - 778 (2,267) (6,333) Compensated Absences 185,538 97,183 (78,429) 204,292 78,000

Business-Type Activities Long-Term Liabilities$ 28,306,600 $ 97,183 $ (1,998,941) $ 26,404,842 $ 1,949,933

State statutes limit the amount of general obligation indebtedness that is supported by tax levies; the District may issue to one percent or less of the total assessed valuation of taxable property. The current value of the District’s general obligation bonds is 0.49% of the total assessed value of taxable property.

Compensated absences in governmental activities will be funded primarily through the General Fund.

NOTE 7 RESTRICTED RESERVES

Wellness Center Revenue Refunding Bond, Series 2015 requires a reserve for future repairs and replacements. The Bond also requires reserve amounts based on future debt requirements. As of December 31, 2018, the reserve account was properly funded with an ending balance of $1,468,922.

-45- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 8 INTERFUND RECEIVABLES, PAYABLES, AND TRANSFERS

The composition of interfund balances as of December 31, 2018, is as follows:

Due from / to other funds:

Receivable Payable Amount Choice Health & Fitness Foundation $ 3,991,124 Capital Projects Fund Foundation 18,600 $ 4,009,724

The interfund balance between Choice Health & Fitness and the Foundation relates to pledges within the Foundation that will be paid to Choice Health & Fitness once they are collected. The interfund balance between the Capital Projects Fund and the Foundation relates to cash collected by the Foundation for pledges intended for the Capital Projects Fund. The Capital Projects Fund does not report a receivable for the entire pledge within the Foundation as it is presented under the modified accrual basis of accounting presenting current resources.

Advances to / from:

Advances From Advances To Amount Foundation Capital Projects Fund$ 4,460,000

Year Ending December 31, Principal Interest

2019 $ 430,000 $ 156,576 2020 440,000 143,451 2021 410,000 130,026 2022 420,000 117,726 2023 390,000 105,126 2024-2028 1,070,000 396,220 2029-2033 1,300,000 168,388 $ 4,460,000 $ 1,217,513

-46- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Interfund transfers were as follows:

Transfer Transfer Fund In Out

General Fund $ 98,473 $ 250,986 Capital Projects Fund 892,240 682,651 Lincoln Golf Course 60,400 - King's Walk Golf Course 310,000 - Choice Health & Fitness 221,000 - Foundation 171,651 820,127 Total$ 1,753,764 $ 1,753,764

In accordance with the agreement between the Foundation and the Capital Projects Fund, the Capital Projects fund transferred $171,651 to the Foundation for the current year interest payment on the Series 2009 and Series 2013B debt issuances. The Foundation transferred pledges collected by donors to the Capital Project Fund and Choice Health & Fitness. The remaining interfund transfers are to cover expenditures paid in one fund on behalf of another fund.

NOTE 9 ASSETS HELD FOR SALE

The Foundation has received donations of 325,000 cubic yards of clay. As of December 31, 2018, the Foundation has 193,000 cubic feet of clay remaining which has been valued at $0.75 per cubic foot, for a total value of $144,750.

NOTE 10 FUND BALANCE

Minimum Fund Balance Policy

Deficit Fund Balance

At December 31, 2018, the Capital Projects Fund had a deficit fund balance of $4,322,110. This deficit will be eliminated with future transfers in and property tax revenues.

NOTE 11 ENDOWMENT

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In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

Description of Amounts Classified as Non-expendable (Endowment Only) as of December 31, 2018

Non-expendable Donations:

The portion of perpetual endowment funds that is required to be retained permanently by donor stipulation$ 201,967

Total endowment funds classified as non-expendable $ 201,967

Return Objectives and Risk Parameters

Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on debt based investments to achieve its long-term return objectives within prudent risk constraints.

Spending Policy and How the Investment Objectives Relate to Spending Policy

-48- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 12 UNEARNED REVENUE

Unearned revenue has been recorded in the funds for the following:

Government-Wide Business-Type Activities Activities Prepaid Lease Agreement $ - $ 84,261 Prepaid Contract Agreements 50,311 - Prepaid Sponsorship Agreements 4,350 - Prepaid and Scheduled Ice Time 106,131 - Advanced Grant Proceeds - 10,000 Advanced Deposits - 102,150 Total$ 160,792 $ 196,411

NOTE 13 UNAVAILABLE REVENUE

Unavailable revenue has been recorded in the governmental funds for the following:

Governmental Activities Taxes Receivable $ 150,278 Special Assessments Receivable 3,784 Development Agreement 29,040 Sponsorship Receivable 386,984 Contracts Receivable 40,000 Total$ 610,086

Sponsorship receivable consists of sponsorships paid and contracts signed for the years following December 31, 2018.

NOTE 14 DEFINED BENEFIT PENSION PLAN – SINGLE EMPLOYER

A. Plan Description

Responsibility for administration of the closed plan rests with the Board of Commissioners of the District.

Eligibility

All employees became a member of the pension plan at the time they started employment with the District, if the following conditions were met:

1. All employees of the District were eligible to participate in the plan if they were employed prior to age 60.

-49- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

The Board of Commissioners approved adopting an Early Retirement Benefit plan under the rule of 90. If an employee chooses to retire after reaching the rule of 90, that employee will be eligible to receive 12.5% of the final monthly salary, which will be paid monthly over a four year period, or until they reach age 65, whichever comes first. If an employee does not choose to retire after reaching the rule of 90, that employee may continue to work and remain in the pension plan until he or she chooses to retire.

Pension and Death Benefits

The Pension Plan provides retirement benefits as well as death benefits. All benefits vest after 5 years of vesting service. Retirement benefits at normal retirement date are as follows:

Benefit and contribution provisions are established by District resolution and may be amended only by the Board of Commissioners.

Employees Covered by Benefit Terms

At December 31, 2018, the following employees were covered by the benefit terms:

Inactive Employees or beneficiaries currently receiving benefits 17 Inactive Employees entitled to but not yet receiving benefits 9 Active Employees 24 50

Member Contributions

Contributions to the plan are required as follows:

All participants contribute 3.7% or 5.9% of monthly earnings, depending on years of service.

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2018, the District reported a liability of $3,284,857 for the net pension liability. The net pension liability was measured as of December 31, 2018, and the total pension liability used to -50- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

calculate the net pension liability was determined by an actuarial valuation as of January 1, 2018 and rolled forward to December 31, 2018.

For the year ended December 31, 2018, the District recognized pension expense of $829,504. At December 31, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ 7,951 $ 196,662 Changes in actuarial assumptions 455,246 - Difference between projected and actual investment earnings 396,258 - Total $ 859,455 $ 196,662

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Pension Expense Year ending December 31: Amount 2019 $ 407,368 2020 59,728 2021 46,206 2022 149,491

Actuarial Assumptions

The total pension liability in the January 1, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.0% Salary increases 2.0% Investment rate of return 7.0%, net of investment expenses Cost-of-living adjustments None

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2014 Combined Healthy Mortality Table.

-51- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

Discount Rate

The discount rate used to measure the total pension liability was 7.0 percent as of December 31, 2018 which was a decrease from the prior year discount rate used of 7.75 percent. The projection of cash flows used to determine the discount rate assumes that member and employer contributions will be made at rates equal to those based on the January 1, 2018 Actuarial Valuation Report.

Changes in the Net Pension Liability

Increase (Decrease) Total Plan Net Position Fiduciary Position Liability Net Position Liability (a) (b) (a) - (b) Balances at 1/1/2018 $ 9,170,305 $ 6,760,464 $ 2,409,841 Changes for the Year: Service Cost 55,532 - 55,532 Interest 701,298 - 701,298 Contributions - Employer - 318,000 (318,000) Contributions - Employee - 68,781 (68,781) Net Investment Income - (222,691) 222,691 Differences Between Expected and Actual Experience (395,310) - (395,310) Changes of Assumptions 665,934 - 665,934 Benefit Payments, Including Refunds of Employee Contributions (353,667) (353,667) - Administrative Expenses - (11,652) 11,652 Net Changes 673,787 (201,229) 875,016 Balances at 12/31/2018$ 9,844,092 $ 6,559,235 $ 3,284,857

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

1% Decrease in 1% Increase in Discount Discount Rate (6.0%) Discount Rate (7.0%) Rate (8.0%)

District's proportionate share of the Single Employer net pension liability: $ 4,343,391 $ 3,284,857 $ 2,384,382

-52- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 15 DEFINED BENEFIT PENSION PLANS - STATEWIDE

North Dakota Public Employees’ Retirement System - Main System - (NDPERS)

The following brief description of NDPERS is provided for general information purposes only. Participants should refer to NDCC Chapter 54-52 for more complete information.

Pension Benefits

Benefits are set by statute. NDPERS has no provision or policies with respect to automatic and ad hoc post-retirement benefit increases. Members of the Main System are entitled to unreduced monthly pension benefits beginning when the sum of age and years of credited service equal or exceed 85 (Rule of 85), or at normal retirement age (65). For members hired on or after January 1, 2016, the Rule of 85 will be replaced with the Rule of 90 with a minimum age of 60. The monthly pension benefit is equal to 2.00% of their average monthly salary, using the highest 36 months out of the last 180 months of service, for each year of service. The plan permits early retirement at ages 55-64 with three or more years of service.

Death and Disability Benefits

Refunds of Member Account Balance

Member and Employer Contributions

1 to 12 months of service – Greater of one percent of monthly salary or $25 13 to 25 months of service – Greater of two percent of monthly salary or $25 25 to 36 months of service – Greater of three percent of monthly salary or $25 Longer than 36 months of service – Greater of four percent of monthly salary or $25

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2018, the District reported a liability of $3,036,093 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2018, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District's proportion of the net pension liability was based on the District's share of covered payroll in the Main System pension plan relative to the covered payroll of all participating Main System employers. At June 30, 2018, the District's proportion was 0.179905%. At June 30, 2017, the District’s proportion was 0.166376%.

For the year ended December 31, 2018, the District recognized pension expense of $563,508. At December 31, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ 8,037 $ 103,294 Changes in actuarial assumptions 1,095,966 43,334 Difference between projected and actual investment earnings - 14,774 Changes in proportion 214,812 15,752 Contributions paid to NDPERS subsequent to the measurement date 68,185 - Total $ 1,387,000 $ 177,154

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The $68,185 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2019.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Pension Expense Year ending December 31: Amount 2019 $ 375,127 2020 334,072 2021 258,131 2022 156,732 2023 17,599

Actuarial Assumptions

The total pension liability in the July 1, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50% Service At Non-State Salary increases Beginning of Year Employee 0 15.00% 1 10.00% 2 8.00%

Age Under 30 10.00% 30-39 7.50% 40-49 6.75% 50-59 6.50% 60+ 5.25%

*Age-based salary increase rates apply for employees with three or more years of service

Investment rate of 7.75%, net of investment expenses return Cost-of-living None adjustments

The long-term expected rate of return on pension plan investments was determined using a building- block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best -55- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

estimates of arithmetic real rates of return for each major asset class included in the Fund’s target asset allocation are summarized in the following table:

Long-Term Expected Asset Class Target Allocation Real Rate of Return Domestic Stocks 30.00% 6.05% International Stocks 21.00% 6.71% Private Equity 7.00% 10.20% Domestic Fixed Income 23.00% 1.45% Global Real Assets 19.00% 5.11%

Discount Rate

For the purpose of this valuation, the expected rate of return on pension plan investments is 7.75%; the municipal bond rate is 3.62%; and the resulting Single Discount Rate is 6.32%.

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 6.32 percent, as well as what the Employer's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.32 percent) or 1 percentage point higher (7.32 percent) than the current rate:

1% Decrease in 1% Increase in Discount Discount Rate (5.32%) Discount Rate (6.32%) Rate (7.32%) District's proportionate share of the NDPERS net pension liability: $ 4,125,486 $ 3,036,093 $ 2,127,030

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued NDPERS financial report.

-56- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 16 OTHER POSTEMPLOYMENT BENEFITS

The following brief description of NDPERS is provided for general information purposes only. Participants should refer to NDAC Chapter 71-06 for more complete information.

NDPERS OPEB plan is a cost-sharing multiple-employer defined benefit OPEB plan that covers members receiving retirement benefits from the PERS, the HPRS, and Judges retired under Chapter 27-17 of the North Dakota Century Code a credit toward their monthly health insurance premium under the state health plan based upon the member's years of credited service. Effective July 1, 2015, the credit is also available to apply towards monthly premiums under the state dental, vision and long-term care plan and any other health insurance plan. The Retiree Health Insurance Credit Fund (RHIC) is advance-funded on an actuarially determined basis.

OPEB Benefits

Effective July 1, 2015, the credit is also available to apply towards monthly premiums under the state dental, vision and long-term care plan and any other health insurance plan. The benefits are equal to $5.00 for each of the employee’s or deceased employee's years of credited service not to exceed the premium in effect for selected coverage. The retiree health insurance credit is also available for early retirement with reduced benefits.

OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB

At December 31, 2018, the District reported a liability of $133,025 for its proportionate share of the net OPEB liability. The net OPEB liability was measured as of June 30, 2018, and the total OPEB liability used to calculate the net OPEB liability was determined by an actuarial valuation as of that date. The Employer's proportion of the net OPEB liability was based on the District's share of covered payroll in the OPEB plan relative to the covered payroll of all participating OPEB employers. At June 30, 2018, the District's proportion was 0.168906 percent. -57- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

For the year ended December 31, 2018, the District recognized OPEB expense of $17,697. At December 31, 2018, the District reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred Outflows of Deferred Inflows of Resources Resources Differences between expected and actual economic experience $ 3,982 $ 2,748 Changes in actuarial assumptions 10,915 - Difference between projected and actual earnings on OPEB plan investments - 2,862 Changes in proportion and differences between employer contributions and proportionate share of contributions 7,893 - Employer Contributions subsequent to the measurement date 10,917 - Total $ 33,707 $ 5,610

The $10,917 reported as deferred outflows of resources related to OPEB resulting from Employer contributions subsequent to the measurement date will be recognized as a reduction of the net OPEB liability in the year ending December 31, 2019.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEBs will be recognized in OPEB expense as follows:

Year ending December 31: Pension Expense Amount 2019 $ 2,375 2020 2,375 2021 2,375 2022 3,638 2023 3,406 2024 2,457 Thereafter 554

Actuarial assumptions. The total OPEB liability in the July 1, 2018 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.50% Salary increases Not applicable Investment rate of return 7.50%, net of investment expenses Cost-of-living adjustments None

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2000 Combined Healthy Mortality Table set back two years for males and three years for females, projected generationally using the SSA 2014 Intermediate Cost scale from 2014. For disabled retirees, mortality rates were based on the RP-2000 Disabled Mortality Table set back one year for males (no setback for females) multiplied by 125%.

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Long-Term Expected Asset Class Target Allocation Real Rate of Return Large Cap Domestic Equities 37.00% 7.15% Small Cap Domestic Equities 9.00% 14.42% International Equities 14.00% 8.83% Core-Plus Fixed Income 40.00% 0.10%

Discount rate. The discount rate used to measure the total OPEB liability was 7.5%. The projection of cash flows used to determine the discount rate assumed plan member and statutory/Board approved employer contributions will be made at rates equal to those based on the July 1, 2018, and July 1, 2017, HPRS actuarial valuation reports. For this purpose, only employer contributions that are intended to fund benefits of current RHIC members and their beneficiaries are included. Projected employer contributions that are intended to fund the service costs of future plan members and their beneficiaries are not included. Based on those assumptions, the RHIC fiduciary net position was projected to be sufficient to make all projected future benefit payments of current plan members. Therefore, the long- term expected rate of return on RHIC investments was applied to all periods of projected benefit payments to determine the total OPEB liability.

Sensitivity of the Employer's proportionate share of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the Plans as of June 30, 2018, calculated using the discount rate of 7.50%, as well as what the RHIC net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage- point higher (8.5 percent) than the current rate:

1% Decrease in Discount 1% Increase in Discount Rate (6.5%) Discount Rate (7.5%) Rate (8.5%) District's proportionate share of the net OPEB liability: $ 168,308 $ 133,025 $ 102,778

NOTE 17 DEFERRED COMPENSATION PLAN AND TRUST

The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to eligible District employees, permits them to defer a portion of their salary until future years. There are two types of deferrals, pre-tax deferrals and Roth, or post-tax deferrals. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.

-59- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 18 RISK MANAGEMENT

NOTE 19 MEMBERSHIP SHARING WITH ALTRU FAMILY YMCA

The District is a party in an agreement with the Altru Family YMCA, in which the two parties share membership revenues based on the agreement.

NOTE 20 NEW PRONOUNCEMENTS

GASB Statement No. 83, Certain Asset Retirement Obligations, addresses accounting and financial reporting for certain asset retirement obligations (AROs). This Statement establishes criteria for determining the timing and pattern of recognition of a liability and corresponding deferred outflow of resources for AROs. It also establishes disclosure of information about the nature of a government’s AROs, the methods and assumptions used for the estimates of the liabilities, and the estimated remaining useful life of the associated tangible capital assets. The requirements of this Statement are effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged.

GASB Statement No. 84, Fiduciary Activities, provides guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how those activities should be reported. This Statement establishes criteria for identifying fiduciary activities of all state and local governments. The focus of the criteria generally is on (1) whether a government is controlling the assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.

-60- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

GASB Statement No. 88, Certain Disclosures Related to Debt, including Direct Borrowings and Direct Placements, improve the information that is disclosed in notes to government financial statements related to debt, including direct borrowings and direct placements. It also clarifies which liabilities governments should include when disclosing information related to debt. This Statement requires that additional essential information related to debt be disclosed in notes to financial statements, including unused lines of credit; assets pledged as collateral for the debt; and terms specified in debt agreements related to significant events of default with finance-related consequences, significant termination events with finance-related consequences, and significant subjective acceleration clauses. This Statement is effective for reporting periods beginning after June 15, 2018. Earlier application is encouraged.

GASB Statement No. 90, Majority Equity Interests, establishes accounting requirements for interest cost incurred before the end of a construction period. This Statement provides guidance for reporting when a government has majority equity interest in legally separate organizations. An equity interest is explicit and measurable if the government has a present or future claim to the net resources of the entity and the method for measuring the government’s share of the entity’s net resources is determinable. If government’s holding of that equity interest meets the definition of an investment, as defined by GASB No. 72, the equity interest should be reported as an investment and measured using the equity method and not as a component unit of the government. If a government’s holding of a majority interest in a legally separate organization does not meet the definition of an investment, the holding of the majority equity interest results in the government being financially accountable for the organization and therefore, the government should report the legally separate organization as a component unit. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.

