City of Grand Forks Organizational Chart

COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Grand Forks, ND For the year ended December 31, 2012 Top Photo: Sorlie Bridge in downtown Grand Forks which is listed on the National Register of Historic Places as one of the few remaining bridges in this style in the U.S., Photo source: Tuey (http://www.flickr.com/photos/tuey/). Permissions under Creative Commons CC-BY-2.0.

Middle Photo: Townsquare in downtown Grand Forks on a busy Saturday morning Farmers Market. Townsquare is also host to a variety of community events throughout the year including concerts, craft shows, and is even available for private rental for events. Photo Source: Greater Grand Forks Convention and Visitors Bureau.

Bottom Photo: Concert at the Alerus Center, a City-owned events center which hosts a variety of events including: concerts, tradeshows, conventions, community festivals, sporting events and serves as the home of University of North Dakota Football. Photo Source: Alerus Center. of the City of Grand Forks, North Dakota

For the Year Ended December 31, 2012

Prepared by THE DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES MAUREEN STORSTAD, DIRECTOR CANDICE STJERN, ASSISTANT DIRECTOR

(Member of Government Finance Officers Association Of the United States & Canada) CITY OF GRAND FORKS, NORTH DAKOTA COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2012

TABLE OF CONTENTS

INTRODUCTORY SECTION

Title Page Table of Contents i - iv Letter of Transmittal I - VIII GFOA Certificate of Achievement For Excellence in Financial Reporting IX Organizational Chart X List of Elected and Appointed City Officials XI

FINANCIAL SECTION Exhibit Page Independent Auditor's Report 1-3 Management Discussion and Analysis 4-18 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 20 Statement of Activities 2 21 Fund Financial Statements: Balance Sheet - Governmental Funds 3 22 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 23 Statement of Revenues, Expenditures, and changes in Fund Balances - Governmental Funds 4 24 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 25 Statement of Revenues, Expenditures, and changes in Fund Balances - Budget and Actual - General Fund 5 26 Statement of Revenues, Expenditures, and changes in Fund Balances - Budget and Actual - Community Development Fund 5A 28 Statement of Net Position - Proprietary Funds 6 30 Statement of Revenues, Expenses, and changes in Fund Net Position - Proprietary Funds 7 32 Statement of Cash Flows - Proprietary Funds 8 34 Statement of Fiduciary Net Position - Fiduciary Funds 9 36 Statement of Changes in Fiduciary Net Position - Fiduciary Funds 10 37

Notes to the Financial Statements 39-76 i Required Supplementary Information: Exhibit Page Schedule of Funding Progress - Public Employees Retirement System 77

Combining and Individual Fund Statements and Schedules: Combining Balance Sheet - Nonmajor Governmental Funds A-1 79 Combining Statement of Revenues, Expenditures and Changes Fund Balance - Nonmajor Governmental Funds A-2 80 Combining Balance Sheet - Nonmajor Special Revenue Funds B-1 84 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Special Revenue Funds B-2 88 Combining Schedule of Revenues, Expenditures and Changes in Fund Balance-Budget and Actual-Nonmajor Special Revenue Funds B-3 94 Combining Balance Sheet - Nonmajor Debt Service Funds C-1 107 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Debt Service Funds C-2 108 Combining Balance Sheet - Nonmajor Capital Project Funds D-1 110 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Capital Project Funds D-2 112 Combining Statement of Net Position - Nonmajor Proprietary Funds E-1 116 Combining Statement of Revenues, Expenditures and Changes in Net Position - Nonmajor Proprietary Funds E-2 118 Combining Statement of Cash Flows - Nonmajor Proprietary Funds E-3 120 Combining Statement of Net Position - Internal Service Funds F-1 124 Combining Statement of Revenues, Expenditures and Changes in Net Position - Internal Service Funds F-2 125 Combining Statement of Cash Flows - Internal Service Funds F-3 126 Combining Statement of Assets & Liabilities - Agency Funds G-1 129 Combining Statement of Changes in Assets & Liabilities - Agency Funds G-2 130 Statement of Changes in Net Position - Pension Trust Fund G-3 132

Capital Assets Used in the Operation of Governmental Funds: 133 Schedule by Source H-1 134 Schedule by Function and Activity H-2 135 Schedule of Changes by Function and Activity H-3 136

Supporting Schedules: Schedule 137 Schedule of Cash, Cash Equivalents and Investments J-1 138 Summary of Debt Statistics J-2 139 Debt Statement as of December 31, 2012 J-3 140 Summary of Debt Service Requirements to Maturity J-4 142 Debt Service Requirements to Maturity - General Obligation and Tax Increment Bonds J-5 143 ii Schedule Page Debt Service Requirements to Maturity - Revenue Bonds J-6a 144 Debt Service Requirements to Maturity - Sales Tax Revenue Bonds J-6b 145 Debt Service Requirements to Maturity - Refunding Improvement Bonds J-7 146 Debt Service Requirements to Maturity - Special Project Bonds and Temporary Warrants J-8 147 Debt Service Requirements to Maturity - Industrial Development Revenue Notes J-9 148

Schedule of Insurance in Force as of December 31, 2012 J-10 152

STATISTICAL SECTION Table 155 Financal Trends:

Net Position by Component Unit, Last Six Fiscal Years 1 157 Changes in Net Position, Last Five Fiscal Years 2 158 Program Revenue by Function, Last Five Fiscal Years 3 160 Government-wide Expenses by Function, Last Five Fiscal Years 4 161 Fund Balances, Governmental, Last Ten Fiscal Years 5 162 Changes in Fund Balances, Governental Funds, Last Ten Fiscal Years 6 163 Revenue Capacity: Tax Revenue by Source, Governmental Funds, Last Ten Fiscal Years 7 164 Assessed and Estimated Marker Value of Taxable Property, Last Ten 8 166 Fiscal Years Property Tax Levy and Collections, Last Ten Fiscal Years 9 168 Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years 10 170 Principal Property Tax Payers, Current Year and Nine Years Ago 11 171 Property Value and Construction Permits 11A 172 Debt Capacity: Ratio of Outstanding Debt by Type, Last Ten Fiscal Years 12 173 Ratio of Net General Bonded Debt to Assessed Value and Net Bonded 13 174 Debt Per Capita, Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt as of Dec. 31, 2012 14 175 Legal Debt Margin Information, Last Ten Fiscal Years 15 176 Computation of Legal Debt Margin 15A 177 Pledged Revenue Coverage- Water Revenue Bonds, Last Ten Fiscal Years 16 178 Pledged Revenue Coverage- Sewer Revenue Bonds, Last Ten Fiscal Years 17 179 Pledged Revenue Coverage-Special Assessment Bonds, Last Ten Fiscal Years 18 180 Demographic and Economic Information: Demographic Statistics, Last Ten Fiscal Years 19 181 Principal Employers, Current Year and Nine Years Ago 20 182

iii Table Page Operating Information: Full-time Equivalent City Employees by Function/Program 21 183 Operating Indicators by Function/Program 22 184 Capital Asset Statistics by Function/Program 23 186 Pension Trust Fund - Analysis of Funding Progress 24 188 Pension Trust Fund - Revenues by Source and Expenses 25 189 by Type

iv FINANCE AND ADMINISTRATIVE SERVICES

City of Grand Forks 255 North Fourth Street • P.O. Box 5200 • Grand Forks, ND 58206-5200 (701) 746-2620 Fax# (701) 787-3740

June 7, 2013

To the Honorable Mayor, Members of the City Council, and Citizens of the City of Grand Forks, North Dakota:

State statute and City Charter require an annual audit of the books of account, financial records, and transactions of all administrative departments. The Comprehensive Annual Financial Report of the City of Grand Forks, North Dakota for the fiscal year ended December 31, 2012, prepared to fulfill this requirement, is hereby submitted.

The report is prepared by the City’s Finance and Administrative Services Office in conformity with the generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB) and audited in accordance with auditing standards generally accepted in the United States of America by a firm of licensed certified public accountants.

This report consists of management’s representation concerning the finances of the City of Grand Forks (the City). Consequently, the management assumes full responsibility for the completeness and reliability for all the information presented in this report. To provide a reasonable basis for making these representations, management of the City has established a comprehensive framework of internal controls designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of these financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement.