Management has not yet determined the effect these statements will have on the District’s financial statements.

-61- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2018

NOTE 21 ACCOUNTING CHANGES

The District implemented GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. This statement requires the District to record their total OPEB liability on the Statement of Net Position. Liabilities are calculated using the Entry Age actuarial cost method.

The District also restructured the Foundation Board which was then reevaluated under GASB Statement No. 14 as amended by GASB Statement No. 61, The Financial Reporting Entity: Omnibus. The Foundation was previously presented as a discretely presented component unit, however, due to the change in the Board composition, it is now being presented as a blended component unit.

As a result, beginning net position has been restated as of January 1, 2018 as follows:

Governmental Business-Type Capital Projects Choice Activities Activities Fund Health & Fitness Foundation Net Position January 1, 2018, as previously reported $ 24,960,133 $ 17,999,954 $ 38,410 $ 12,637,605 $ 1,290,186 Restatement for OPEB accounting: Other Postemployment Benefit Liability (124,186) - - - - OPEB related Deferred Outflows of Resources 10,458 - - - - Record the Foundation as a proprietary fund - 1,290,186 - - - Remove pledges payable within the Foundation (1) - 2,506,959 - - 2,506,959 Remove pledges receivable outside of the Foundation (1) (2,329,087) - - - - Remove interest payable associated with the Foundation 41,535 - - - - Record additional pledges receivable 54,118 - 54,118 - Record advances from other funds for debt within the Foundation - - (4,955,000) - - Remove accrued interest receivable - (41,928) - - (41,928) Remove Foundation bond issue costs - (143,221) - - (143,221) Total Prior Period Adjustment (2,401,280) 3,666,114 (4,955,000) 54,118 2,321,810 Net Position January 1, 2018, as restated$ 22,558,853 $ 21,666,068 $ (4,916,590) $ 12,691,723 $ 3,611,996

(1) Due to differences in the allowance and present value calculation there is a difference between the pledges payable and receivable removed within the Governmental Activities and the Foundation.

NOTE 22 SUBSEQUENT EVENTS

No significant events have occurred subsequent to the District’s year end. Subsequent events have been evaluated through March 15, 2019, which is the date these financial statements were available to be issued.

* * * * * * * * * * * * *

-62- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S CONTRIBUTIONS TO NDPERS/SINGLE EMPLOYER PLANS AS OF DECEMBER 31

Actuarial Determined or Statutorily Required Contribution Deficiency Contributions as a % of Year Ended Contributions District's Contributions (Excess) District's Covered Payroll Covered Payroll Single Employer Plan 2015 $ 208,429 $ 210,000 $ 1,571 $ 1,351,786 15.54% 2016 276,944 210,000 (66,944) 1,347,615 15.58% 2017 288,286 210,000 (78,286) 1,305,429 16.09% 2018 238,562 318,000 79,438 1,211,584 26.25%

NDPERS 2015 132,843 132,843 - 1,865,772 7.12% 2016 120,358 120,358 - 1,690,424 7.12% 2017 129,449 129,449 - 1,818,101 7.12% 2018 137,219 137,219 - 1,927,227 7.12%

The amounts presented for each fiscal year were determined as of the District’s year end which is December 31.

The single employer pension plan does not have statutorily required contributions; contributions are made based on recommendations from the actuarial study performed annually.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-63- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S AND NON-EMPLOYER PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AS OF DECEMBER 31

The amounts presented for each fiscal year were determined as of the measurement date of the District’s net pension liability which is June 30 of the previous fiscal year for NDPERS.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-64- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF CHANGES IN THE DISTRICT’S NET PENSION LIABILITY AND RELATED RATIOS AS OF DECEMBER 31

2018 2017 2016 Total Pension Liability Service Cost $ 55,532 $ 51,356 $ 53,042 Interest 701,298 639,065 613,350 Differences Between Expected and Actual Experience (395,310) 47,709 177,548 Changes of Assumptions 665,934 743,710 - Benefit Payments, Including Refunds of Employee Contributions (353,667) (496,980) (544,647) Net Changes 673,787 984,860 299,293 Total Pension Liability - Beginning 9,170,305 8,185,445 7,886,152 Total Pension Liability - Ending (a) $ 9,844,092 $ 9,170,305 $ 8,185,445

Total Fiduciary Net Position Contributions - Employer $ 318,000 $ 210,000 $ 210,000 Contributions - Employee 68,781 69,545 74,628 Net Investment Income (222,691) 987,588 392,405 Benefit Payments, Including Refunds of Employee Contributions (353,667) (496,980) (544,647) Administrative Expenses (11,652) (15,570) (13,466) Net Changes in Plan Fiduciary Net Position (201,229) 754,583 118,920 Plan Fiduciary Net Position - Beginning 6,760,464 6,005,881 5,886,961 Plan Fiduciary Net Position - Ending (b) $ 6,559,235 $ 6,760,464 $ 6,005,881

District's Net Pension Liability - Ending (a) - (b) $ 3,284,857 $ 2,409,841 $ 2,179,564

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 66.63% 73.72% 73.37%

Covered Employee Payroll $ 1,211,584 $ 1,305,429 $ 1,347,615

District's Net Pension Liability as a Percentage of Covered Employee Payroll 271.12% 184.60% 161.73%

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-65- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S CONTRIBUTIONS TO OPEB PLAN AS OF DECEMBER 31

The amounts presented for each fiscal year were determined as of the District’s year end which is December 31.

The District implemented GASB Statement No. 75 for its year ended December 31, 2018. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-66- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S SHARE OF THE OPEB LIABILITY AS OF DECEMBER 31

District’s Proportionate Share of the Net OPEB Plan Fiduciary Net District’s Proportion of District’s Proportionate Liability (Asset) as a Position as a Percentage the Net OPEB Liability Share of the Net District's Covered Percentage of its Covered of the Total OPEB Year Ended (Asset) OPEB Liability (Asset) Payroll Payroll Liability 2018 0.168906%$ 133,025 $ 1,848,194 7.20% 61.89%

The amounts presented for each fiscal year were determined as of the measurement date of the District’s other postemployment benefit liability which is June 30 of the previous fiscal year.

The District implemented GASB Statement No. 75 for its year ended December 31, 2018. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-67- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2018

Variance with Final Budget Original and Positive Final Budget Actual (Negative) REVENUES Local Property Taxes$ 5,539,400 $ 5,701,064 $ 161,664 State Revenues 860,000 941,675 81,675 Program Income 1,114,700 1,175,410 60,710 Investment Earnings 35,000 124,357 89,357 Sponsorship 350,000 326,570 (23,430) Donations 10,000 9,249 (751) Miscellaneous 30,400 52,709 22,309

Total Revenues 7,939,500 8,331,034 391,534

EXPENDITURES Current: Park Operations 5,617,000 5,315,076 301,924 Forestry 815,300 773,520 41,780 Recreation 655,800 605,811 49,989 Capital Outlay: Capital and Betterment 576,500 781,381 (204,881) Debt Service: Principal Retirement 41,000 90,315 (49,315) Interest Charges - 39,712 (39,712)

Total Expenditures 7,705,600 7,605,815 99,785

Excess (Deficiency) of Revenues over Expenditures 233,900 725,219 491,319

OTHER FINANCING SOURCES (USES) Transfers In - 98,473 98,473 Transfers Out (60,000) (250,986) (190,986)

Total Other Financing Sources (Uses) (60,000) (152,513) (92,513)

Net Change in Fund Balances 173,900 572,706 398,806

Fund Balances - Beginning of Year 2,260,869 2,260,869 -

Fund Balances - End of Year $ 2,434,769 $ 2,833,575 $ 398,806

See Notes to the Required Supplementary Information

-68- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2018

NOTE 1 BUDGETARY DATA

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

All budgeted appropriations lapse at the end of the fiscal year.

NOTE 2 CHANGES OF ASSUMPTIONS – NDPERS AND OPEB

Amounts reported in 2018 reflect actuarial assumption changes effective July 1, 2018 based on the results of an actuarial experience study completed in 2015. This includes changes to the mortality tables, disability incidence rates, retirement rates, administrative expenses, salary scale, and percent married assumption.

-69- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING SCHEDULE OF BALANCE SHEET – GENERAL FUND AS OF DECEMBER 31, 2018

Forestry Recreation Total General General Fund Fund Fund Funds Assets Cash$ 2,279,729 $ 581,598 $ 200,315 $ 3,061,642 Accounts Receivable 407,818 - 2 407,820 Taxes Receivable 80,969 20,140 8,425 109,534 Contract Receivable 426,984 - - 426,984

Total Assets$ 3,195,500 $ 601,738 $ 208,742 $ 4,005,980

Liabilities Accounts Payable$ 280,075 $ - $ - $ 280,075 Unearned Revenue 160,792 - - 160,792 Sales Tax Payable 2,286 - 74 2,360 Gift Certificate/Card Payable 25,761 - - 25,761 Accrued Payroll 101,694 23,295 18,952 143,941

Total Liabilities 570,608 23,295 19,026 612,929

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 76,296 15,389 7,983 99,668 Unavailable Revenue - Special Assessments - 3,784 - 3,784 Unavailable Revenue - Development Agreement 29,040 - - 29,040 Unavailable Revenue - Contracts 426,984 - - 426,984

Total Deferred Inflows of Resources 532,320 19,173 7,983 559,476

Fund Balances Unassigned 2,092,572 559,270 181,733 2,833,575

Total Fund Balances 2,092,572 559,270 181,733 2,833,575

Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 3,195,500 $ 601,738 $ 208,742 $ 4,005,980

-70- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2018

Recreation Total General General Fund Forestry Fund Fund Funds Revenues Local Property Taxes$ 4,372,528 $ 874,777 $ 453,759 $ 5,701,064 State Revenues 941,675 - - 941,675 Program Income 942,130 2,500 230,780 1,175,410 Investment Earnings 124,357 - - 124,357 Sponsorships 325,468 - 1,102 326,570 Donations - - 9,249 9,249 Miscellaneous 40,151 6,786 5,772 52,709 Total Revenues 6,746,309 884,063 700,662 8,331,034

Expenditures Current: Park Operations 5,315,076 - - 5,315,076 Forestry - 773,520 - 773,520 Recreation - - 605,811 605,811 Capital Outlay: Capital and Betterment 717,290 64,091 - 781,381 Debt Service: Principal Retirement 90,315 - - 90,315 Interest Charges 39,712 - - 39,712 Total Expenditures 6,162,393 837,611 605,811 7,605,815

Excess (Deficiency) of Revenues Over (Under) Expenditures 583,916 46,452 94,851 725,219

Other Financing Sources (Uses) Operating Transfers In 98,473 - - 98,473 Operating Transfers Out (58,400) - (192,586) (250,986) Total Other Financing Sources (Uses) 40,073 - (192,586) (152,513)

Net Change in Fund Balances 623,989 46,452 (97,735) 572,706 Fund Balance Beginning of Year 1,468,583 512,818 279,468 2,260,869

Fund Balance End of Year$ 2,092,572 $ 559,270 $ 181,733 $ 2,833,575

-71-

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities and each major fund information of the Park District of the City of Grand Forks, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks' basic financial statements and have issued our report thereon dated March 15, 2019.

Internal Control over Financial Reporting

Make Every Day Count www.bradymartz.com -72-

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

Purpose of this Report

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 15, 2019

-73- Make Every Day Count www.bradymartz.com

PARK DISTRICT OF THE CITY OF GRAND FORKS GRAND FORKS, NORTH DAKOTA

AUDITED FINANCIAL STATEMENTS

FOR THE YEAR ENDED DECEMBER 31, 2017

TABLE OF CONTENTS

Page

ROSTER OF DISTRICT OFFICIALS 1

INDEPENDENT AUDITOR'S REPORT 2

MANAGEMENT’S DISCUSSION AND ANALYSIS 5

BASIC FINANCIAL STATEMENTS

Government-Wide Financial Statements:

Statement of Net Position 15

Statement of Activities 16

Fund Financial Statements:

Balance Sheet - Governmental Funds 17

Reconciliation of Governmental Funds Balance Sheet to Net Position of Governmental Activities 18

Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 19

Reconciliation of the Changes in Fund Balance of Governmental Funds to the Statement of Activities 20

Statement of Net Position - Proprietary Funds 21

Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 23

Statement of Cash Flows - Proprietary Funds 24

Statement of Fiduciary Net Position – Fiduciary Funds 25

Statement of Changes in Fiduciary Net Position – Fiduciary Funds 26

Notes to the Basic Financial Statements 27

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of District’s Contributions to NDPERS/Single Employer Plans 59

Schedule of District’s and Non-Employer Proportionate Share of the Net Pension Liability 60

Schedule of Changes in District's Net Pension Liability and Related Ratios 61

Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - General Fund 62

Notes to the Required Supplementary Information 63

SUPPLEMENTARY INFORMATION

Combining Schedule of Balance Sheet - General Fund 64

Combining Statement of Revenues, Expenditures and Changes in Fund Balances - General Fund 65

Statement of Financial Position - Foundation Component Unit 66

Statement of Activities - Foundation Component Unit 67

* * * * * * * * * * * * * * * * *

PARK DISTRICT OF THE CITY OF GRAND FORKS ROSTER OF DISTRICT OFFICIALS AS OF DECEMBER 31, 2017

Jay Panzer President

Greg LaDouceur Vice-President

Paul Barta Board Member

Tim Skarperud Board Member

Molly Soeby Board Member

Bill Palmiscno Executive Director

* * * * * * * * * * * * * * *

-1-

INDEPENDENT AUDITOR'S REPORT

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the discretely presented component unit of the Park District of the City of Grand Forks as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks’ basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Auditor's Responsibility

-2-

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the discretely presented component unit of the Park District of the City of Grand Forks, as of December 31, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedule of the District’s contributions to NDPERS/ single employer plans, schedule of District’s and non-employer proportionate share of the net pension liability, schedule of changes in the District’s net pension liability and related ratios, and budgetary comparison information as listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Park District of the City of Grand Forks’ financial statements. The combining general fund statements and Statement of Financial Position and Statement of Activities – Foundation Component Unit are presented for purposes of additional analysis and are not a required part of the basic financial statements.

The combining general fund statements and Statement of Financial Position and Statement of Activities – Foundation Component Unit are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining general fund statements and Statement of Financial Position and Statement of Activities – Foundation

-3-

Component Unit are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated March 23, 2018 on our consideration of the Park District of the City of Grand Forks' internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the Park District of the City of Grand Forks' internal control over financial reporting and compliance.

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 23, 2018

-4- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

The discussion and analysis of the Park District of the City of Grand Forks’ (the “District”) financial performance provides an overall review of the District’s financial activities for the year ended December 31, 2017 with comparisons for the year ended December 31, 2016. The intent of this discussion and analysis is to look at the District’s financial performance as a whole; readers should also review the basic financial statements to enhance their understanding of the District’s financial performance.

Financial Highlights

 The assets and deferred outflows of resources of the District exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by $42,960,087 (net position). Of this amount, $5,334,398 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.  The change in net position was an increase of $1,298,114.  Total liabilities were $48,535,529 at December 31, 2017. This is a decrease of $1,512,622 from the balance at December 31, 2016. This result was due to increases in net pension liabilities and payments of bonds payable.

Using this Annual Financial Report

Reporting on the District as a Whole

Statement of Net Position and the Statement of Activities

In the Statement of Net Position and the Statement of Activities, the District’s activities are reported as Governmental Activities and Business Type Activities.