As management, we assert, to the best of our knowledge and belief, these financial statements are complete and reliable in all material respects.

Brady, Martz and Associates, P.C., Certified Public Accountants have audited the financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended December 31, 2012 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The requirement has been complied with and the independent auditors have issued an unmodified (“clean”) opinion on the City of Grand Forks financial statements for the year ended December 31, 2012. The independent auditor’s report is located at the front of the financial section of this report.

Management discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview, and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction.

The independent audit of the financial statements of the City of Grand Forks was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the

I fair presentation of the financial statement, but also on the City’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. Information related to this single audit, including the schedule of expenditures of federal awards, auditor’s report on the internal control structure, and compliance with applicable laws and regulations are included in a separate report that is available in the City Finance and Administrative Services Office.

Profile of the Government

The City of Grand Forks was incorporated in 1881. The City of Grand Forks is located on the eastern border of North Dakota, in the rich Red River Valley, which is one of the most fertile agricultural areas in the world. Grand Forks history shows it to be a popular gathering spot for both native American and early settler population engaged in fur trapping and trading. Steamboats on the river and the expansion of the railroad facilitated much trade on the Red River Corridor from southern and eastern areas of the U. S. through Grand Forks to western and northern areas, including Winnipeg, Canada. Besides the trading, historically, the agriculture industry has been a major factor in the City’s continued growth and development of the successful business climate in the region.

During the past few years, however, the local and regional economy has become more diversified with growth in the medical, manufacturing, border security, energy, environmental, aviation/aerospace industries and other research and commercial sectors. Today’s major employers include University of North Dakota, Altru Health Systems, GF Air Force Base, GF School District, Valley Memorial Homes, City of GF, Amazon.com, LM Wind Power, JR Simplot, GF County, GF Herald and Hugo’s Grocery Store.

The City currently occupies a land area of approximately 26.01 square miles and has a population of 54,358 at the end of 2012. Grand Forks is the proud home to the University of North Dakota that has a student body of approximately 15,250 and is the flagship institution of the North Dakota University System.

Located approximately 15 miles west of the City of Grand Forks and a very crucial part of the City is the Grand Forks Air Force Base. The Air Base is home to Predator and Global Hawk unmanned aircraft and almost 3,000 military personnel and civilians.

The City of Grand Forks is empowered to levy a property tax on real property located within its boundary. It is also empowered by state statute to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the City Council.

The City of Grand Forks adopted its Home Rule Charter in 1970 and operates under a strong mayor-council form of government. Policymaking and legislative authority are vested with the city council consisting of the mayor and seven council members, one from each ward of the City. The city council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring the City Administrator and the City Attorney. The City Administrator, under the direction of the Mayor, is responsible for carrying out the policies and ordinances of the council, and for overseeing the day-to-day operations of the city government. The council is elected on a non-partisan basis. The council members serve four-year staggered terms. The mayor is elected to serve a four-year term and is elected at large.

II The City provides its residents and businesses with a full range of services contemplated by statute or charter. This includes Public Safety (Police, and Fire), Highways and Streets Construction and Maintenance, Sanitation, Health, Culture and Recreation, Public Improvements, Planning and Zoning, Water, Sewer, Public Transportation, and General Administrative Services.

The City is also financially accountable for the Grand Forks Regional Airport Authority, a legally separate entity. The Mayor with the approval of the City Council appoints three of the five members of the Authority board. Tax levies and bond issuance authorizations are approved by the City Council and the legal liability for the general obligation portion of the Authority’s debt remains with the City. Thus the authority activities are discretely presented in the City of Grand Forks Comprehensive Annual Financial Report. Separate and audited financial statements can be obtained from the Grand Forks Regional Airport Authority.

The City Council is required to adopt a final budget by no later than October 7th. The annual budget serves as the foundation for the City of Grand Forks financial planning and control. The appropriated budget is prepared by fund and department. Department heads may transfer resources within a department as they see fit. Transfers of appropriations between general fund departments, and various funds, however, require the approval of the city council. The level of budgetary control, (that is the level at which expenditures may not legally exceed appropriations) is the fund level. Budget to actual comparisons are provided in this report for each individual governmental fund for which an appropriated annual budget has been adopted. For the general fund and the special revenue – community development fund the comparison is presented on pages 26-28 as part of the basic financial statements for the governmental funds. For the governmental funds other than the general fund and the special revenue – community development fund with the appropriated annual budgets, this comparison is presented in the governmental subsection of this report, which starts on page 79.