-5- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Reporting on the District’s Most Significant Fund

Governmental Fund

The Park District of the City of Grand Forks as a Whole

Recall that the Statement of Net Position looks at the District as a whole. Table 1 provides a summary of the District’s net position for 2017 and 2016:

Table 1 Statement of Net Position December 31, 2017

Governmental Business-Type Activities Activities Total Assets Current and Other Assets$ 6,172,209 $ 8,121,824 $ 14,294,033 Capital Assets, Net 42,196,902 33,420,692 75,617,594

Total Assets 48,369,111 41,542,516 89,911,627

Deferred Outflows of Resources 1,879,821 - 1,879,821

Liabilities Current Liabilities 625,402 303,358 928,760 Long-Term Liabilities: Due within One Year 1,640,089 1,462,000 3,102,089 Due in more than One Year 22,727,476 21,777,204 44,504,680

Total Liabilities 24,992,967 23,542,562 48,535,529

Deferred Inflows of Resources 295,832 - 295,832

Net Position Net Investment in Capital Assets 23,217,657 10,367,026 33,584,683 Restricted 2,617,573 1,423,433 4,041,006 Unrestricted (875,097) 6,209,495 5,334,398

Total Net Position $ 24,960,133 $ 17,999,954 $ 42,960,087

-6- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Table 1 Continued Statement of Net Position December 31, 2016

Governmental Business-Type Activities Activities Total Assets Current and Other Assets$ 5,973,004 $ 8,453,021 $ 14,426,025 Capital Assets, Net 42,277,414 34,225,880 76,503,294

Total Assets 48,250,418 42,678,901 90,929,319

Deferred Outflows of Resources 897,659 - 897,659

Liabilities Current Liabilities 649,075 282,255 931,330 Long-Term Liabilities: Due within One Year 1,913,661 1,452,488 3,366,149 Due in more than One Year 22,596,059 23,154,613 45,750,672

Total Liabilities 25,158,795 24,889,356 50,048,151

Deferred Inflows of Resources 116,854 - 116,854

Net Position Net Investment in Capital Assets 21,777,252 9,779,726 31,556,978 Restricted 2,921,228 1,372,521 4,293,749 Unrestricted (826,052) 6,637,298 5,811,246

Total Net Position $ 23,872,428 $ 17,789,545 $ 41,661,973

-7- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Table 2 Changes in Net Position As of December 31, 2017

Governmental Business-Type Activities Activities Total Revenues Program Revenues Charges for Services$ 1,254,042 $ 5,632,382 $ 6,886,424 Operating Grants and Contributions 8,671 - 8,671 Capital Grants and Contributions 169,972 171,811 341,783 General Revenues Property Taxes 8,385,069 - 8,385,069 State Revenues 816,622 - 816,622 Other 158,632 12,301 170,933 Total Revenues 10,793,008 5,816,494 16,609,502

Increase (Decrease) in Net Position Before Transfers 1,701,658 (403,544) 1,298,114

Transfers (613,953) 613,953 -

Increase (Decrease) in Net Position 1,087,705 210,409 1,298,114

Net Position Beginning of Year 23,872,428 17,789,545 41,661,973

Net Position End of Year $ 24,960,133 $ 17,999,954 $ 42,960,087

-8- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Table 2 Continued Changes in Net Position As of December 31, 2016

Governmental Business-Type Activities Activities Total Revenues Program Revenues Charges for Services$ 1,167,531 $ 5,615,603 $ 6,783,134 Operating Grants and Contributions 12,679 - 12,679 Capital Grants and Contributions 1,268,436 149,502 1,417,938 General Revenues Property Taxes 6,743,449 - 6,743,449 State Revenues 830,997 - 830,997 Other 149,851 478,191 628,042 Total Revenues 10,172,943 6,243,296 16,416,239

Expenses Program Expenses Park Operations 7,414,770 - 7,414,770 Forestry 813,708 - 813,708 Recreation 773,609 - 773,609 Interest on Long-Term Debt 597,571 - 597,571 King's Walk Golf Course - 1,314,050 1,314,050 Lincoln Golf Course - 316,749 316,749 Choice Health & Fitness - 4,400,732 4,400,732 Total Expenses 9,599,658 6,031,531 15,631,189

Increase (Decrease) in Net Position Before Transfers 573,285 211,765 785,050

Transfers (595,276) 595,276 -

Increase (Decrease) in Net Position (21,991) 807,041 785,050

Net Position Beginning of Year 23,894,419 16,982,504 40,876,923

Net Position End of Year $ 23,872,428 $ 17,789,545 $ 41,661,973

Choice Health & Fitness membership revenue decreased almost $93,000 from the prior year. Choice Health & Fitness has a shared membership agreement with the Altru Family YMCA. Combined members for both organizations started the year with approximately 15,700 members and ended the year with approximately 14,900 members. Members are expected to remain close to the 15,000 level and the focus will continue to be on member retention for 2018. Programming revenue saw increases in a number of areas due to added services provided and an increased campaign to inform members. We believe 2018 will bring additional growth in some programs. On the expense side, 2017 operating expenses were less than the prior year. For 2018 we will continue to evaluate current programing and look to augment with fresh offerings that will allow us to provide great customer service with the financial levels needed to support it.

-9- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

King’s Walk Golf Course was open from early April to late October in 2017. Total operating revenue was within $5,000 of the 2016 level. Over 26,700 rounds were played in 2017, which was down around 1,500 rounds from the 2016 season. Golfers purchasing King’s Walk season memberships were again able to play Lincoln Golf Course at no extra cost and this policy will continue in 2018.

Lincoln Golf Course was open from early April to late October in 2017. Total operating revenue was up over $54,000 which was mainly due to good weather conditions and the closure of UND’s Ray Richards golf course. Over 19,400 rounds were played in 2017, which was up over 3,300 rounds from the 2016 season. The Steve Mullally Youth Golf Course, located next to Lincoln Golf Course, was enjoyed by many families. This is a youth 9-hole golf course and is free for youth and families to play.

General Fund Budgetary Highlights

The District’s budget is prepared on the same basis of accounting as the financial statements.

There were no amendments to the District’s budget during the course of 2017.

Original and final budgeted revenues for the general fund in 2017 were $7,918,000 and the actual revenues were $8,157,526. The major factor contributing to the increase of actual revenues over budgeted revenues in 2017 was due to an increase of almost $170,000 in local property taxes. This was attributed to a higher percentage of timely current year collections compared to the percentage budgeted. Increased program revenue of over $84,000 also contributed, but was offset by a reduction in state aid of approximately $73,000. This reduction in state aid is directly related to a reduction in sales tax collections for the state of ND tied to the slowdown of oil production in the western part of the state.

Original and final budgeted expenditures for the general fund in 2017 were $7,569,200 and the actual expenditures were $7,330,644. Actual expenses were less than budgeted mainly due to continuing to prioritize maintenance items and projects as well as expense control by managers in their departments.

-10- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Capital Assets

Table 3 Capital Assets at December 31, 2017 (Net of Depreciation)

Governmental Business-Type Activities Activities Total Land $ 4,845,084 $ 3,249,695 $ 8,094,779 Land Improvements 13,006,855 - 13,006,855 Buildings, Systems and Structures 22,613,856 25,781,285 48,395,141 Golf Course - 3,677,972 3,677,972 Equipment 973,009 466,866 1,439,875 Vehicles 259,425 140 259,565 Tractors, Trailers, and Mowers 476,037 244,734 720,771 Construction in Progress 22,636 - 22,636

Totals $ 42,196,902 $ 33,420,692 $ 75,617,594

Capital Assets at December 31, 2016 (Net of Depreciation)

Governmental Business-Type Activities Activities Total Land $ 4,845,084 $ 3,249,695 $ 8,094,779 Land Improvements 12,744,471 91,566 12,836,037 Buildings, Systems and Structures 22,801,392 26,361,346 49,162,738 Golf Course - 3,734,913 3,734,913 Equipment 996,856 513,895 1,510,751 Vehicles 267,192 473 267,665 Tractors, Trailers, and Mowers 496,488 273,992 770,480 Construction in Progress 125,931 - 125,931

Totals $ 42,277,414 $ 34,225,880 $ 76,503,294

Additional information on the District’s capital assets can be found in Note 3 of this report.

-11- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Long-Term Debt

At the end of the current fiscal year, the District had total bonded debt outstanding of $35,976,783, contract payable of $6,056,128, net pension liabilities of $5,084,049, and compensated absences of $489,809.

Table 4 Outstanding Debt at December 31, 2017

Governmental Business-Type Activities Activities Total General Obligation Bonds$ 12,923,117 $ - $ 12,923,117 Revenue Bonds - 23,053,666 23,053,666 Contract Payable 6,056,128 - 6,056,128 Net Pension Liability 5,084,049 - 5,084,049 Compensated Absences 304,271 185,538 489,809

Total$ 24,367,565 $ 23,239,204 $ 47,606,769

Outstanding Debt at December 31, 2016

Governmental Business-Type Activities Activities Total General Obligation Bonds$ 13,133,878 $ - $ 13,133,878 Revenue Bonds - 24,446,154 24,446,154 Contract Payable 6,718,309 - 6,718,309 Special Assessments Debt 638,191 - 638,191 Net Pension Liability 3,707,762 - 3,707,762 Capital Leases 9,784 - 9,784 Compensated Absences 301,796 160,947 462,743

Total $ 24,509,720 $ 24,607,101 $ 49,116,821

The District’s total debt decreased by $1,510,052 during the current fiscal year. The District issued $3,215,000 of Refunding Improvement Bonds, Series 2017 during the year to take advantage of lower interest rates.

Additional information on the District’s long-term debt can be found in Note 6 of this report.

-12- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Long and Short-term Goals

For 2018, the District is continuing to expand and improve facilities to meet demand. Altru Wellness Village will be adding sidewalk lighting and enhancing the community park by adding playground equipment. A skate park will be constructed at Kannowski Park. At Scheels Sports Complex, the finishing touches will take place on the concession stand and restroom building along with fields 3 and 4. Bringewatt Park will see sand volleyball improvements and sidewalks will be added to Veterans Memorial Park. Court resurfacing is also planned at Abbott and Riverside Parks.

In terms of government funds, all indicators for the City of Grand Forks point to a steady growth situation, which means the tax base along with the value of the mill will increase. The tax revenues for its government funds will increase accordingly. The revenue sharing relationship with state government on agricultural and mineral industries appears to have leveled off after the rapid escalation and then regression over the last number of years. The District budgeted to increase the reserves in the government funds for 2018.

The enterprise funds are composed of activities where the District tries to balance fee structures to keep them affordable for families while using as little tax based support as possible. Choice Health & Fitness saw a leveling off in memberships, while program revenue increased this year. The golf courses continue to see the number of rounds played and season memberships sold to be consistent with historical totals. The District’s enterprise funds performed well in 2017.

The success of the capital campaigns for Choice Health & Fitness, which opened in the fall of 2012, ICON Sports Center, which opened in the fall of 2014, and Scheels Sports Complex, which will be fully playable in 2018, has taught the District that they have a great deal of opportunity to improve facilities through philanthropic means. Therefore, the District will continue to work with the Grand Forks Parks and Recreation Foundation (Foundation) to increase their donation revenue. The District’s emphasis on seeking sponsorships and donations within its organization promises to boost the District’s ability to meet demands for expanded services and facilities. The District also continues to expand and benefit from partnership developments, such as with Altru Health System and the Altru Family YMCA.

-13- PARK DISTRICT OF THE CITY OF GRAND FORKS MANAGEMENT’S DISCUSSION AND ANALYSIS - CONTINUED FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016

Performance Tools and Response to Change

The annual financial report provides measurement tools to judge the financial performance of each department, as well as the District as an agency.

Non-Tax Funds

Contacting the District’s Treasurer’s Office

Annually the District makes available its financial reports and budget documents. The District publishes a variety of informative documents related to its operations.

This financial report is designed to provide the District’s citizenry with the general overview of the District’s finances and show the District’s accountability for all money it receives, spends or invests. If you have any questions about this report or need financial information, contact George Hellyer, Superintendent of Finance, Park District of the City of Grand Forks, 1060 47th Avenue South, Grand Forks, ND 58201.

-14- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION AS OF DECEMBER 31, 2017

Governmental Business-Type Activities Activities Total Component Unit Assets Cash $ 2,779,301 $ 2,413,317 $ 5,192,618 $ 666,690 Investments - - - 847,708 Restricted Cash & Investments with Fiscal Agent - 1,423,433 1,423,433 - Accounts Receivable, Net 324,808 73,238 398,046 41,928 Pledges Receivable, Net 2,329,087 4,140,410 6,469,497 6,919,890 Taxes Receivable 147,561 - 147,561 - Contract Receivable 577,142 - 577,142 4,955,000 Interest Receivable - 3,067 3,067 - Prepaid Expenses 14,310 - 14,310 - Inventory - 68,359 68,359 - Nondepreciable Capital Assets 17,874,575 3,249,695 21,124,270 - Depreciable Capital Assets, Net 24,322,327 30,170,997 54,493,324 - Assets Held for Sale - - - 144,750

Total Assets 48,369,111 41,542,516 89,911,627 13,575,966

Deferred Outflows of Resources Deferred Outflows of Resources - NDPERS 1,379,322 - 1,379,322 - Deferred Outflows of Resources - Single Employer Plan 500,499 - 500,499 - Total Deferred Outflows of Resources 1,879,821 - 1,879,821 -

Liabilities Accounts Payable 260,684 220 260,904 3,976 Sales Tax Payable 2,313 4,612 6,925 - Gift Certificates/Cards Payable 23,445 67,050 90,495 - Accrued Payroll 123,984 88,697 212,681 - Accrued Interest Payable 96,890 61,988 158,878 41,928 Unearned Revenue 118,086 80,791 198,877 106,138 Non Current Liabilities: Due Within One Year 1,640,089 1,462,000 3,102,089 1,575,985 Due in More than One Year 22,727,476 21,777,204 44,504,680 10,557,753 Total Liabilities 24,992,967 23,542,562 48,535,529 12,285,780

Deferred Inflows of Resources Deferred Inflows of Resources - NDPERS 94,614 - 94,614 - Deferred Inflows of Resources - Single Employer Plan 201,218 - 201,218 - Total Deferred Inflows of Resources 295,832 - 295,832 -

Net Position Net Investment in Capital Assets 23,217,657 10,367,026 33,584,683 - Restricted for: Debt Service 234,541 1,373,448 1,607,989 - Repairs and Replacement - 49,985 49,985 - Capital Projects 2,383,032 - 2,383,032 - Foundation - - - 392,576 Unrestricted (875,097) 6,209,495 5,334,398 897,610

Total Net Position$ 24,960,133 $ 17,999,954 $ 42,960,087 $ 1,290,186

See Notes to the Basic Financial Statements

-15- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017

Program Revenues Net (Expense) Revenue and Changes in Net Position Operating Capital Grants Charges for Grants and and Governmental Business-Type Expenses Services Contributions Contributions Activities Activities Total Component Unit

Governmental Activities Park Operations$ 6,855,087 $ 999,968 $ - $ 169,972 $ (5,685,147) $ - $ (5,685,147) $ - Forestry 832,487 2,320 - - (830,167) - (830,167) - Recreation 698,343 251,754 8,671 - (437,918) - (437,918) - Interest on Long-Term Debt 705,433 - - - (705,433) - (705,433) - Total Governmental Activities 9,091,350 1,254,042 8,671 169,972 (7,658,665) - (7,658,665) -

Business-Type Activities King's Walk Golf Course 1,500,557 1,143,628 - - - (356,929) (356,929) - Lincoln Golf Course 368,744 303,653 - - - (65,091) (65,091) - Choice Health & Fitness 4,350,737 4,185,101 - 171,811 - 6,175 6,175 - Total Business- Type Activities 6,220,038 5,632,382 - 171,811 - (415,845) (415,845) - Total Primary Government$ 15,311,388 $ 6,886,424 $ 8,671 $ 341,783 (7,658,665) (415,845) (8,074,510) -

Component Unit Foundation $ 566,309 (566,309)

General Revenues: Property Taxes - General 5,690,892 - 5,690,892 - Property Taxes - Debt Service 1,678,871 - 1,678,871 - Property Taxes - Capital Projects 1,015,306 - 1,015,306 - Grants and Entitlements not Restricted to Specific Programs 816,622 - 816,622 894,685 Investment Earnings 54,884 12,301 67,185 55,383 Miscellaneous 103,748 - 103,748 185,086 Transfers (613,953) 613,953 - - Total General Revenues and Transfers 8,746,370 626,254 9,372,624 1,135,154

Change in Net Position 1,087,705 210,409 1,298,114 568,845

Net Position- Beginning 23,872,428 17,789,545 41,661,973 721,341 Net Position- End of Year$ 24,960,133 $ 17,999,954 $ 42,960,087 $ 1,290,186

See Notes to the Basic Financial Statements

-16- PARK DISTRICT OF THE CITY OF GRAND FORKS BALANCE SHEET – GOVERNMENTAL FUNDS AS OF DECEMBER 31, 2017

Total Debt Service Capital Governmental General Fund Fund Projects Fund Funds Assets Cash$ 2,440,125 $ 302,637 $ 36,539 $ 2,779,301 Accounts Receivable 324,808 - - 324,808 Taxes Receivable 101,361 28,794 17,406 147,561 Pledge Receivable - - 2,329,087 2,329,087 Contract Receivable 577,142 - - 577,142 Prepaid Expenses 14,310 - - 14,310

Total Assets$ 3,457,746 $ 331,431 $ 2,383,032 $ 6,172,209

Liabilities Accounts Payable $ 260,684 $ - $ - $ 260,684 Sales Tax Payable 2,313 - - 2,313 Gift Certificate/Cards Payable 23,445 - - 23,445 Unearned Revenue 118,086 - - 118,086 Accrued Payroll 123,984 - - 123,984

Total Liabilities 528,512 - - 528,512

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 84,231 25,701 15,535 125,467 Unavailable Revenue - Special Assessments 6,992 - - 6,992 Unavailable Revenue - Contracts and Pledges 577,142 - 2,329,087 2,906,229

Total Deferred Inflows of Resources 668,365 25,701 2,344,622 3,038,688

Fund Balances Nonspendable For: Prepaid Expenses 14,310 - - 14,310 Restricted For: Debt Service - 305,730 - 305,730 Capital Projects - - 38,410 38,410 Unassigned 2,246,559 - - 2,246,559

Total Fund Balances 2,260,869 305,730 38,410 2,605,009

Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 3,457,746 $ 331,431 $ 2,383,032 $ 6,172,209

See Notes to the Basic Financial Statements

-17- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF GOVERNMENTAL FUNDS BALANCE SHEET TO NET POSITION OF GOVERNMENTAL ACTIVITIES AS OF DECEMBER 31, 2017

Total Governmental Funds Balance $ 2,605,009

Amounts reported for governmental activities in the statement of net position are different because:

Capital assets used in governmental activities are not financial resources and therefore not reported in the governmental funds. 42,196,902

Other long-term assets are not available to pay for current-period expenditures and therefore are unavailable in the governmental funds: Contract Receivable$ 577,142 Special Assessments 6,992 Property Taxes 125,467 Pledge Receivable 2,329,087 Total 3,038,688

Net deferred outflows/(inflows) of resources relating to the single employer and cost sharing defined benefit plans in the governmental activities are not financial resources and, therefore, are not reported as deferred outflows (inflows): Deferred Outflows of Resources - Single Employer Plan 500,499 Deferred Outflows of Resources - PERS 1,379,322 Deferred Inflows of Resources - Single Employer Plan (201,218) Deferred Inflows of Resources - PERS (94,614) 1,583,989 Long-term liabilities not due and payable in the current period and therefore are not included in the governmental funds: Accrued Interest (96,890) Compensated Absences (304,271) Notes Payable (6,056,128) Premium on Bonds Payable (168,117) Net Pension Liability - PERS (2,674,208) Net Pension Liability - Single Employer Plan (2,409,841) Bonds Payable (12,755,000)

Total (24,464,455)

Net Position of Governmental Activities $ 24,960,133

See Notes to the Basic Financial Statements

-18- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017

Total Debt Service Capital Projects Governmental General Fund Fund Fund Funds Revenues Local Property Taxes$ 5,670,237 $ 1,678,871 $ 1,015,306 $ 8,364,414 State Revenues 816,622 - - 816,622 Program Income 1,226,093 - - 1,226,093 Investment Earnings 54,884 - - 54,884 Sponsorships 317,394 - - 317,394 Donations 8,671 - 531,504 540,175 Miscellaneous 63,625 60 40,060 103,745 Total Revenues 8,157,526 1,678,931 1,586,870 11,423,327