Economic Condition and Outlook

Agriculture remains a vital part of the region’s economy and 2012 was a very good year due to large yields, a timely harvest and a national drought. Agriculture, education and medical services provide stability to the economy of the City. However, the economy continues to diversify.

The Grand Forks region is feeling the impacts associated with phenomenal growth in the oil industry as regional companies expand operations here to service demands there. In 2012 the City has established the ‘Access the Bakken’. The City recognizes that tremendous growth has occurred in western North Dakota due to the Bakken oil boom. That growth has put a strain on business needs in the Bakken, such as space for corporate office expansion, housing needs for employees and more. The City of Grand Forks has a unique opportunity to help meet those growing demands, which will have benefits to the region and the entire state of North Dakota. The objective is to promote Grand Forks as a viable option to expand oil- related business ventures and housing needs.

Along with the thriving state economy, the local economy has been strong. The City serves as the economic, educational and retail trade center for the area. Approximately two hundred and fifty thousand (250,000) persons use Grand Forks as their regional center for trade, health care, education and entertainment. Many of the people using Grand Forks come from our neighbors to the North, Canada. Effective June 1, 2012, the duty-free limit increased. Canadians that come to Grand Forks to shop for 24 hours are able to bring back duty free items up to $200 (up from $50) and $800 (up from $400) after a 48 hour trip.

III City sales tax showed a 10% increase in 2012 over 2011, which was up 7% from 2010. According to the North Dakota State Tax Department, taxable sales and purchases for the City of Grand Forks have increased from $1.1 billion in 2011 to $1.2 billion in 2012.

In May 2013, Northern Plains Nitrogen announced plans to construct a $1.5 billion world scale nitrogen fertilizer production facility northwest of Grand Forks near the city’s wasterwater treatment plant and landfill. It will utilize increasing supplies of natural gas from the western part of the state and provide a reliable supply of fertilizer, reducing the dependence on imported fertilizer, for growers in the North Central United States and the Canadian provinces of Manitoba and Saskatchewan. Construction is anticipated to begin in the spring of 2015 and the plant should be online in the spring of 2017. Over approximately twenty four months of construction, the workforce will peak at about 2,000 workers in all facets of construction such as welders, electricians, instrument technicians and machine operators. Once completed the plant will employ about 135 full time employees.

Through the strength of partnerships with community, state, and regional members, Grand Forks is poised to take advantage of growth opportunities in many areas including aviation, energy, medicine, border security and other research and commercial sectors.

The City had a slight decrease in unemployment from 3.6 percent in 2011 to 3.4 percent in 2012, which is much lower than the national average of 8.1 percent.

Grand Forks serves as a ‘Destination City’ for the region with its prime location for retail shopping, entertainment, sporting events, as well as health and educational facilities. The City owned Alerus Event Center and the attached privately owned Canad Inn, with its 40,000 square foot indoor water park continue to draw visitors to the community for conventions, concerts, and other events. With the growth in the convention business many new hotels have opened or are under construction nearby. The Alerus Center is home to the University of North Dakota football team which is a member of the Big Sky Athletic Conference.

The City is also home to the Ralph Engelstad Area, home to the Division 1 University of North Dakota men’s hockey team. The Ralph Engelstad Arena led the nation for NCAA Division 1 men’s hockey home attendance in the 2012-2013 season, averaging 11,592 fans per game in its’ 21 home games. ‘The Ralph’ also has many events in addition to college hockey and basketball such as hockey camps, concerts, tournaments and many private events.

Together the Alerus Center and the Ralph Engelstad Arena bring thousands of visitors to our city annually.

The City also has a thriving art community. The North Dakota Museum of Art is located on the campus of the University of North Dakota. The City is also home to the Empire Arts Center a multi-purpose arts facility located in downtown Grand Forks. The Empire hosts a variety of theater productions, performing arts, films, concerts, speakers and community events throughout the year. Each June the City hosts the Grand Cities Art Fest with over 250 artist and food vendors which draws more than 40,000 visitors downtown over two days.

Other city amenities include the Arnold Palmer Signature Golf Course, Kings’ Walk, and the nationally designated Greenway Trail system which winds through both Grand Forks and East Grand Forks. The City hosts many other events annually such as the Wild Hog Half Marathon, Rollin on the Red (a roller blading marathon), the Dewey Kvidt Memorial Duathalon, Extreme North Dakota Adventure Race, Blues on the Red (a series of blues concerts in town square) and the Jr. Grand Am which brings more than 300 youth basketball teams to town each April. These events and attractions continue to spur the strong retail sector of the community and make Grand Forks a multi-dimensional ‘Destination City’.

The Grand Forks Air Force Base is one of the largest employers in the state of North Dakota. The base employs more than 3,000 military personnel and civilians. The Air Force is utilizing the base as an operating location for Predator (MQ-1) and Global Hawk (RQ-4) unmanned aircraft. The base is now home to two Predators owned by U.S. Customs and Border Protection, and received a flock of Global Hawk, Block 40’s in the summer of 2011.

The Grand Forks Air Force Base is working with the University of North Dakota and Northrop Grumman to create a new high-tech UAS Technology and Training complex on unused space at the Air Base through an enhanced use lease. In addition, North Dakota is among the states vying to become a UAS pilot training site for the Federal Aviation Administration. A decision is expected to be made in 2013.

UND has launched the first collegiate Unmanned Aircraft Systems program, it has established a Center of Excellence for UAS Research. This center will provide a conduit between private industry and UAS researchers, promoting commercialization of new UAS-related products and services while bringing new UAS-related business ventures to the region.

Grand Forks is the home to the University of North Dakota’s Energy and Environmental Research Center (EERC). In 2008 the EERC became home to the national Center for Hydrogen Technology, which provides valuable research in the development of Hydrogen as an alternative fuel.

The EERC's eleven Centers of Excellence are leading the world in developing advanced energy systems and the prevention and cleanup of air, water, and soil pollution. Each Center of Excellence has received national and/or international recognition as a leader in its respective topic area. The EERC is committed to the demonstration and commercialization of its technologies. These commercialization efforts lead to economic development through the creation of spin-off businesses and high-tech and manufacturing jobs that pay well. The potential benefits of effective commercialization of EERC-developed technologies are enormous.

The University of North Dakota is designated as North Dakota’s Center of Excellence in Life Sciences and Advanced Technologies (COELSAT). The development of this center will ultimately spur the growth of Grand Forks’ Life Sciences Sector by creating jobs from the commercialization of university research innovations developed through corporate partnerships. As part of this effort, UND Research Foundation has partnered with the City of Grand Forks and the North Dakota Department of Commerce to develop the Research Enterprise and Commercialization (REAC) Campus. The impact to the region of these research related efforts is over $90 million, resulting in over 1,500 jobs.

The $16 million Research Enterprise and Commercialization (REAC-1) building opened for business in February 2009 on the western outskirts of UND, has 50,000 square feet of research and development space. It is an exciting addition to the Red River Valley Research Corridor. With UND research and corporate partnership, these companies will not only boost our economy but will also allow our college graduates to find good paying jobs right here at home. The only Biosafety Level 3 laboratory space in the Upper Midwest is located in Grand Forks at the REAC facility. In addition, LM Wind Power recently announced the establishment of a new research and development division in the REAC facility in partnership with the UND School of Engineering and Mines.

The University of North Dakota in Grand Forks is home to North Dakota’s only medical school and one of the largest graduate schools between the Mississippi River and Seattle. It has been designated a Carnegie Doctoral Research Institution. The 2013 North Dakota Legislature allocated $122 million for a new medical school facility at UND along with $11million to renovate the law school on campus.

V An indoor practice facility is also being planned for UND with the first phase estimated to be a $19.5 million project. This facility will house an indoor football field, an eight lane 300-meter track and the football offices.

Simplot, a major potato processor, has made a significant investment in the renewal and expansion of their Grand Forks facility. Simplot is installed an anaerobic digester that converts the facility’s biodegradable potato by-products to energy. This multimillion dollar equipment upgrade secures the companies’ investment in Grand Forks for years to come.