Expenditures Current: Park Operations 5,209,101 - - 5,209,101 Forestry 793,073 - - 793,073 Recreation 698,343 - - 698,343 Capital Outlay: Capital and Betterment 489,329 262,383 277,597 1,029,309 Debt Service: Principal Retirement 96,965 4,118,193 575,000 4,790,158 Interest Charges 43,833 467,267 189,126 700,226 Total Expenditures 7,330,644 4,847,843 1,041,723 13,220,210

Excess (Deficiency) of Revenues Over (Under) Expenditures 826,882 (3,168,912) 545,147 (1,796,883)

Other Financing Sources (Uses) Issuance of Debt - 3,215,000 - 3,215,000 Premium on Debt Issuance - 74,266 - 74,266 Operating Transfers In - - 35,369 35,369 Operating Transfers Out (108,064) - (541,258) (649,322) Total Other Financing Sources (Uses) (108,064) 3,289,266 (505,889) 2,675,313

Net Change in Fund Balances 718,818 120,354 39,258 878,430 Fund Balance Beginning of Year 1,542,051 185,376 (848) 1,726,579

Fund Balance End of Year$ 2,260,869 $ 305,730 $ 38,410 $ 2,605,009

See Notes to the Basic Financial Statements

-19- PARK DISTRICT OF THE CITY OF GRAND FORKS RECONCILIATION OF THE CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2017

Net Change in Fund Balance - Total Governmental Funds $ 878,430

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlays exceeded depreciation in the current period. Capital Asset Additions$ 1,029,309 Current Year Depreciation (1,109,821) Total (80,512)

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the governmental funds: Property Taxes 26,609 Special Assessments (5,952) Grants (5,000) Contracts and Pledges Receivable (645,977)

The issuance of long-term debt provides current financial resources to the governmental funds. However, there is no effect on net position. Also, governmental funds report the effect of premiums and discounts when debt is first issued, whereas these amounts are unavailable and deferred and amortized in the statement of activities. Proceeds from the Issuance of Long-Term Debt (3,215,000) Premium on Issuance of Long-Term Debt (74,266)

Change in deferred outflows and inflows of resources related to the net pension liability 803,184

Repayment of principal on long-term debt consumes the current financial resources of the governmental funds. However, there is no effect on net position. The following are principal payments on long-term debt during the year ended December 31, 2017: Accrued Interest Payable (25,232) Amortization of Bond Premium 20,026 Principal Payment on Bonds Payable 3,480,000 Principal Payment on Special Assessments 638,192 Principal Payment on Notes Payable 671,965 Change in Compensated Absences (2,475) Change in Net Pension Liability (1,376,287)

Total 3,406,189

Change in Net Position$ 1,087,705

See Notes to the Basic Financial Statements

-20- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS AS OF DECEMBER 31, 2017

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Totals Assets Current Assets: Cash$ 2,048,222 $ 60,138 $ 304,957 $ 2,413,317 Accounts Receivable 23,272 - 52,966 76,238 Allowance for Doubtful Accounts - - (3,000) (3,000) Pledges Receivable - - 610,376 610,376 Interest Receivable - - 3,067 3,067 Inventory 59,844 8,515 - 68,359 Total Current Assets 2,131,338 68,653 968,366 3,168,357

Non-Current Assets: Restricted Cash & Investments with Fiscal Agent - - 1,423,433 1,423,433 Total Restricted Assets - - 1,423,433 1,423,433

Capital Assets: Land 618,820 21,640 2,609,235 3,249,695 Buildings, Systems & Structures 2,263,476 1,009,959 26,606,953 29,880,388 Golf Course 5,553,039 533,780 - 6,086,819 Equipment 988,645 8,000 340,697 1,337,342 Vehicles 7,000 12,000 - 19,000 Tractors, Trailers, & Mowers 568,024 262,368 - 830,392 Less Accumulated Depreciation (4,053,999) (729,079) (3,199,866) (7,982,944) Total Capital Assets (Net of Accumulated Depreciation) 5,945,005 1,118,668 26,357,019 33,420,692

Pledges Receivable, Net of Current Portion - - 3,530,034 3,530,034

Total Non-Current Assets 5,945,005 1,118,668 31,310,486 38,374,159 Total Assets 8,076,343 1,187,321 32,278,852 41,542,516

See Notes to the Basic Financial Statements

-21- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF NET POSITION - PROPRIETARY FUNDS - CONTINUED AS OF DECEMBER 31, 2017

Business-Type Activities-Enterprise Funds King's Walk Lincoln Golf Choice Health Golf Course Course & Fitness Totals Liabilities Current Liabilities: Accounts Payable $ 220 $ - $ - $ 220 Sales Tax Payable 84 - 4,528 4,612 Gift Certificate/Cards Payable 48,152 1,167 17,731 67,050 Accrued Payroll 19,878 - 68,819 88,697 Unearned Revenue - - 80,791 80,791 Compensated Absences 17,420 2,010 47,570 67,000 Bonds Payable 615,000 - 780,000 1,395,000 Accrued Interest Payable 12,615 - 49,373 61,988 Total Current Liabilities 713,369 3,177 1,048,812 1,765,358

Non-Current Liabilities: Compensated Absences 28,417 3,499 86,622 118,538 Bonds Payable, Net of Current 3,152,853 - 18,505,813 21,658,666 Total Non-Current Liabilities 3,181,270 3,499 18,592,435 21,777,204 Total Liabilities 3,894,639 6,676 19,641,247 23,542,562

Net Position Net Investment in Capital Assets 2,177,152 1,118,668 7,071,206 10,367,026 Restricted for: Debt Service - - 1,373,448 1,373,448 Repairs and Replacement - - 49,985 49,985 Unrestricted 2,004,552 61,977 4,142,966 6,209,495 Total Net Position $ 4,181,704 $ 1,180,645 $ 12,637,605 $ 17,999,954

See Notes to the Basic Financial Statements

-22- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017

Business-Type Activities - Enterprise Funds King's Walk Golf Lincoln Golf Choice Health & Course Course Fitness Totals Operating Revenues: Charges for Sales and Services: Sales $ 1,143,628 $ 303,653 $ 4,185,101 $ 5,632,382 Total Operating Revenues 1,143,628 303,653 4,185,101 5,632,382

Operating Expenses: Costs of Sales and Services 720,279 208,970 2,142,341 3,071,590 Administration 434,524 104,944 1,007,760 1,547,228 Total Operating Expenses 1,154,803 313,914 3,150,101 4,618,818

Operating Income (Loss) before Depreciation (11,175) (10,261) 1,035,000 1,013,564

Depreciation and Amortization 266,287 54,830 603,298 924,415

Operating Income (Loss) (277,462) (65,091) 431,702 89,149

Non-Operating Revenues (Expenses): Donations/Sponsorships - - 171,811 171,811 Interest Income - - 12,301 12,301 Loss on Disposal of Fixed Assets (1,720) - - (1,720) Bond Interest Expense (77,747) - (597,338) (675,085) Total Non-Operating Revenue (Expenses) (79,467) - (413,226) (492,693)

Income (Loss) Before Transfers (356,929) (65,091) 18,476 (403,544)

Transfers In 351,258 52,695 210,000 613,953

Changes in Net Position (5,671) (12,396) 228,476 210,409

Total Net Position - Beginning 4,187,375 1,193,041 12,409,129 17,789,545

Total Net Position - Ending$ 4,181,704 $ 1,180,645 $ 12,637,605 $ 17,999,954

See Notes to the Basic Financial Statements

-23- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017

Business-Type Activities - Enterprise Funds King's Walk Lincoln Choice Health Golf Course Golf Course & Fitness Totals CASH FLOWS FROM OPERATING ACTIVITIES Receipts from Customers and Users$ 1,164,682 $ 303,845 $ 4,183,892 $ 5,652,419 Payments to Suppliers (712,919) (214,347) (2,136,769) (3,064,035) Payments to Employees (435,258) (104,600) (981,751) (1,521,609) Net Cash Provided (Used) by Operating Activities 16,505 (15,102) 1,065,372 1,066,775 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers from other Funds 351,258 52,695 210,000 613,953 Net Cash Provided (Used) by Non-Capital and Related Financing Activities 351,258 52,695 210,000 613,953 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal Paid on Bonds Payable (600,000) - (770,000) (1,370,000) Capital Donations - - 410,165 410,165 Proceeds from Sale of Capital Assets 4,000 - - 4,000 Purchases of Capital Assets (103,368) - (21,580) (124,948) Interest Paid on Capital Debt (92,983) - (607,875) (700,858) Net Cash Provided (Used) by Capital and Related Financing Activities (792,351) - (989,290) (1,781,641) CASH FLOWS FROM INVESTING ACTIVITIES Interest and Dividends Received - - 12,460 12,460 Net Cash Provided (Used) by Capital Investing Activities - - 12,460 12,460 Net Increase (Decrease) in Cash and Cash Equivalents (424,588) 37,593 298,542 (88,453) Cash and Cash Equivalents, January 1 2,472,810 22,545 1,429,848 3,925,203 Cash and Cash Equivalents, December 31$ 2,048,222 $ 60,138 $ 1,728,390 $ 3,836,750

Reconciliation of Operating Income to Net Cash Provided (Used) by Operating Activities: Operating Income (Loss) $ (277,462) $ (65,091) $ 431,702 $ 89,149 Adjustments to Reconcile Operating Income to Net Cash Provided (Used) by Operating Activities: Depreciation and Amortization Expense 266,287 54,830 603,298 924,415 Effects on Operating Cash Flows Due to Changes in: Accounts Receivable 7,276 - (4,726) 2,550 Inventories 7,056 (5,377) - 1,679 Accounts Payable 304 - 4,528 4,832 Gift Certificate/Cards Payable 28,079 192 3,517 31,788 Accrued Payroll (4,120) - 5,148 1,028 Compensated Absences 3,386 344 20,861 24,591 Unearned Revenue (14,301) - 1,044 (13,257) Total Adjustments 293,967 49,989 633,670 977,626 Net Cash Provided (Used) by Operating Activities $ 16,505 $ (15,102) $ 1,065,372 $ 1,066,775

See Notes to the Basic Financial Statements

-24- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS AS OF DECEMBER 31, 2017

Pension Trust Fund ASSETS Investments, at Fair Value: Investment Funds$ 6,752,927

Total Assets$ 6,752,927

NET POSITION Held in Trust for Pension Benefits and Other Purposes $ 6,752,927

See Notes to the Basic Financial Statements

-25- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED DECEMBER 31, 2017

Pension Trust Fund ADDITIONS Contributions: Employer$ 210,000 Plan Members 69,545 Total Contributions 279,545

Investment Earnings: Investment Income 390,248 Net Change in the Fair Value of Investments 600,985 Net Investment Earnings 991,233

Total Additions 1,270,778

DEDUCTIONS Benefits Paid 496,980 Administrative Costs 15,176

Total Deductions 512,156

Change in Net Position 758,622

Net Position - Beginning 5,994,305

Net Position - Ending$ 6,752,927

See Notes to the Basic Financial Statements

-26- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS AS OF DECEMBER 31, 2017

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Park District of the City of Grand Forks (District) operates with its board members elected at large, authorized to levy taxes, issue debt, budget, and designate management. The District provides the following services as authorized by its charter: parks, golf courses, recreation, forestry, and general administrative services.

A. Reporting Entity

The Grand Forks Parks and Recreation Foundation (Foundation) meets the criteria and is included as a discretely presented component unit.

B. Basis of Presentation

Government-wide and Fund Financial Statements

-27- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

C. Measurement Focus/Basis of Accounting

The District reports the following major governmental funds:

The General Fund is the District’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund.

The Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds.

-28- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

The District reports the following major proprietary funds:

The King’s Walk Golf Course Fund accounts for the activities of King’s Walk Golf Course.

The Lincoln Golf Course Fund accounts for the activities of Lincoln Golf Course.

The Choice Health & Fitness Fund accounts for the activities of Choice Health & Fitness.

Additionally, the District reports the following fund types:

The Pension Trust Fund accounts for the activities of the single employer defined benefit pension plan.

D. Budgetary Data

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

The Board of Commissioners shall give preliminary approval of the District budget and give first reading of the annual appropriation ordinance by September 10 of each year. The Board of Commissioners will hold public hearings and may subtract from or change appropriations. Any changes in the budget must be with the revenues and reserves estimated as available by the Superintendent of Finance or the revenue estimates must be changed by an affirmative vote of a majority of the Board of Commissioners.

All budgeted appropriations lapse at the end of the fiscal year.

E. Cash

The cash balances from all funds are pooled and invested. All certificates of deposit, no matter what the maturity date and all highly liquid investments (including restricted assets) with maturity of three months or less when purchased are considered cash equivalents and treated as such in the statement of cash flows.

-29- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

F. Fair Value Measurements

The District accounts for all assets and liabilities that are being measured and reported on a fair value basis in accordance with GAAP. GAAP defines fair value, establishes a framework for measuring fair value and expands disclosure about fair value measurements.

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

G. Receivables and Payables

Advances between funds, as reported in the fund financial statements, are offset by a fund balance reserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources.

H. Inventory

All inventories are stated at cost, determined on an average-cost basis.

I. Capital Assets

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized.

-30- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Property, plant, and equipment of the District is depreciated using the straight line method over the following estimated useful lives:

Assets Years Buildings, Systems and Structures 20-50 Golf Course 15-50 Equipment 5-10 Vehicles 5 Tractors, Trailers, and Mowers 5-15

J. Property Taxes

The County spreads all levies over taxable property. Property taxes are attached as an enforceable lien on the real estate and become due on January 1 of the year following the assessment date.

Property tax revenues are recognized when they become available. All other taxes are fully offset by deferred revenue because they are not known to be available to finance current expenditures.

K. Compensated Absences

L. Long-Term Obligations

M. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.

N. Fund Balance

Nonspendable – consists of amounts that are not in spendable form, such as inventory and prepaid items.

Committed – consists of internally imposed constraints. These constraints are established by formal action of the Board of Commissioners.

Unassigned – is the residual classification for the general fund and also reflects negative residual amounts in other funds.

When both restricted and unrestricted resources are available for use, it is the District’s policy to first use restricted resources, and then use unrestricted resources as they are needed.

When committed, assigned or unassigned resources are available for use, it is the District’s policy to use resources in the following order; 1) committed, 2) assigned and 3) unassigned.

O. Net Position

-32- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

P. Net Position Flow Assumption

Sometimes the District will fund outlays for a particular purpose for both restricted (e.g., restricted bond or grant proceeds) and unrestricted resources. In order to calculate the amounts to report as restricted net position and unrestricted net position in the government-wide financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the District’s policy to consider restricted net position to have been depleted before unrestricted net position is applied.

Q. Deferred Outflows/Inflows of Resources

In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resource (expense/expenditure) until then. The District has one item reported on the statement of net position as Deferred Outflows of Resources which represents actuarial differences within NDPERS and the single employer pension plan as well as amounts paid to the plans after the measurement date.

In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The District has three types of items, which arise only under a modified accrual basis of accounting, that qualify for reporting in this category. Accordingly, unavailable revenue - property taxes, unavailable revenue - special assessments and unavailable revenue - contracts and pledges are reported only in the governmental funds balance sheet. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The District also has two items reported on the statement of net position as Deferred Inflows of Resources which represents actuarial differences within NDPERS plan and Single Employer Pension Plan.

R. Sales Taxes

Sales taxes collected from customers and remitted to taxing authorities are excluded from revenues and cost of sales, respectively.

S. Pensions

For purposes of measuring the net pension liability and asset, deferred outflows/inflows of resources, and pension expense, information about the fiduciary net position of the North Dakota Public Employees Retirement System (NDPERS) and the single employer pension plan and additions to/deductions from NDPERS/Single Employer plan fiduciary net position have been determined on the same basis as they are reported by NDPERS/Single Employer plan’s except that NDPERS’s fiscal year is June 30. For this purpose, plan contributions are recognized as of employer payroll paid dates and benefit payments and refunds are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value.

T. Unearned Revenue

Unearned revenues represent resources that have been received but are not yet earned.

-33- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

U. Pledge Receivable

V. Component Unit Significant Accounting Policies

Organization

The purpose of the Foundation is to contribute to and promote healthful lifestyles in our community through the development and enhancement of parks, playgrounds, recreational facilities, programs, and activities for all people of Grand Forks, regardless of age, physical ability, or economic position.

Basis of Accounting

The financial statements of the Foundation have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America.

Basis of Presentation

Net position and revenues, expenses, gains and losses are classified based on the existence or absence of donor-imposed restrictions. Accordingly, net position of the Foundation and changes therein are classified and reported as follows:

Unrestricted Net Asset - Net asset that is not subject to donor-imposed stipulations.

Temporarily Restricted Net Asset - Net asset subject to donor-imposed stipulations that may or will be met, either by actions of the Foundation and/or the passage of time. When a restriction expires, temporarily restricted net asset is reclassified to unrestricted net asset and reported in the statement of activities as net asset released from restrictions.

Permanently Restricted Net Asset - Net asset subject to donor-imposed stipulations that they be maintained permanently by the Foundation. Generally, the donors of these assets permit the Foundation to use all or part of the income earned on any related investments for general or specific purposes.

Financial Statement Presentation

The Foundation adopted Statement of Financial Accounting Standards (SFAS) No. 117, Financial Statements of Not-for-Profit Organizations. Under SFAS No. 117, the Foundation is required to report information regarding its financial asset and activities accordingly to three classes of net assets; unrestricted, temporarily restricted, and permanently restricted.

-34- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Estimates

The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Cash

The cash balances from all funds are pooled and invested. The Foundation considers all certificates of deposit, no matter what the maturity date and all highly liquid investments (including restricted assets) with maturity of three months or less when purchased to be considered cash equivalents and treated as such in the statement of cash flows.

Promises to Give

Assets Held for Sale

The Foundation carries non-current available-for-sale financial assets, which are measured at market value. Realized gains and losses on dispositions are based on the net proceeds and the adjusted book value of the assets sold.

Investments

The Foundation carries investments in marketable securities with readily determinable fair values and all investments in debt securities at their fair values, using level 1 inputs as described below, in the Statement of Financial Position. Unrealized gains and losses are included in the change in net assets in the accompanying Statement of Activities.

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

-35- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Long-Term Obligations

Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized using the straight line method over the life of the related debt. Bond issue costs are reported net of related debt.