Altru Health Systems, the city’s largest health care provider, has developed a formal affiliation with the world renowned Mayo Clinic. The affiliation 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. Altru recently announced a $200 million expansion plan. The planned timeline of the expansion is from 2016 to 2024.

Amazon.com, Inc. expanded the Company’s customer service center in Grand Forks creating hundreds of full time jobs and seasonal jobs in 2011 and 2012. And Acme Tools of Grand Forks is planning a 40,000- square-foot warehouse and distribution center in the city’s expanded Industrial Park.

Wal-Mart Stores Inc. is planning a second Wal-Mart Supercenter store in Grand Forks on Gateway Drive on the northwest side of the city. The new store is estimated to be 181,378 square feet on 19 acres of land to be constructed in 2013.

The Grand Forks International Airport, located 5 miles west of the City, hosts a hub for Federal Express and is served by Delta Air Lines, United Airlines and Allegiant Air. The airport has non-stop service to Las Vegas, NV, Orlando, FL, Minneapolis, MN, and Denver, CO. In May 2012 United Airlines began service from Grand Forks with direct flights to Denver. A new $10 million terminal was completed in the fall of 2011. The 2012 boardings totaled 137,988 a sixteen percent increase over 2011, setting another record. The Airport is planning a parking lot expansion due to the heavy demand. A combination of factors is contributing to this growth, including more flights, new destinations and more Canadian passengers.

A total of 366,431 takeoffs and landings were performed at the airport in 2012, representing a 5.2% increase over 2011. The majority of these operations are performed by the University of North Dakota aviation school.

The City also continues to have both passenger and freight rail services with Amtrak’s “Empire Builder” and Burlington Northern. Two bus lines serve the area and a number of trucking firms provide daily service.

Housing starts are up locally. The City has experienced a moderate growth in valuation due to new construction and revaluation. Property taxes generated by new construction and valuation increases are estimated to be 3.08%, .74% for property revaluation and 2.34% for new construction for the 2013 budget year.

In 2012, 1506 building permits were issued on construction valued at $127,729,350. The number of building permits is up from 2011 however the construction value is down from 2011, this is due to the construction of the Choice Wellness and Fitness Center of $19,500,000 recorded in 2011. One hundred and ten (110) single-family homes were built in 2012 along with twenty two (22) town-homes and eight (8) multi-family (apartment) structures providing a total of 424 housing units compared to 326 in 2011.

VI Efforts continue to minimize property tax increases without detriment to service levels. Prudent long-range planning has included a one mill increase in the 2013 budget to be set aside for a future fire station to serve the south-east quadrant of the city

The 2013 the North Dakota Legislature provided $657 million in property tax relief through a new K-12 funding formula that shifts the largest share of education costs from school districts to the state. There is also an additional $200 million in property tax relief that will go to counties to provide property tax credits to be spread to all taxing entities. In addition the legislature also passed $250 million in income tax relief.

The City’s bond rating was confirmed at Aa2 in November 2012.

Major Initiatives

In August of 2012, the Mayor’s Blue Ribbon Housing Commission was formed to spur housing development in Grand Forks. The Mayor formed this committee to address the shortage of housing in the city. With Grand Forks poised to grow, housing will be crucial. Demand for housing in Grand Forks is strong and it is real. As a result of the commission spotlighting the housing issues there has been an increase in development. For 2013 at least 1100 new rental units are on the horizon along with 160 single or double housing units.

The Mayor and the City Council with the help from community partners, continue to promote, preserve and enhance Grand Forks as a positive place for young people. For the seventh year in a row America’s Promise - The Alliance for Youth announced Grand Forks as one of the 100 Best Communities for Young People.

The goal of energy efficiency, or becoming more “green”, is captured within our Green3 Grand Forks efforts to engage city staff and community members to develop response to the soaring energy costs, reduce expenditure, and improve the environment. Through the work of the Green3 Grand Forks Resource Committee, a “living” Action Plan has been created and some of the projects recommended by the committee are underway. These projects include public building energy audits, hybrid buses, synchronized traffic signals along major corridors, greenway tree planting and a community garden.