Contributions

The Foundation also adopted Accounting Standards Codification Topic 605 and 720, Accounting for Contributions Received and Contributions Made, whereby contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support depending on the existence and/or nature of any donor restrictions. Restricted net assets are reclassified to unrestricted net assets upon satisfaction of the time or purpose restrictions.

Income Taxes

The Foundation is organized as a North Dakota non-profit corporation and is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code.

NOTE 2 CASH

A. Deposits

In accordance with North Dakota laws, the District maintains deposits at depositories authorized by the Board of Commissioners. The depositories are members of the Federal Reserve System.

At December 31, 2017, the carrying amount of the District's bank deposits was $5,192,618 and the bank balance was $5,319,709, of which all was covered by Federal Depository Insurance or collateral held in safekeeping in the District's name. In addition, there is $1,423,433 held with fiscal agent as restricted cash for bond covenants. The balance consists entirely of cash. The cash is held at the Bank of New York Mellon and is covered by FDIC coverage.

The carrying amount of Grand Forks Parks and Recreation Foundation’s bank deposits were $666,690 of which all was covered by Federal Depository Insurance. In addition, there are investments of $847,708. All investments are U.S. government securities or exchange traded funds (ETFs).

-36- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

B. Investments

As of December 31, 2017, $6,628,537 of the District’s pension trust funds were invested with the North Dakota State Investment Board and $124,390 of the pension trust funds were invested with Aetna Life Insurance Company. Both the North Dakota State Investment Board and Aetna Life Insurance Company are external investment pools.

As of December 31, 2017, the Foundation had the following investments:

Quoted Prices in Active Markets for Identical Assets Investment Type (Level 1)

Grand Forks Parks and Recreation Foundation - Component Unit Equity Securities: Basic Materials$ 3,692 Consumer Cyclical 13,973 Consumer Non-Cyclical 8,370 Energy 5,573 Financial 15,210 Health Care 16,887 Industrials 9,806 Mutual Fund - Equity 117,074 Mutual Funds - International 60,742 Technology 22,331 Telecommunications 2,006 Utility 2,582 Mutual Funds 181,545 Total $ 459,791

The remaining $387,917 investments are invested in Certificates of Deposits.

Permitted Investments for Restricted Investments

itself): Federal Home Loan Bank System, as to senior debt obligations; Student Loan Marketing Association (SLMA or "Sallie Mae"), as to senior debt obligations; Resolution Funding Corp. (REFCORP) obligations; and Farm Credit System, as to consolidated system-wide bonds and notes; d) direct and general obligations or of bonds or notes issued by, any state of the United States of America or any municipality or political subdivision of any such state, which obligations are rated in one of the two highest rating categories of either S&P or Moody's, or, upon the discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; e) commercial paper which matures not more than two hundred seventy (270) days after the date of purchase rated, at the time of purchase in the single highest classification, "A-l+" by S&P or "P-I" by Moody's, or, upon the discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; f) certificates of deposit secured at all times by collateral described in (a) and/or (b) above; provided that such certificates must be issued by commercial banks, savings and loan or mutual savings banks. Such collateral must be held by a third party and the owner must have a perfected security interest in the collateral, including those of the Trustee and its affiliates; g) certificates of deposit, savings accounts or deposit account which is fully insured by FDIC, including those of the Trustee and its affiliates; h) Investment Agreements, including guaranteed investment contracts entered into with a provider which has an unsecured, uninsured and unguaranteed obligation rating of "Prime -1 "or "A3" or better by Moody's and "A-I" or "A" or better by S&P, or upon discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; i) obligations of any state of the United States, any political subdivision thereof or any agency or instrumentality thereof, if such obligations are secured by Governmental Obligations the principal of and interest on which will be sufficient to pay when due the principal and interest on such obligations; j) shares or certificates in any short-term investment fund which is maintained by the Trustee and which fund invests solely in Governmental Obligations; k) federal funds or bankers acceptances with a maximum term of one (1) year of any bank which has an unsecured, uninsured and unguaranteed obligation rating of "Prime-l " or "A3" or better by Moody's and "A-I" or "A" or better by S&P, or upon discontinuance of either or both of such services, any other nationally recognized rating service approved by the Trustee; and l) deposits of the Bank of North Dakota which, as provided by Section 6-09-10 of the North Dakota Century Code, are guaranteed by the State.

Interest Rate Risk

The District does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from changing interest rates.

Credit Risk

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Concentration of Credit Risk

The District places no limit on the amount the District may invest in any one issuer.

NOTE 3 CAPITAL ASSETS

Capital asset activity for the year ended December 31, 2017 was as follows:

Balance Transfers/ Balance 01/01/17 Additions Deletions Adjustments 12/31/17 Governmental Activities Capital Assets Not Being Depreciated: Land$ 4,845,084 $ - $ - $ - $ 4,845,084 Land Improvements 12,744,471 262,384 - - 13,006,855 Construction in Progress 125,931 22,636 (125,931) - 22,636 Total Capital Assets Not Being Depreciated 17,715,486 285,020 (125,931) - 17,874,575

Capital Assets Being Depreciated: Buildings, Systems, and Structures 33,751,009 657,327 (129,579) - 34,278,757 Equipment 2,309,602 81,658 - - 2,391,260 Vehicles 1,061,109 68,982 (80,030) - 1,050,061 Tractors, Trailers, and Mowers 1,253,870 62,253 (13,262) - 1,302,861 Total Capital Assets Being Depreciated 38,375,590 870,220 (222,871) - 39,022,939

Less Accumulated Depreciation: Buildings, Systems, and Structures (10,949,617) (844,863) 129,579 - (11,664,901) Equipment (1,312,746) (111,749) - 6,244 (1,418,251) Vehicles (793,917) (76,749) 80,030 - (790,636) Tractors, Trailers, and Mowers (757,382) (76,460) 13,262 (6,244) (826,824) Total Accumulated Depreciation (13,813,662) (1,109,821) 222,871 - (14,700,612)

Total Capital Assets Being Depreciated, Net 24,561,928 (239,601) - - 24,322,327

Governmental Capital Assets, Net$ 42,277,414 $ 45,419 $ (125,931) $ -$ 42,196,902

Business-Type Activities Capital Assets Not Being Depreciated: Land$ 3,249,695 $ - $ -$ -$ 3,249,695

Capital Assets Being Depreciated: Land Improvements 541,139 - - (541,139) - Buildings, Systems, and Structures 29,826,912 53,476 - - 29,880,388 Golf Course 5,545,680 - - 541,139 6,086,819 Equipment 1,305,204 32,139 - - 1,337,343 Vehicles 19,000 - - - 19,000 Tractors, Trailers, and Mowers 843,634 39,333 (52,575) - 830,392 Total Capital Assets Being Depreciated 38,081,569 124,948 (52,575) - 38,153,942

Less Accumulated Depreciation: Land Improvements (449,573) - - 449,573 - Buildings, Systems, and Structures (3,465,566) (633,537) - - (4,099,103) Golf Course (1,810,767) (148,507) - (449,573) (2,408,847) Equipment (791,309) (79,168) - - (870,477) Vehicles (18,527) (333) - - (18,860) Tractors, Trailers, and Mowers (569,642) (62,871) 46,855 - (585,658) Total Accumulated Depreciation (7,105,384) (924,416) 46,855 - (7,982,945)

Total Capital Assets Being Depreciated, Net 30,976,185 (799,468) (5,720) - 30,170,997

Business-Type Activities Capital Assets, Net$ 34,225,880 $ (799,468) $ (5,720) $ -$ 33,420,692

-39- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Depreciation expense was charged to functions/programs of the primary government as follows:

Governmental Activities: Park Operations$ 1,070,407 Forestry 39,414 Total Depreciation Expense - Governmental Activities$ 1,109,821

Business-Type Activities: King's Walk Golf Course $ 266,288 Lincoln Golf Course 54,830 Choice Health & Fitness 603,298 Total Depreciation Expense - Business-Type Activities$ 924,416

NOTE 4 CONTRACT RECEIVABLE

2018$ 320,002 2019 237,140 2020 10,000 2021 10,000 $ 577,142

NOTE 5 PLEDGES RECEIVABLE - FOUNDATION

Pledges receivable consist of unconditional promises to give from individuals, businesses, and private foundations. These contributions are restricted for construction of Choice Health & Fitness, Scheels Sports Complex, ICON Sports Center, and Veterans Memorial Park and are due according to the following schedule:

Receivable in less than one year $ 934,532 Receivable in one to five years 2,988,804 Receivable in more than five years 2,996,554 $ 6,919,890

Management estimates an allowance for uncollectible pledges to be $244,160 at December 31, 2017.

Choice Health & Fitness and the Capital Project fund have pledges receivable from the Foundation in the amount of $4,140,410 and $2,329,087 at December 31, 2017, respectively. The Foundation owes other organizations $450,393 at December 31, 2017.

-40- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

NOTE 6 LONG-TERM DEBT

The District also issues revenue bonds where it pledges income derived from the acquired or constructed assets to pay debt service.

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/17 Governmental Activities: General Obligation Refunding Improvement Bonds, Series 2011 12/1/2011$ 4,500,000 2.00%-3.75% 5/1/2037$ 3,680,000 General Obligation Refunding Improvement Bonds, Series 2013A 12/12/2013 1,985,000 2.00%-4.00% 5/1/2033 1,730,000 General Obligation Special Assessment Prepayment Bonds, Series 2014A 1/7/2014 3,065,000 2.00%-3.25% 5/1/2028 2,490,000 General Obligation Refunding Improvement Bonds, Series 2016 5/26/2016 2,025,000 2.00%-2.25% 5/1/2031 1,905,000 General Obligation Refunding Improvement Bonds, Series 2017A 2/9/2017 3,215,000 2.00%-2.50% 5/1/2026 2,950,000 Contracts Payable - ICON Holdings, LLC 9/2/2014 716,750 4.50% 12/31/2024 534,285

Contracts Payable - City of Grand Forks 6/6/2017 590,461 3.00% 12/31/2041 566,843 Total Governmental Activities $ 16,097,211 $ 13,856,128

Business-Type Activities: General Obligation Refunding Improvement Bonds, Series 2009C 9/3/2009$ 485,000 1.20%-4.00% 12/1/2021$ 190,000 General Obligation Taxable Refunding Improvement Bonds, Series 2009D 9/3/2009 510,000 2.25%-5.40% 12/1/2021 200,000 General Obligation Refunding Improvement Bonds, Series 2014B 2/26/2014 4,820,000 2.00%-2.15% 5/1/2023 3,305,000 Wellness Center Revenue Refunding Bonds, Series 2015 4/30/2015 20,975,000 2.00%-3.50% 12/1/2036 19,110,000 Total Business-Type Activities $ 26,790,000 $ 22,805,000

-41- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/17 Component Unit Activities: Lease Revenue Bonds, Series 2009 12/30/2009$ 1,855,000 2.00%-3.50% 12/16/2020$ 135,000 Lease Revenue Bonds, Series 2013B 12/12/2013 6,845,000 3.00%-4.25% 10/1/2033 4,820,000 Total Component Unit Activities $ 8,700,000 $ 4,955,000

The Grand Forks Parks and Recreation Foundation issued Lease Revenue Bonds, Series 2009 and 2013B to provide permanent financing for improvements at the District facilities. The Foundation will lease Elks Pool and ICON Sports Center to the District pursuant to the lease agreements. The contract payable amount on the District’s financial statements matches the Bonds issued to the Foundation as follows:

Date of Original Interest Maturity Balance Issue Amount Rate Date 12/31/17 Governmental Activities: Grand Forks Parks and Recreation Foundation 12/30/2009$ 1,855,000 2.00%-3.50% 12/16/2020$ 135,000 Grand Forks Parks and Recreation Foundation 12/12/2013 6,845,000 3.00%-4.25% 10/1/2033 4,820,000 Total Contract Payable $ 8,700,000 $ 4,955,000

Pledged Revenues

The District’s revenues are pledged for Taxable Wellness Center Revenue Bonds, Series 2015. The Bonds and any additional bonds are payable from and secured by a pledge and lien in (i) the revenues derived from operations of the District’s revenue producing facilities, (ii) the pledged revenues, as defined, and (iii) investment income derived from the funds created under the Indenture, all as defined and provided in the Indenture.

Annual debt service requirements to maturity for bonds are as follows:

2018 $ 170,000 $ 105,650 $ 90,000 $ 51,216 $ 200,000 $ 62,743 2019 180,000 102,150 90,000 49,416 205,000 58,693 2020 180,000 98,460 90,000 47,616 210,000 54,543 2021 185,000 94,442 95,000 45,766 215,000 50,024 2022 190,000 90,035 95,000 43,628 220,000 45,130 2023-2027 1,025,000 372,875 520,000 177,950 1,180,000 133,533 2028-2032 800,000 239,562 615,000 86,600 260,000 4,225 2033-2037 950,000 90,253 135,000 2,700 - - 2038-2041 ------$ 3,680,000 $ 1,193,427 $ 1,730,000 $ 504,892 $ 2,490,000 $ 408,889

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Governmental Activities G.O. Refunding ImprovementG.O. Refunding Improvement ICON Holdings, LLC Year Ending Bonds, Series 2016 Bonds, Series 2017A Contracts Payable December 31, Principal Interest Principal Interest Principal Interest

2018 $ 120,000 $ 37,662 $ 300,000 $ 63,700 $ 66,471 $ 22,932 2019 120,000 35,262 305,000 57,650 69,514 19,890 2020 125,000 32,813 315,000 51,450 72,695 16,708 2021 125,000 30,312 320,000 44,700 76,022 13,381 2022 130,000 27,762 325,000 37,444 79,501 9,902 2023-2027 685,000 98,761 1,385,000 69,893 170,082 8,723 2028-2032 600,000 26,596 - - - - 2033-2037 ------2038-2041 ------$ 1,905,000 $ 289,168 $ 2,950,000 $ 324,837 $ 534,285 $ 91,536

Governmental Activities City of Grand Forks Year Ending Contracts Payable Total December 31, Principal Interest Principal Interest

2018 $ 23,618 $ 17,005 $ 970,089 $ 360,908 2019 23,618 16,297 993,132 339,358 2020 23,618 15,588 1,016,313 317,178 2021 23,618 14,880 1,039,640 293,505 2022 23,618 14,171 1,063,119 268,072 2023-2027 118,090 60,227 5,083,172 921,962 2028-2032 118,090 42,513 2,393,090 399,496 2033-2037 118,090 24,799 1,203,090 117,752 2038-2041 94,483 7,085 94,483 7,085 $ 566,843 $ 212,565 $ 13,856,128 $ 3,025,314

-43- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

2018 $ 45,000 $ 7,050 $ 45,000 $ 10,396 $ 525,000 $ 61,720 2019 45,000 5,520 50,000 8,146 535,000 51,120 2020 50,000 3,900 50,000 5,596 545,000 40,320 2021 50,000 2,000 55,000 2,970 555,000 29,320 2022 - - - - 565,000 18,120 2023-2027 - - - - 580,000 6,235 2028-2032 ------2033-2036 ------$ 190,000 $ 18,470 $ 200,000 $ 27,108 $ 3,305,000 $ 206,835

Business-Type Activities Wellness Center Revenue Refunding Year Ending Bonds, Series 2015 Total December 31, Principal Interest Principal Interest

2018 $ 780,000 $ 592,475 $ 1,395,000 $ 671,641 2019 795,000 576,875 1,425,000 641,661 2020 820,000 553,025 1,465,000 602,841 2021 840,000 528,425 1,500,000 562,715 2022 865,000 503,225 1,430,000 521,345 2023-2027 4,710,000 2,111,725 5,290,000 2,117,960 2028-2032 5,390,000 1,359,875 5,390,000 1,359,875 2033-2036 4,910,000 427,119 4,910,000 427,119 $ 19,110,000 $ 6,652,744 $ 22,805,000 $ 6,905,157

Component Unit Activities Lease Revenue Bonds, Lease Revenue Bonds, Year Ending Series 2009 Series 2013B Total December 31, Principal Interest Principal Interest Principal Interest

2018 $ 45,000 $ 4,725 $ 450,000 $ 166,926 $ 495,000 $ 171,651 2019 45,000 3,150 385,000 153,426 430,000 156,576 2020 45,000 1,575 395,000 141,876 440,000 143,451 2021 - - 410,000 130,026 410,000 130,026 2022 - - 420,000 117,726 420,000 117,726 2023-2027 - - 1,230,000 437,938 1,230,000 437,938 2028-2032 - - 1,250,000 219,896 1,250,000 219,896 2033 - - 280,000 11,900 280,000 11,900 $ 135,000 $ 9,450 $ 4,820,000 $ 1,379,714 $ 4,955,000 $ 1,389,164

-44- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Changes in Long-Term Liabilities

Long-term liability activity for the year ended December 31, 2017, was as follows:

Balance Balance Due Within 1/1/17 Issued Retired 12/31/17 One Year Governmental Activities: Bonds Payable: General Obligation Bonds$ 13,020,000 $ 3,215,000 $ (3,480,000) $ 12,755,000 $ 880,000 Unamortized Bond Premium 113,877 74,266 (20,026) 168,117 15,445 Notes Payable - Capital Lease 9,784 - (9,784) - - Contract Payable 5,530,000 - (575,000) 4,955,000 495,000 Contract Payable 1,188,309 - (87,181) 1,101,128 90,089 Special Assessments Debt 638,193 - (638,193) - - Net Pension Liability: Single Employer Plan 2,179,564 230,277 - 2,409,841 - PERS 1,528,198 1,146,010 - 2,674,208 - Compensated Absences 301,796 177,589 (175,114) 304,271 175,000

Governmental Activities Long-Term Liabilities $ 24,509,721 $ 4,843,142 $ (4,985,298) $ 24,367,565 $ 1,655,534

Business Type Activities: Bonds Payable: Revenue Bonds $ 24,175,000 $ - $ (1,370,000) $ 22,805,000 $ 1,395,000 Unamortized Bond Premium 274,979 - (23,266) 251,713 23,266 Unamortized Bond Discount (3,825) - 778 (3,047) (778) Compensated Absences 160,947 91,485 (66,894) 185,538 67,000

Business-Type Activities Long-Term Liabilities $ 24,607,101 $ 91,485 $ (1,459,382) $ 23,239,204 $ 1,484,488

Component Unit Activities: Bonds Payable: Revenue Bonds $ 5,530,000 $ - $ (575,000) $ 4,955,000 $ 495,000 Unamortized Bond Costs (36,380) - 5,555 (30,825) (5,555) Component Unit Long-Term Liabilities $ 5,493,620 $ - $ (569,445) $ 4,924,175 $ 489,445

State statutes limit the amount of general obligation indebtedness that is supported by tax levies; the District may issue to one percent or less of the total assessed valuation of taxable property. The current value of the District’s general obligation bonds is 0.57% of the total assessed value of taxable property.

Compensated absences in governmental activities will be funded primarily through the General Fund.

In 2017, the District issued $3,215,000 of Refunding Improvement Bonds, Series 2017A to take advantage of lower interest rates. As a result of the refunding, the District anticipates a savings of $212,616.

-45- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

NOTE 7 RESTRICTED RESERVES

Wellness Center Revenue Refunding Bond, Series 2015 requires a reserve for future repairs and replacements. The Bond also requires reserve amounts based on future debt requirements. As of December 31, 2017, the reserve account was properly funded with an ending balance of $1,423,433.

NOTE 8 FOUNDATION CONTRACT RECEIVABLE

The Foundation issued Lease Revenue Bonds, Series 2009 and Series 2013B, to provide permanent financing for improvements at the District facilities. The Foundation will lease Elks Pool to the District pursuant to a lease agreement dated December 30, 2009. In addition, the Foundation will lease ICON Sports Center to the District pursuant to a lease agreement dated December 12, 2013. The debt service will be paid by the Foundation from the rental payments. The contract receivable amount for the Foundation, as of December 31, 2017, is as follows:

Year Ending Contract Receivable December 31, Principal Interest

2018 $ 495,000 $ 171,651 2019 430,000 156,576 2020 440,000 143,451 2021 410,000 130,026 2022 420,000 117,726 2023-2027 1,230,000 437,938 2028-2032 1,250,000 219,896 2033 280,000 11,900 $ 4,955,000 $ 1,389,164

NOTE 9 FOUNDATION ASSETS HELD FOR SALE

The Foundation has received donations of 325,000 cubic yards of clay. As of December 31, 2017, the Foundation has 193,000 cubic feet of clay remaining which has been valued at $0.75 per cubic foot, for a total value of $144,750.

NOTE 10 FUND BALANCE

Minimum Fund Balance Policy

The Board of Commissioners has formally adopted a fund balance policy for the General Fund. The policy establishes the District will strive to maintain a minimum general fund balance (unassigned, assigned and committed only) of 15% of the operating expenditures.

NOTE 11 ENDOWMENT

-46- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

The remaining portion of the donor-restricted endowment fund that is not classified in permanently restricted net assets is classified as temporarily restricted net assets until those amounts are appropriated for expenditure by the Foundation in a manner consistent with the standard of prudence prescribed by UPMIFA. In accordance with UPMIFA, the Foundation considers the following factors in making a determination to appropriate or accumulate donor-restricted endowment funds:

Endowment Net Assets Composition by Type of Fund as of December 31, 2017

Temporarily Permanently Unrestricted Restricted Restricted Total Total Donor-Restricted Endowment Funds as of December 31, 2017 $ - $ 20,573 $ 191,967 $ 212,540

Changes in Endowment Net Assets for the Year Ended December 31, 2017

Temporarily Permanently Unrestricted Restricted Restricted Total Endowment Net Assets, As of January 1, 2017 $ (1,335) $ 460 $ 191,367 $ 190,492

Contributions - - 600 600 Investment Return: Unrealized/realized gain (loss) on investments - 25,179 - 25,179 Distributions - (350) - (350) Fees - (3,381) - (3,381) Release from restrictions 1,335 (1,335) - - Endowment Net Assets, As of December 31, 2017 $ - $ 20,573 $ 191,967 $ 212,540

-47- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Description of Amounts Classified as Permanently Restricted Net Assets and Temporarily Restricted Net Assets (Endowment Only) as of December 31, 2017

Permanently Restricted Net Assets:

The portion of perpetual endowment funds that is required to be retained permanently by donor stipulation$ 191,967 . Total endowment funds classified as permanently restricted net assets 191,967$

Return Objectives and Risk Parameters

Strategies Employed for Achieving Objectives

To satisfy its long-term rate-of-return objectives, the Foundation relies on a total return strategy in which investment returns are achieved through both capital appreciation (realized and unrealized) and current yield (interest and dividends). The Foundation targets a diversified asset allocation that places a greater emphasis on debt based investments to achieve its long-term return objectives within prudent risk constraints.

Spending Policy and How the Investment Objectives Relate to Spending Policy

NOTE 12 INTERFUND TRANSFERS

Interfund transfers were as follows: Transfer Transfer Fund In Out

General Fund $ - $ 108,064 Capital Projects Fund 35,369 541,258 Lincoln Golf Course 52,695 - King's Walk Golf Course 351,258 - Choice Health & Fitness 210,000 - Total$ 649,322 $ 649,322

Interfund transfers are to cover expenditures paid in one fund on behalf of another fund. -48- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

NOTE 13 UNEARNED REVENUE

Unearned revenue has been recorded in the funds for the following:

Government-Wide Business-Type Activities Activities Prepaid Lease Agreement $ - $ 80,791 Prepaid Contract Agreements 13,350 - Prepaid Sponsorship Agreements 18,776 - Prepaid and Scheduled Ice Time 85,960 - Total$ 118,086 $ 80,791

NOTE 14 UNAVAILABLE REVENUE

Unavailable revenue has been recorded in the governmental funds for the following:

Governmental Activities Taxes Receivable $ 125,467 Special Assessments Receivable 6,992 Sponsorship Receivable 516,142 Contracts Receivable 61,000 Pledges Receivable 2,329,087 Total$ 3,038,688

Sponsorship revenue consists of sponsorships paid and contracts signed for the years following December 31, 2017. Pledges receivable consist of multiple signed pledges, to be collected in subsequent years, for construction of ICON Sports Center, Scheels Sports Complex, and Altru Wellness Village outdoor tennis courts.

NOTE 15 DEFINED BENEFIT PENSION PLAN – SINGLE EMPLOYER

A. Plan Description

Responsibility for administration of the closed plan rests with the Board of Commissioners of the District.

Eligibility

All employees became a member of the pension plan at the time they started employment with the District, if the following conditions were met:

1. All employees of the District were eligible to participate in the plan if they were employed prior to age 60.

-49- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

The Board of Commissioners approved adopting an Early Retirement Benefit plan under the rule of 90. If an employee chooses to retire after reaching the rule of 90, that employee will be eligible to receive 12.5% of the final monthly salary, which will be paid monthly over a four year period, or until they reach age 65, whichever comes first. If an employee does not choose to retire after reaching the rule of 90, that employee may continue to work and remain in the pension plan until he or she chooses to retire.

Pension and Death Benefits

The Pension Plan provides retirement benefits as well as death benefits. All benefits vest after 5 years of vesting service. Retirement benefits at normal retirement date are as follows:

Benefit and contribution provisions are established by District resolution and may be amended only by the Board of Commissioners.

Employees Covered by Benefit Terms

At December 31, 2017, the following employees were covered by the benefit terms:

Inactive Employees or beneficiaries currently receiving benefits 16 Inactive Employees entitled to but not yet receiving benefits 8 Active Employees 25 49

Member Contributions

Contributions to the plan are required as follows:

All participants contribute 3.7% or 5.9% of monthly earnings, depending on years of service.

-50- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2017, the District reported a liability of $2,409,841 for the net pension liability. The net pension liability was measured as of December 31, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2017 and rolled forward to December 31, 2017.

For the year ended December 31, 2017, the District recognized pension expense of $468,878. At December 31, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual economic experience $ 66,668 $ - Changes in actuarial assumptions 433,831 - Difference between projected and actual investment earnings - 201,218 Changes in proportion - - Total $ 500,499 $ 201,218

Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ending December 31: Pension Expense Amount 2018 $ 369,087 2019 123,243 2020 (89,764) 2021 (103,285)

Actuarial Assumptions

The total pension liability in the January 1, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 2.0% Salary increases 2.0% Investment rate of return 7.75%, net of investment expenses Cost-of-living adjustments None

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2014 Combined Healthy Mortality Table.

-51- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Long-Term Expected Real Asset Class Target Allocation Rate of Return Domestic Stocks 45.00% 7.09% International Stocks 15.00% 7.30% Private Equity 5.00% 10.90% Domestic Fixed Income 25.00% 0.80%

Global Real Assets 10.00% 5.53%

Discount Rate

The discount rate used to measure the total pension liability was 7.75 percent as of December 31, 2017. The projection of cash flows used to determine the discount rate assumes that member and employer contributions will be made at rates equal to those based on the January 1, 2017 Actuarial Valuation Report.

Changes in the Net Pension Liability

Increase (Decrease) Total Plan Net Position Fiduciary Position Liability Net Position Liability (a) (b) (a) - (b) Balances at 1/1/2016 $ 8,185,445 $ 6,005,881 $ 2,179,564 Changes for the Year: Service Cost 51,356 - 51,356 Interest 639,065 - 639,065 Contributions - Employer - 210,000 (210,000) Contributions - Employee - 69,545 (69,545) Net Investment Income - 987,588 (987,588) Differences between expected and actual experience 47,709 - 47,709 Changes of assumptions 743,710 - 743,710 Benefit payments, including refunds of employee contributions (496,980) (496,980) - Administrative Expenses - (15,570) 15,570 Net Changes 984,860 754,583 230,277 Balances at 1/1/2017 $ 9,170,305 $ 6,760,464 $ 2,409,841

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the District's net pension liability calculated using the discount rate of 7.75 percent, as well as what the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (6.75 percent) or 1 percentage point higher (8.75 percent) than the current rate:

1% Decrease in Discount Rate 1% Increase in Discount Rate (6.75%) Discount Rate (7.75%) (8.75%) District's proportionate share of the Single Employer net pension liability: $ 3,386,082 $ 2,409,841 $ 1,575,948

-52- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

DEFINED BENEFIT PENSION PLANS – STATEWIDE

North Dakota Public Employees’ Retirement System - Main System - (NDPERS)

The following brief description of NDPERS is provided for general information purposes only. Participants should refer to NDCC Chapter 54-52 for more complete information.

Responsibility for administration of the NDPERS defined benefit pension plan is assigned to a Board comprised of seven members. The Board consists of a Chairman, who is appointed by the Governor; one member appointed by the Attorney General; one member appointed by the State Health Officer; three members elected by the active membership of the NDPERS system; one member elected by the retired public employees; and two members of the legislative assembly appointed by the chairman of the legislative management.

Pension Benefits

Benefits are set by statute. NDPERS has no provision or policies with respect to automatic and ad hoc post-retirement benefit increases. Members of the NDPERS Main System are entitled to unreduced monthly pension benefits beginning when the sum of age and years of credited service equal or exceed 85 (Rule of 85), or at normal retirement age (65). For members hired on or after January 1, 2016, the Rule of 85 will be replaced with the Rule of 90 with a minimum age of 60. The monthly pension benefit is equal to 2.00% of their average monthly salary, using the highest 36 months out of the last 180 months of service, for each year of service. The plan permits early retirement at ages 55-64 with three or more years of service.

Death and Disability Benefits

Death and disability benefits are set by statute. If an active member dies with less than three years of service for the NDPERS Main System, a death benefit equal to the value of the member’s accumulated contributions, plus interest, is paid to the member’s beneficiary. If the member has earned more than three years of credited service for the NDPERS Main System, the surviving spouse will be entitled to a single payment refund, life-time monthly payments in an amount equal to 50% of the member’s accrued normal retirement benefit, or monthly payments in an amount equal to the member’s accrued 100% Joint and Survivor retirement benefit if the member had reached normal retirement age prior to date of death. If the surviving spouse dies before the member’s accumulated pension benefits are paid, the balance will be payable to the surviving spouse’s designated beneficiary.

Eligible members who become totally disabled after a minimum of 180 days of service, receive monthly disability benefits equal to 25% of their final average salary with a minimum benefit of $100. To qualify under this section, the member has to become disabled during the period of eligible employment and apply for benefits within one year of termination. The definition of disabled is set by the NDPERS in the North Dakota Administrative Code.

-53- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Refunds of Member Account Balance

Member and Employer Contributions

Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At December 31, 2017, the District reported a liability of $2,674,208 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2017, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The District's proportion of the net pension liability was based on the District's share of covered payroll in the NDPERS Main System pension plan relative to the covered payroll of all participating NDPERS Main System employers. At June 30, 2017, the District's proportion was 0.166376%. At June 30, 2016, the District’s proportion was 0.156803%.

For the year ended December 31, 2017, the District recognized pension expense of $444,537. At December 31, 2017, the District reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual economic experience $ 15,895 $ 13,029 Changes in actuarial assumptions 1,096,606 60,316 Difference between projected and actual investment earnings 35,966 - Changes in proportion 155,082 21,269 Contributions paid to NDPERS subsequent to the measurement date 75,773 - Total $ 1,379,322 $ 94,614

-54- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

$75,773 reported as deferred outflows of resources related to pensions resulting from District contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ending December 31, 2018.

Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

Year ending December 31: Pension Expense Amount 2018 $ 272,877 2019 322,227 2020 284,213 2021 211,777 2022 117,841

Actuarial Assumptions

The total pension liability in the July 1, 2017 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement:

Inflation 3.50% Salary increases Service at Beginning of Year: Increate Rate: 0 15.00% 1 10.00% 2 8.00% Age* Under 36 8.00% 36 – 40 7.50% 41 – 49 6.00% 50+ 5.00% Investment rate of return 7.75%, net of investment expenses Cost-of-living adjustments None

* Age-based salary increase rates apply for employees with three or more years of service.

For active members, inactive members and healthy retirees, mortality rates were based on the RP- 2000 Combined Healthy Mortality Table with ages set back two years for males and three years for females, projected generationally using the SSA 2014 Intermediate Cost scale from 2014. For disabled retirees, mortality rates were based on the RP-2000 Disabled Retiree Mortality Table with ages set back one year for males (not set back for females) multiplied by 125%.

-55- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Long-Term Expected Real Asset Class Target Allocation Rate of Return Domestic Stocks 31.00% 6.05% International Stocks 21.00% 6.70% Private Equity 5.00% 10.20% Domestic Fixed Income 17.00% 1.43% International Fixed Income 5.00% -0.45% Global Real Assets 20.00% 5.16%

Cash Equivalents 1.00% 0.00%

Discount Rate

For NDPERS, GASB Statement No. 67 includes a specific requirement for the discount rate that is used for the purpose of the measurement of the Total Pension Liability. This rate considers the ability of the NDPERS Main System to meet benefit obligations in the future. To make this determination, employer contributions, employee contributions, benefit payments, expenses and investment returns are projected into the future. The current employer and employee fixed rate contributions are assumed to be made in each future year. The Plan Net Position (assets) in future years can then be determined and compared to its obligation to make benefit payments in those years. In years where assets are not projected to be sufficient to meet benefit payments, which is the case for the NDPERS plan, the use of a municipal bond rate is required.

The pension plan’s fiduciary net position was projected to be sufficient to make all projected future benefit payments through the year of 2061. Therefore, the long-term expected rate of return on pension plan investments was applied to projected benefit payments through the year 2061, and the municipal bond rate was applied to all benefit payments after that date. For the purpose of this valuation, the expected rate of return on pension plan investments is 7.75%; the municipal bond rate is 3.56%; and the resulting Single Discount Rate is 6.44%.

Sensitivity of the District’s Proportionate Share of the Net Pension Liability to Changes in the Discount Rate

The following presents the District's proportionate share of the net pension liability calculated using the discount rate of 6.44 percent, as well as what the Employer's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (5.44 percent) or 1 percentage point higher (7.44 percent) than the current rate:

1% Decrease in Discount Rate 1% Increase in Discount Rate (5.44%) Discount Rate (6.44%) (7.44%) District's proportionate share of the NDPERS net pension liability: $ 3,630,320 $ 2,674,208 $ 1,878,764

-56- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

Pension Plan Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued NDPERS financial report.

NOTE 16 DEFERRED COMPENSATION PLAN AND TRUST

The District offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The Plan, available to eligible District employees, permits them to defer a portion of their salary until future years. There are two types of deferrals, pre-tax deferrals and Roth, or post-tax deferrals. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency.

NOTE 17 RISK MANAGEMENT

NOTE 18 MEMBERSHIP SHARING WITH ALTRU FAMILY YMCA

The District is a party in an agreement with the Altru Family YMCA, in which the two parties share membership revenues based on the agreement.

NOTE 19 NEW PRONOUNCEMENTS

GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions, is to improve accounting and financial reporting by state and local governments for postemployment benefits other than pensions (other postemployment benefits or OPEB). It also improves information provided by state and local governmental employers about financial support for OPEB that is provided by other entities. This Statement is effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged.

-57- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE BASIC FINANCIAL STATEMENTS - CONTINUED AS OF DECEMBER 31, 2017

are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The requirements of this Statement are effective for reporting periods beginning after December 15, 2018. Earlier application is encouraged.

GASB Statement No. 85, Omnibus 2017, addresses practice issues that have been identified during implementation and application of certain GASB Statements. This Statement addresses a variety of topics including issues related to blending component units, goodwill, fair value measurement and application, and postemployment benefits (pensions and other postemployment benefits [OPEB]). The requirements of this Statement are effective for reporting periods beginning after June 15, 2017. Earlier application is encouraged.

GASB Statement No. 86, Certain Debt Extinguishment Issues, provides guidance for derecognizing debt that is defeased in substance, regardless of how cash and other monetary assets placed in an irrevocable trust for the purpose of extinguishing that debt were acquired. This Statement requires that any remaining prepaid insurance related to the extinguished debt be included in the net carrying amount of that debt for the purpose of calculating the difference between the reacquisition price and the net carrying amount of the debt. In addition, this Statement will enhance the decision-usefulness of information in notes to financial statements regarding debt that has been defeased in substance. This Statement is effective for reporting periods beginning after June 15, 2017. Earlier application is encouraged.