A major water treatment project is on the horizon. The City and its consulting team have been evaluating the City’s existing water treatment plant and necessary upgrades to accommodate future facility capacity and treatment needs. Taking into consideration all of the challenges facing the existing water treatment plant and a comprehensive water treatment technology evaluation, the City decided to construct a new water treatment plant in a new location.

The City completed a successful Water Treatment Plant Pilot Project, which examined the efficiency and effectiveness of treatment technologies on the Red River and Red Lake River water supplies and refined treatment plant operation and maintenance and capital cost estimates. Further design and technology selection and testing will be done through 2013. Final design is expected to take place through 2014 with construction to be underway in 2015 and completion in 2018. The cost is estimated to be $125 million with 50% federal or state funding and the remaining 50% local funds. The 2013 ND State Legislature has listed $5 million in the ND Water Commission Budget for the Grand Forks Regional Water Treatment Plant.

With the exception of minor miscellaneous work and the final paper work submission, the work on the U.S. Army Corps of Engineers (USACE) Permanent Flood Damage Reduction and Recreation project is substantially complete and has been accepted by the Federal Emergency Management Agency (FEMA). As such much of the City has been removed from the 100-year flood plain. With the completion of the permanent flood protection the need for the City to construct temporary levees if faced with a repeat flood

VII of 1997 has been eliminated. The permanent flood protection has provided the businesses and residents of the city much needed safety, security, and economic stability.

Other Financial Information

The management continues to administer the financial policies established by the City Council in a prudent and effective manner. A continuation of this cooperative effort will assure the citizens a healthy future.

Accounting System and Reporting – During the year, the City’s accounting system is maintained primarily on a modified accrual basis to provide financial controls. Appropriations are encumbered for major purchase amounts prior to the release of purchase orders to vendors. This system provides budgetary control on all operating funds at a minimum cost. At year-end, journal entries are prepared by finance department as a preparatory step for completion of the annual financial report. The auditor’s report on these financial statements accompanies the report following this letter.

Certificate of Achievement – The Government Finance Officers Association of United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Grand Forks for its comprehensive annual financial report (CAFR) for the fiscal year ended December 31, 2011. This was the 26th consecutive year the City has received this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both Generally Accepted Accounting Principles (GAAP) and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate.

Acknowledgments

The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the Finance and Administrative Services Department. We wish to express our appreciation to all the members of the department, especially Emily Fossen, Cheryl Ramberg, Sherie Lundmark, Linda Kuntz, Sandy Johnson, Mike Vatnsdal and Gerri Konze who assisted and contributed to the preparation of this report. We also wish to express our appreciation to the Mayor and City Council for their continued interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner.

Respectfully submitted,

______Candice Stjern, CPA Maureen Storstad, CPA Assistant Director of Finance Director of Finance

VIII

CITY OF GRAND FORKS ORGANIZATIONAL CHART

CITIZENS OF GRAND FORKS

CITY COUNCIL MAYOR COMMUNITY/ GOVERNMENT MICHAEL BROWN RELATIONS OFFICER PETE HAGA

PUBLIC INFORMATION HUMAN RESOURCES/ LEGAL SERVICES CENTER CIVIL SERVICE CITY HALL KEVIN DEAN COMMISSION DARYL CITY ADMINISTRATOR HOWARD HOVLAND SWANSON RICHARD DUQUETTE

INFORMATION HEALTH PUBLIC PLANNING FINANCE FIRE POLICE ENGINEERING ASSESSING URBAN TECHNOLOGY WORKS DEVELOPMENT MUNICIPAL ROXANNE DON TODD BRAD MAUREEN PETER JOHN ALLEN MEL GREG COURT FIALA SHIELDS FELAND GENGLER STORSTAD O’NEILL PACKETT GRASSER CARSEN HOOVER

WASTEWATER SANITATION STORMWATER DAVE RICHARD KRESEL NEWMAN

WATERWORKS STREETS BUILDING UTILITIES INSPECTIONS ENGINEERING ENGINEERING HAZEL MARK BEV SLETTEN AUBOL COLLINGS RICH ROMNESS MARK WALKER