Management has not yet determined the effect these statements will have on the District’s financial statements.

NOTE 20 RECLASSIFICATION

Certain reclassifications have been made to the 2016 financial statements in order to conform with the 2017 presentation.

NOTE 21 SUBSEQUENT EVENTS

No significant events have occurred subsequent to the District’s year end. Subsequent events have been evaluated through March 23, 2018, which is the date these financial statements were available to be issued.

* * * * * * * * * * * * *

-58- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S CONTRIBUTIONS TO NDPERS/SINGLE EMPLOYER PLANS AS OF DECEMBER 31, 2017

Actuarial Determined Contributions as a % or Statutorily Required Contribution District's Covered of Covered Employee Year Ended Contributions District's Contributions Deficiency (Excess) Employee Payroll Payroll Single Employer Plan 2015 $ 208,429 $ 210,000 $ 1,571 $ 1,351,786 15.54% 2016 276,944 210,000 (66,944) 1,347,615 15.58% 2017 288,286 210,000 (78,286) 1,305,429 16.09%

NDPERS 2015 132,843 132,843 - 1,865,772 7.12% 2016 120,358 120,358 - 1,690,424 7.12% 2017 129,449 129,449 - 1,818,101 7.12%

The amounts presented for each fiscal year were determined as of the District’s year end which is December 31.

The single employer pension plan does not have statutorily required contributions; contributions are made based on recommendations from the actuarial study performed annually.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-59- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF DISTRICT’S AND NON-EMPLOYER PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AS OF DECEMBER 31, 2017

District's Proportionate District's Share of the Net Pension Plan Fiduciary Net District's Proportion of Proportionate Share of Liability (Asset) as a Position as a the Net Pension the Net Pension District's Covered- Percentage of its Covered- Percentage of the Year Ended Liability (Asset) Liability (Asset) Employee Payroll employee Payroll Total Pension Liability NDPERS 2015 0.163035% $ 1,108,610 $ 1,452,445 76.33% 77.15% 2016 0.156803% 1,528,198 1,580,206 96.71% 70.46% 2017 0.166376% 2,674,208 1,698,443 157.45% 61.98%

The amounts presented for each fiscal year were determined as of the measurement date of the District’s net pension liability which is June 30 of the previous fiscal year for NDPERS.

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-60- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF CHANGES IN DISTRICT’S NET PENSION LIABILITY AND RELATED RATIOS AS OF DECEMBER 31, 2017

2017 2016 2015 Total Pension Liability Service Cost $ 51,356 $ 53,042 $ 65,304 Interest 639,065 613,350 600,859 Differences Between Expected and Actual Experience 47,709 177,548 - Changes of Assumptions 743,710 - - Benefit Payments, Including Refunds of Employee Contributions (496,980) (544,647) (450,874) Net Changes 984,860 299,293 215,289 Total Pension Liability - Beginning 8,185,445 7,886,152 7,670,863 Total Pension Liability - Ending (a) $ 9,170,305 $ 8,185,445 $ 7,886,152

Total Fiduciary Net Position Contributions - Employer $ 210,000 $ 210,000 $ 210,000 Contributions - Employee 69,545 74,628 79,340 Net Investment Income 987,588 392,405 67,259 Benefit Payments, Including Refunds of Employee Contributions (496,980) (544,647) (450,874) Administrative Expenses (15,570) (13,466) (18,795) Net Changes in Plan Fiduciary Net Position 754,583 118,920 (113,070) Plan Fiduciary Net Position - Beginning 6,005,881 5,886,961 6,000,031 Plan Fiduciary Net Position - Ending (b) $ 6,760,464 $ 6,005,881 $ 5,886,961

District's Net Pension Liability - Ending (a) - (b) $ 2,409,841 $ 2,179,564 $ 1,999,191

Plan Fiduciary Net Position as a Percentage of the Total Pension Liability 73.72% 73.37% 74.65%

Covered Employee Payroll $ 1,305,429 $ 1,347,615 $ 1,351,786

District's Net Pension Liability as a Percentage of Covered Employee Payroll 184.60% 161.73% 147.89%

The District implemented GASB Statement No. 68 for its year ended December 31, 2015. Information for the prior years is not available.

See Notes to the Required Supplementary Information

-61- PARK DISTRICT OF THE CITY OF GRAND FORKS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – BUDGET AND ACTUAL – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2017

Variance with Final Budget Original and Positive Final Budget Actual (Negative) REVENUES Local Property Taxes$ 5,501,200 $ 5,670,237 $ 169,037 State Revenues 890,000 816,622 (73,378) Program Income 1,141,800 1,226,093 84,293 Investment Earnings 6,000 54,884 48,884 Sponsorship 340,000 317,394 (22,606) Donations 10,000 8,671 (1,329) Miscellaneous 29,000 63,625 34,625

Total Revenues 7,918,000 8,157,526 239,526

EXPENDITURES Current: Park Operations 5,459,700 5,209,101 250,599 Forestry 804,800 793,073 11,727 Recreation 760,700 698,343 62,357 Capital Outlay: Capital and Betterment 544,000 489,329 54,671 Debt Service: Principal Retirement - 96,965 (96,965) Interest Charges - 43,833 (43,833)

Total Expenditures 7,569,200 7,330,644 238,556

Excess (Deficiency) of Revenues over Expenditures 348,800 826,882 478,082

OTHER FINANCING SOURCES (USES) Transfers Out (60,000) (108,064) (48,064)

Total Other Financing Sources (Uses) (60,000) (108,064) (48,064)

Net Change in Fund Balances 288,800 718,818 430,018

Fund Balances - Beginning of Year 1,542,051 1,542,051 -

Fund Balances - End of Year $ 1,830,851 $ 2,260,869 $ 430,018

See Notes to the Required Supplementary Information

-62- PARK DISTRICT OF THE CITY OF GRAND FORKS NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2017

NOTE 1 BUDGETARY DATA

The budget for each governmental fund is prepared on the same basis of accounting as the financial statements.

All budgeted appropriations lapse at the end of the fiscal year.

NOTE 2 CHANGES OF ASSUMPTIONS – NDPERS

Amounts reported in 2017 reflect actuarial assumption changes effective July 1, 2017 based on the results of an actuarial experience study completed in 2015. This includes changes to the mortality tables, disability incidence rates, retirement rates, administrative expenses, salary scale, and percent married assumption.

-63- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING SCHEDULE OF BALANCE SHEET – GENERAL FUND AS OF DECEMBER 31, 2017

Forestry Recreation Total General General Fund Fund Fund Funds Assets Cash $ 1,614,855 $ 533,563 $ 291,707 $ 2,440,125 Accounts Receivable 324,808 - - 324,808 Taxes Receivable 91,995 8,555 811 101,361 Contract Receivable 577,142 - - 577,142 Prepaid Expenses 14,310 - - 14,310

Total Assets$ 2,623,110 $ 542,118 $ 292,518 $ 3,457,746

Liabilities Accounts Payable $ 260,684 $ - $ - $ 260,684 Unearned Revenue 118,086 - - 118,086 Sales Tax Payable 2,217 - 96 2,313 Gift Certificate/Card Payable 23,445 - - 23,445 Accrued Payroll 88,722 22,308 12,954 123,984

Total Liabilities 493,154 22,308 13,050 528,512

Deferred Inflows of Resources Unavailable Revenue - Property Taxes 84,231 - - 84,231 Unavailable Revenue - Special Assessments - 6,992 - 6,992 Unavailable Revenue - Contracts and Pledges 577,142 - - 577,142

Total Deferred Inflows of Resources 661,373 6,992 - 668,365

Fund Balances Nonspendable - Prepaid Expenses 14,310 - - 14,310 Unassigned 1,454,273 512,818 279,468 2,246,559

Total Fund Balances 1,468,583 512,818 279,468 2,260,869

Total Liabilities, Deferred Inflows of Resources and Fund Balances$ 2,623,110 $ 542,118 $ 292,518 $ 3,457,746

-64- PARK DISTRICT OF THE CITY OF GRAND FORKS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES – GENERAL FUND FOR THE YEAR ENDED DECEMBER 31, 2017

Recreation Total General General Fund Forestry Fund Fund Funds Revenues Local Property Taxes$ 4,245,538 $ 832,003 $ 592,696 $ 5,670,237 State Revenues 816,622 - - 816,622 Program Income 972,019 2,320 251,754 1,226,093 Investment Earnings 54,884 - - 54,884 Sponsorships 316,096 - 1,298 317,394 Donations - - 8,671 8,671 Miscellaneous 50,647 6,228 6,750 63,625 Total Revenues 6,455,806 840,551 861,169 8,157,526

Expenditures Current: Park Operations 5,209,101 - - 5,209,101 Forestry - 793,073 - 793,073 Recreation - - 698,343 698,343 Capital Outlay: Capital and Betterment 449,419 39,910 - 489,329 Debt Service: Principal Retirement 96,965 - - 96,965 Interest Charges 43,833 - - 43,833 Total Expenditures 5,799,318 832,983 698,343 7,330,644

Excess (Deficiency) of Revenues Over (Under) Expenditures 656,488 7,568 162,826 826,882

Other Financing Sources (Uses) Operating Transfers Out (68,064) - (40,000) (108,064) Total Other Financing Sources (Uses) (68,064) - (40,000) (108,064)

Net Change in Fund Balances 588,424 7,568 122,826 718,818 Fund Balance Beginning of Year 880,159 505,250 156,642 1,542,051

Fund Balance End of Year$ 1,468,583 $ 512,818 $ 279,468 $ 2,260,869

-65- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF FINANCIAL POSITION FOUNDATION COMPONENT UNIT AS OF DECEMBER 31, 2017

Assets Current Assets: Cash & Cash Equivalents$ 666,690 Investments 847,708 Accounts Receivable 41,928 Pledges Receivable, Net of Allowances 934,532 Contract Receivable 495,000 Total Current Assets 2,985,858

Non - Current Assets: Assets Held for Sale 144,750 Pledges Receivable, Net of Current Portion and Allowance 5,985,358 Contract Receivable, Net of Current Portion 4,460,000 Total Non - Current Assets 10,590,108

Total Assets$ 13,575,966

Liabilities Current Liabilities: Accounts Payable $ 3,976 Interest Payable 41,928 Pledges Payable, Net of Allowances 1,080,985 Bonds Payable 495,000 Total Current Liabilities 1,621,889

Non - Current Liabilities: Unearned Revenue 106,138 Pledges Payable, Net of Current Portion and Allowance 6,128,578 Bonds Payable, Net of Current Portion 4,460,000 Less: Unamortized Bond Issue Costs (30,825) Total Non - Current Liabilities 10,663,891

Total Liabilities 12,285,780

Net Assets Unrestricted 897,610 Temporarily Restricted 200,609 Permanently Restricted 191,967 Total Net Assets 1,290,186

Total Liabilities and Net Assets$ 13,575,966

-66- PARK DISTRICT OF THE CITY OF GRAND FORKS STATEMENT OF ACTIVITIES FOUNDATION COMPONENT UNIT FOR THE YEAR ENDED DECEMBER 31, 2017

Permanently Temporarily Restricted Restricted Unrestricted Total SUPPORT AND REVENUE Gifts and Bequests$ 600 $ 375,777 $ 518,308 $ 894,685 Rent Income - - 185,086 185,086 Interest, Dividends, Gains and (Losses) - 26,230 29,153 55,383 Net Assets Released from Restriction - (306,634) 306,634 - 600 95,373 1,039,181 1,135,154

EXPENSES Marketing - - 3,972 3,972 Contributions - - 352,286 352,286 Interest Expense - - 190,641 190,641 Office Expense - - 3,498 3,498 Miscellaneous - - 15,912 15,912 - - 566,309 566,309

CHANGES IN NET ASSETS 600 95,373 472,872 568,845

BEGINNING NET ASSETS 191,367 105,236 424,738 721,341

ENDING NET ASSETS $ 191,967 $ 200,609 $ 897,610 $ 1,290,186

-67-

To the Board of Commissioners Park District of the City of Grand Forks Grand Forks, North Dakota

We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, each major fund and discretely presented component unit information of the Park District of the City of Grand Forks, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Park District of the City of Grand Forks' basic financial statements and have issued our report thereon dated March 23, 2018.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the Park District of the City of Grand Forks’ internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinions on the effectiveness of Park District of the City of Grand Forks’ internal control. Accordingly, we do not express an opinion on the effectiveness of the Park District of the City of Grand Forks’ internal control.

-68-

Compliance and Other Matters

Purpose of this Report

BRADY, MARTZ & ASSOCIATES, P.C. GRAND FORKS, NORTH DAKOTA

March 23, 2018

-69- APPENDIX D -

FORM OF LEGAL OPINION

General Obligation Special Assessment Refunding Bonds, Series 2021A PROPOSED FORM OF LEGAL OPINION

Park District of the City of Grand Forks Grand Forks, North Dakota

[Original Purchaser]

Re: $[______] General Obligation Special Assessment Prepayment Refunding Bonds, Series 2021A Park District of the City of Grand Forks, North Dakota

Ladies and Gentlemen:

As Bond Counsel in connection with the authorization, issuance and sale by the Park District of the City of Grand Forks, North Dakota (the “Issuer”), of the obligations described above, dated, as originally issued, as of [______], 2021 (the “Bonds”), we have examined certified copies of certain proceedings taken, and certain affidavits and certificates furnished, by the Issuer in the authorization, sale and issuance of the Bonds, including the form of the Bonds. As to questions of fact material to our opinion, we have assumed the authenticity of and relied upon the proceedings, affidavits and certificates furnished to us without undertaking to verify the same by independent investigation. From our examination of such proceedings, affidavits and certificates and on the basis of existing law, it is our opinion that:

1. The Bonds are valid and binding obligations of the Issuer, enforceable in accordance with their terms.

2. All taxable property within the corporate limits of the Issuer is subject to ad valorem taxation without limitation as to rate or amount to pay the Bonds. The Issuer is required by law to include in its annual tax levy the principal and interest coming due on the Bonds to the extent the necessary funds are not provided from other sources.

3. Interest on the Bonds (a) is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the “Code”) and (b) is not an item of tax preference for purposes of the federal alternative minimum tax imposed by Section 55 of the Code.

4. Interest on the Bonds is excluded from taxable income for North Dakota income tax purposes.

5. The Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code.

The opinions expressed in paragraphs 1 and 2 are subject, as to enforceability, to the effect of any state or federal laws relating to bankruptcy, insolvency, reorganization, moratorium, or creditors’ rights and the application of equitable principles, whether considered at law or in equity. Park District of the City of Grand Forks, North Dakota [Original Purchaser] Page 2

The opinions expressed in paragraphs 3, 4, and 5 above are subject to the compliance by the Issuer with certain requirements of the Code that must be satisfied subsequent to the issuance of the Bonds. Noncompliance with these requirements could result in the inclusion of interest on the Bonds in gross income for federal income tax purposes and taxable income for North Dakota income tax purposes or the Bonds failing to be qualified tax-exempt obligations retroactive to the date of issuance of the Bonds.

Except as stated herein, we express no opinion regarding federal, state, or other tax consequences to the owner of the Bonds

We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and, accordingly, we express no opinion with respect thereto. This opinion is given as of the date hereof and we assume no obligations 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.

Dated: [______], 2021.

Very truly yours,

4849-8010-1850\2

APPENDIX E -

FORM OF LEGAL OPINION

Refunding Improvement Bonds, Series 2021B PROPOSED FORM OF LEGAL OPINION

Park District of the City of Grand Forks Grand Forks, North Dakota

[Original Purchaser]

Re: $[______] Refunding Improvement Bonds, Series 2021B Park District of the City of Grand Forks, North Dakota

Ladies and Gentlemen:

1. The Bonds are valid and binding obligations of the Issuer, enforceable in accordance with their terms. The Bonds are issued for the purpose of refunding improvement warrants of the Issuer (the “Warrants”) drawn on the funds of an improvement district of the Issuer (the “Improvement District”) for the purpose of paying the costs of the improvements in the Improvement District and refunding certain outstanding refunding improvement bonds of the Issuer.

2. The principal of and interest on the Bonds are payable from the Refunding Improvement Bonds, Series 2021B Bond Fund (the “Bond Fund”) of the Issuer, in which the Issuer now holds, in trust for the holders of the Bonds, a like principal amount of Warrants. All payments made on the Warrants are to be credited to the Bond Fund and applied in payment of the principal and interest on the Bonds. The Warrants have been duly authorized, executed and delivered in anticipation of the collection of the special assessments to pay for the improvements in the Improvement District. Whenever all special assessments theretofore collected and appropriated to the funds for the Improvement District are insufficient to pay all principal or interest then due on the Warrants drawn thereon, the governing body of the Issuer is required to levy an ad valorem tax upon all taxable property in the jurisdiction of the Issuer for the payment of such deficiency, and may levy such a tax whenever a deficiency is likely to occur within one year, which deficiency tax levies are not subject to any limitation as to rate or amount.

Park District of the City of Grand Forks, North Dakota [Original Purchaser] Page 2

4. Interest on the Bonds is excluded from taxable income for North Dakota income tax purposes.

5. The Bonds are “qualified tax-exempt obligations” within the meaning of Section 265(b)(3) of the Code.

Except as stated herein, we express no opinion regarding federal, state, or other tax consequences to the owner of the Bonds.

We have not been asked, and have not undertaken, to review the accuracy, completeness or sufficiency of any offering materials relating to the Bonds, and, accordingly, we express no opinion with respect thereto. 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 occur after the date hereof and which may be retroactive.

Dated: [______], 2021.

Very truly yours,

4818-6216-3418\2

APPENDIX - F

FORM OF CONTINUING DISCLOSURE UNDERTAKING

General Obligation Special Assessment Refunding Bonds, Series 2021A CONTINUING DISCLOSURE UNDERTAKING

$______General Obligation Special Assessment Refunding Bonds, Series 2021A Park District of the City of Grand Forks, North Dakota

______, 2021

This Continuing Disclosure Undertaking (the “Continuing Disclosure Undertaking” or “Undertaking”) is executed and delivered by the Park District of the City of Grand Forks, North Dakota (the “Issuer”), in connection with the issuance by the Issuer of its General Obligation Special Assessment Refunding Bonds, Series 2021A, in the original aggregate principal amount of $______(the “Bonds”). The Bonds are being issued under the terms of the Resolution adopted by the Board of Park Commissioners of the Issuer on March 2, 2021 (the “Resolution”). The Bonds are being delivered to ______, ______(the “Purchaser”) on ______, 2021. Under the terms of the Resolution, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events to provide for the public availability of such information and to permit the Purchaser to comply with the continuing disclosure requirements of the Rule (defined herein). The Issuer hereby covenants and agrees as follows:

1. Purpose of the Continuing Disclosure Undertaking. This Continuing Disclosure Undertaking is being executed and delivered by the Issuer for the benefit of the Holders (defined herein) of the Bonds in order to assist the Participating Underwriter (defined herein) in complying with the Rule (defined herein). This Undertaking, together with the Resolution, constitute the written agreement or contract for the benefit of the Holders of the Bonds that is required by the Rule.

2. Definitions. In addition to the defined terms set forth in the Resolution, which apply to any capitalized term used in this Undertaking, unless otherwise defined in this Undertaking, the following capitalized terms shall have the following meanings:

“Annual Report” means any annual report provided by the Issuer in accordance with, and as described in, Sections 3 and 4 of this Continuing Disclosure Undertaking.

“Audited Financial Statements” means annual financial statements, prepared in accordance with generally accepted accounting principles for governmental units (“GAAP”) as prescribed by the Governmental Accounting Standards Board (“GASB”), or as otherwise required by North Dakota law for the preceding Fiscal Year, including a balance sheet and statement of revenues, expenditures, and changes in fund balances.

“Bonds” means the General Obligation Special Assessment Refunding Bonds, Series 2021A, issued by the Issuer in the original aggregate principal amount of $______.

“Issuer” means the Park District of the City of Grand Forks, North Dakota, which is the obligated person with respect to the Bonds.

4819-9214-3839\2 “Disclosure Covenants” means the continuing disclosure obligations of the Issuer under this Continuing Disclosure Undertaking.

“Disclosure Information” means the financial information and operating data referred to in Section 3(a) of this Continuing Disclosure Undertaking.

“EMMA” means the Electronic Municipal Market Access system operated by the MSRB and the primary portal for complying with the continuing disclosure requirements of the Rule.

“Official Statement” means the Preliminary Official Statement, dated March 1, 2021, and the Official Statement, dated ______, 2021, which constitutes the final official statement delivered in connection with the Bonds, which is available from the MSRB.

“Fiscal Year” means the fiscal year of the Issuer.

“Holder” means the person in whose name a Bond is registered or a beneficial owner of such a Bond.

“Material Event” means any of the events listed in Section 5(a) of this Continuing Disclosure Undertaking.

“MSRB” means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314.

“Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds.

“Repository” means EMMA.

“Rule” means SEC Rule 15c2-12(b)(5) promulgated by the SEC under the Securities Exchange Act of 1934, as the same may be amended from time to time, and including written interpretations thereof by the SEC.

“SEC” means Securities and Exchange Commission.

3. Provision of Annual Financial Information and Audited Financial Statements.

(a) On or before June 30 of each year, commencing with the Fiscal Year ending December 31, 2020, the Issuer shall provide to the Repository the following financial information and operating data (the “Disclosure Information”) with respect to the most recently completed Fiscal Year. In the event of a change in the Fiscal Year of the Issuer, such information shall be provided no later than 180 days after the end of such Fiscal Year:

(i) The Audited Financial Statements of the Issuer for such Fiscal Year, which financial statements shall contain balance sheets as of the end of such Fiscal Year and a statement of operations, changes in fund balances, and cash flows for the Fiscal Year then ended, showing in comparative form such figures for the preceding Fiscal Year of the

2 4819-9214-3839\2 Issuer, prepared in accordance with GAAP promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by GASB or as otherwise provided under North Dakota law, as in effect from time to time, or, if to the extent such financial statements have not been prepared in accordance with GAAP for reasons beyond the reasonable control of the Issuer, noting the discrepancies therefrom and the effect thereof and certified as to accuracy and completeness in all material respects by the Superintendent of Finance (the “Superintendent of Finance”); and

(ii) To the extent not included in the financial statements referred to in clauses (i) above, information of the type set forth in Section 4 below, which information may be unaudited, but is to be certified as to accuracy and completeness in all material respects, by the Superintendent of Finance of the Issuer to the knowledge of the Superintendent of Finance, which certifications may be based on the reliability of information obtained from governmental or other third party sources.

The Annual Report and Disclosure Information may be submitted as a single document or as separate documents comprising a package, and may cross-reference other information as provided in Section 4 of this Undertaking; provided that the Audited Financial Statements of the Issuer may be submitted separately from the balance of the Annual Report and will be submitted as soon as available.

Any or all of the Disclosure Information may be incorporated, if it is updated as required by the Disclosure Covenants, by reference from other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference.

(b) If any part of the Disclosure Information can no longer be generated because the operations of the Issuer have materially changed or have been discontinued, such Disclosure Information need no longer be provided if the Issuer includes in the Disclosure Information a statement to such effect; provided, however, if such operations have been replaced by other Issuer operations in respect of which data is not included in the Disclosure Information and the Issuer determines that certain specified data regarding such replacement operations would be material, then, from and after such determination, the Disclosure Information shall include such additional specified data regarding the replacement operations. If the Disclosure Information is changed or the Disclosure Covenants are amended as permitted by this Undertaking, then the Issuer is to include in the next Disclosure Information to be delivered under the Disclosure Covenants, to the extent necessary, an explanation of the reasons for the amendment and the effect of any change in the type of financial information or operating data provided.

(c) If the Issuer is unable or fails to provide to the Repository an Annual Report and Disclosure Information by the date required in subsection (a), the Issuer shall send a notice of that fact to the Repository.

3 4819-9214-3839\2 (d) The Issuer shall determine each year prior to the date for providing the Annual Report and Disclosure Information the name and address of the Repository.

4. Content of Annual Reports. The Annual Report shall contain or incorporate by reference the information for such Fiscal Year of the type contained in the Official Statement under the following headings:

INDEBTEDNESS, FINANCIAL INFORMATION, PROPERTY VALUATIONS AND TAXES, AND CITY TAX RATES, LEVIES AND COLLECTIONS.

In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Undertaking.

Any or all of the items listed above may be incorporated, if updated as required by the Disclosure Covenants, by reference to other documents, including official statements of debt issues of the Issuer or related public entities, which have been submitted to the Repository or the SEC. If the document incorporated by reference is a final official statement, it must also be available from the MSRB. The Issuer shall clearly identify each such other document so incorporated by reference.

5. Reporting of Material Events.

(a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701– TEB), or other material notices or determinations with respect to the tax status of the Bonds, or other material events affecting the tax status of the Bonds;

7. Modifications to rights of Bondholders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution, or sale of property securing repayment of the Bonds, if material;

4 4819-9214-3839\2 11. Rating changes;

12. Bankruptcy, insolvency, receivership, or similar event of the obligated person;

13. The consummation of a merger, consolidation, or acquisition involving an obligated person or the sale of all or substantially all of the assets of the obligated person, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than in accordance with its terms, if material;

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material;

15. Incurrence of a financial obligation of the obligated person, if material, or agreement to covenants, events of default, remedies, priority rights, or other similar terms of a financial obligation of the obligated person, any of which affect security holders, if material; and

16. Default, event of acceleration, termination event, modification of terms, or other similar events under the terms of a financial obligation of the obligated person, any of which reflect financial difficulties.

For purposes of the events identified in paragraphs 15 and 16 above, the term “financial obligation” means (i) a debt obligation; (ii) a derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (iii) a guarantee of (i) or (ii). The term “financial obligation” shall not include municipal securities as to which a final official statement has been provided to the MSRB consistent with the Rule.

(b) The Issuer shall file a notice of any Material Event with the Repository or with the MSRB within ten (10) business days of the occurrence of the Material Event.

(c) The Issuer shall provide notice, in a timely manner to the Repository and the MSRB, of the occurrence of any of the following events or conditions: (i) the amendment or supplementing of the Disclosure Covenants in accordance with the terms of this Undertaking, together with a copy of such amendment or supplement and any explanation provided by the Issuer under the Disclosure Covenants; (ii) the termination of the obligations of the Issuer under the Disclosure Covenants in accordance with the terms of this Undertaking; (iii) any change in the accounting principles under the terms of which the Audited Financial Statements of the Issuer constituting a portion of the Disclosure Information are prepared; and (iv) any change in the Fiscal Year of the Issuer.

(d) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of such information.

(e) The Issuer shall provide notice, in a timely manner to the Repository and the MSRB, of the occurrence of any of the following events or conditions: (i) any amendment or

5 4819-9214-3839\2 supplement of the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the Issuer under the Disclosure Covenants; (ii) the termination of the obligations of the Issuer under the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Undertaking; (iii) any change in the accounting principles under the terms of which the Audited Financial Statements constituting a portion of the Disclosure Information are prepared; and (iv) any change in the Fiscal Year of the Issuer.

(f) Unless otherwise required by law and subject to technical and economic feasibility, the Issuer shall employ such methods of information transmission as shall be requested or recommended by the designated recipients of the Issuer’s information.

6. EMMA. The SEC has designated EMMA, operated by the MSRB, as a nationally recognized municipal securities information repository and the exclusive portal for complying with the continuing disclosure requirements of the Rule. Until MSRB and the SEC determine to provide for an alternative system for filing continuing disclosure information with respect to municipal bonds, the Issuer shall make all filings required under this Continuing Disclosure Undertaking solely with EMMA.

7. Termination of Reporting Obligation. The obligations of the Issuer under the Resolution and this Continuing Disclosure Undertaking shall terminate upon the payment in full of all of the principal of, premium, if any, and interest on the Bonds (whether at the maturity thereof or upon redemption and prepayment prior to maturity).

8. Agent. The Issuer may, from time to time, appoint or engage a dissemination agent to assist it in carrying out its obligations under Resolution and this Continuing Disclosure Undertaking, and may discharge any such agent, with or without appointing a successor dissemination agent.

9. Amendment; Waiver. Notwithstanding any other provision of the Resolution or this Continuing Disclosure Undertaking, the Issuer may amend this Continuing Disclosure Undertaking, and any provision of this Continuing Disclosure Undertaking may be waived, if such amendment or waiver is supported by an opinion of nationally recognized bond counsel to the effect that such amendment or waiver would not, in and of itself, cause a violation of the Rule. The provisions of the Resolution with respect to continuing disclosure obligations of the Issuer and this Continuing Disclosure Undertaking, or any provision hereof, shall be null and void in the event that the Issuer delivers to the Repository an opinion of nationally recognized bond counsel to the effect that those portions of the Rule which require the continuing disclosure provisions of the Resolution and require the execution and delivery of this Continuing Disclosure Undertaking are invalid, have been repealed retroactively, or otherwise do not apply to the Bonds. The provisions of the Resolution with respect to the continuing disclosure obligations of the Issuer and this Continuing Disclosure Undertaking may be amended without the consent of the Holders of the Bonds, but only upon the delivery by the Issuer to the Repository of the proposed amendment and an opinion of nationally recognized bond counsel to the effect that such amendment, and giving effect thereto, will not adversely affect the compliance by the Issuer with the applicable continuing disclosure provisions of the Resolution and this Continuing Disclosure Undertaking and with the Rule.

6 4819-9214-3839\2 10. Additional Information. Nothing in this Continuing Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Undertaking or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Undertaking, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event.

11. Default. In the event of a failure of the Issuer to comply with any Disclosure Covenants of this Undertaking, any person aggrieved thereby including the Holders of the Bonds may take whatever action at law or in equity as may appear necessary or appropriate to enforce performance and observance of any such Disclosure Covenants, including seeking mandamus or specific performance by court order. Direct, indirect, consequential, and punitive damages shall not be recoverable, however, for any default under this Undertaking. A default under this Undertaking shall not be deemed an event of default with respect to the Bonds or under any other provisions of the Resolution.

12. Beneficiaries. This Continuing Disclosure Undertaking shall inure solely to the benefit of the Issuer, the Participating Underwriters, and the Holders from time to time of the Bonds, and, except as expressly set forth herein, shall create no rights in any other person or entity.

7 4819-9214-3839\2

Execution page of the Issuer to the Continuing Disclosure Undertaking.

PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA

By Its President of the Board

By Its Clerk

4819-9214-3839\2 8 APPENDIX G -

FORM OF CONTINUING DISCLOSURE UNDERTAKING

Refunding Improvement Bonds, Series 2021B CONTINUING DISCLOSURE UNDERTAKING

$______Refunding Improvement Bonds, Series 2021B Park District of the City of Grand Forks, North Dakota

______, 2021

This Continuing Disclosure Undertaking (the “Continuing Disclosure Undertaking” or “Undertaking”) is executed and delivered by the Park District of the City of Grand Forks, North Dakota (the “Issuer”), in connection with the issuance by the Issuer of its Refunding Improvement Bonds, Series 2021B, in the original aggregate principal amount of $______(the “Bonds”). The Bonds are being issued under the terms of the Resolution adopted by the Board of Park Commissioners of the Issuer on March 2, 2021 (the “Resolution”). The Bonds are being delivered to ______, ______(the “Purchaser”) on ______, 2021. Under the terms of the Resolution, the Issuer has covenanted and agreed to provide continuing disclosure of certain financial information and operating data and timely notices of the occurrence of certain events to provide for the public availability of such information and to permit the Purchaser to comply with the continuing disclosure requirements of the Rule (defined herein). The Issuer hereby covenants and agrees as follows:

“Annual Report” means any annual report provided by the Issuer in accordance with, and as described in, Sections 3 and 4 of this Continuing Disclosure Undertaking.

“Bonds” means the Refunding Improvement Bonds, Series 2021B, issued by the Issuer in the original aggregate principal amount of $______.

“Issuer” means the Park District of the City of Grand Forks, North Dakota, which is the obligated person with respect to the Bonds.

4850-2069-3727\2 “Disclosure Covenants” means the continuing disclosure obligations of the Issuer under this Continuing Disclosure Undertaking.

“Disclosure Information” means the financial information and operating data referred to in Section 3(a) of this Continuing Disclosure Undertaking.

“EMMA” means the Electronic Municipal Market Access system operated by the MSRB and the primary portal for complying with the continuing disclosure requirements of the Rule.

“Fiscal Year” means the fiscal year of the Issuer.

“Holder” means the person in whose name a Bond is registered or a beneficial owner of such a Bond.

“Material Event” means any of the events listed in Section 5(a) of this Continuing Disclosure Undertaking.

“MSRB” means the Municipal Securities Rulemaking Board located at 1900 Duke Street, Suite 600, Alexandria, VA 22314.

“Participating Underwriter” means any of the original underwriter(s) of the Bonds (including the Purchaser) required to comply with the Rule in connection with the offering of the Bonds.

“Repository” means EMMA.

“SEC” means Securities and Exchange Commission.

3. Provision of Annual Financial Information and Audited Financial Statements.

2 4850-2069-3727\2 Issuer, prepared in accordance with GAAP promulgated by the Financial Accounting Standards Board as modified in accordance with the governmental accounting standards promulgated by GASB or as otherwise provided under North Dakota law, as in effect from time to time, or, if to the extent such financial statements have not been prepared in accordance with GAAP for reasons beyond the reasonable control of the Issuer, noting the discrepancies therefrom and the effect thereof and certified as to accuracy and completeness in all material respects by the Superintendent of Finance (the “Superintendent of Finance”); and

3 4850-2069-3727\2 (d) The Issuer shall determine each year prior to the date for providing the Annual Report and Disclosure Information the name and address of the Repository.

INDEBTEDNESS, FINANCIAL INFORMATION, PROPERTY VALUATIONS AND TAXES, AND CITY TAX RATES, LEVIES AND COLLECTIONS.

In addition to the items listed above, the Annual Report shall include Audited Financial Statements submitted in accordance with Section 3 of this Undertaking.

5. Reporting of Material Events.

(a) This Section 5 shall govern the giving of notice of the occurrence of any of the following events (“Material Events”) with respect to the Bonds:

1. Principal and interest payment delinquencies;

2. Non-payment related defaults, if material;

3. Unscheduled draws on debt service reserves reflecting financial difficulties;

4. Unscheduled draws on credit enhancements reflecting financial difficulties;

5. Substitution of credit or liquidity providers, or their failure to perform;

7. Modifications to rights of Bondholders, if material;

8. Bond calls, if material, and tender offers;

9. Defeasances;

10. Release, substitution, or sale of property securing repayment of the Bonds, if material;

4 4850-2069-3727\2 11. Rating changes;

12. Bankruptcy, insolvency, receivership, or similar event of the obligated person;

14. Appointment of a successor or additional trustee or the change of name of a trustee, if material;

(b) The Issuer shall file a notice of any Material Event with the Repository or with the MSRB within ten (10) business days of the occurrence of the Material Event.

(e) The Issuer shall provide notice, in a timely manner to the Repository and the MSRB, of the occurrence of any of the following events or conditions: (i) any amendment or

5 4850-2069-3727\2 supplement of the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Undertaking, together with a copy of such amendment or supplement and any explanation provided by the Issuer under the Disclosure Covenants; (ii) the termination of the obligations of the Issuer under the Disclosure Covenants in accordance with the terms of this Continuing Disclosure Undertaking; (iii) any change in the accounting principles under the terms of which the Audited Financial Statements constituting a portion of the Disclosure Information are prepared; and (iv) any change in the Fiscal Year of the Issuer.

6 4850-2069-3727\2 10. Additional Information. Nothing in this Continuing Disclosure Undertaking shall be deemed to prevent the Issuer from disseminating any other information, using the means of dissemination set forth in this Undertaking or any other means of communication, or including any other information in any Annual Report or notice of occurrence of a Material Event, in addition to that which is required by this Undertaking. If the Issuer chooses to include any information in any Annual Report or notice of occurrence of a Material Event in addition to that which is specifically required by this Undertaking, the Issuer shall have no obligation under this Certificate to update such information or include it in any future Annual Report or notice of occurrence of a Material Event.

7 4850-2069-3727\2

Execution page of the Issuer to the Continuing Disclosure Undertaking.

PARK DISTRICT OF THE CITY OF GRAND FORKS, NORTH DAKOTA

By Its President of the Board

By Its Clerk

4850-2069-3727\2 8