WASTE WATER PUBLIC TREATMENT TRANSIT DON DALE TUCKER BERGMAN

As of 1/1/2011

ELECTED OFFICIALS

Current Ward Term Expires

Michael R. Brown June 2016

Terry Bjerke 1 June 2016 Tyrone Grandstrand 2 June 2014 Bret Weber 3 June 2016 Harold Gershman 4 June 2014 Doug Christensen 5 June 2016 Dana Sande 6 June 2014 Ken Vein 7 June 2016

APPOINTED OFFICIALS

Maureen Storstad Director of Finance and Administrative Services Candice Stjern Assistant Director of Finance and Administrative Services

CITY OF GRAND FORKS, NORTH DAKOTA MANAGEMENT DISCUSSION AND ANALYSIS

As the management of the City of Grand Forks, we are pleased to offer readers of the City of Grand Forks financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended December 31, 2012. Please read it in conjunction with the additional information presented in the accompanying letter of transmittal, the City’s basic financial statements, and the notes to the financial statements.

Financial Highlights

• The assets of the City exceeded its liabilities by $466.1 million at the end of the fiscal year 2012. Of this amount, $34.6 million may be used to meet the City’s ongoing obligations to citizens and creditors. • The City’s total net assets increased by $16 million. • As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $50.8 million, a decrease of $10.5 million in comparison to the prior year. Of this total amount, approximately $15.8 million, thirty- one (31%) is available for spending at the City’s discretion. • At the end of the current fiscal year, unassigned fund balance for the general fund was $9.1 million, or thirty (30%) of total general fund expenditures of $29.9 million. • The City’s total debt decreased by $21.8 million during the current fiscal year. The City completed the crossover refunding of the 2003A Refunding Improvement Bonds and the 2002G General Obligation Dike Bonds in the amounts of $5,755,000 and $2,215,000 respectively during 2012. • The State of North Dakota allowed the City to pay off the 2001C State Revolving Fund loan of $5,640,000 early from cash on hand. It was paid off in full in September 2012. • During the current year, the City issued: o $5,290,000 of Refunding Improvement and Refunding Bonds, Series 2012A to finance various improvement projects in the city limits and to refund the Refunding Improvement Bonds, Series 2002F and Refunding Improvement Bonds, Series 2003B. This was a current refunding. o $3,880,000 of Water Reserve Revenue Bonds, Series 2012B to finance water pond system improvements.

Overview of the Financial Statements

This discussion and analysis are intended to serve as an introduction to the City of Grand Forks basic financial statements. The City’s basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide Financial Statements.

The government-wide financial statements are designed to provide readers with a broad overview of the City of Grand Forks finances, in a manner similar to a private-sector business.

The Statement of Net Position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City of Grand

4 Forks is improving or deteriorating. However, other non-financial factors need to be considered to assess the overall health of the City of Grand Forks.

The Statement of Activities presents information on how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal years.

Both of the government-wide financial statements distinguish functions of the City of Grand Forks that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Grand Forks include general government, public safety, public health, highways and streets, culture and recreation, and permanent flood protection. The business-type activities of the City include sanitation, water, sewer, storm sewer, mosquito control, public transportation, Job Development Authority, downtown parking services, and operation and maintenance of the Alerus Center.

The government-wide financial statements also include financial information of the Grand Forks Regional Airport Authority as a component unit. The Mayor with the approval of the City Council appoints three of the five members of the board and can impose its will if it chooses to do so. The Authority activities are discretely presented in a separate column in the government-wide financial statements.

The government-wide financial statements can be found on pages 20-21 of this report.

Fund Financial Statements

A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City of Grand Forks, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements.

All of the funds of the City of Grand Forks can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statement focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. The governmental fund statements provide a detailed short-term view of the City’s general government operations and the basic services it provides. Such information may be useful in evaluating the city’s near-term financing requirements. These funds are reported on the modified accrual basis of accounting.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the city’s near-term financing decisions. Both the governmental fund balance sheet and governmental fund statements of

5 revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities.

The City of Grand Forks maintains 37 individual governmental funds. Information is presented separately in governmental fund balance sheet and statement of revenues, expenditures, and changes in fund balances for the general fund, the special assessment debt service fund, and community development special revenue fund which are considered to be major funds. Data from the other governmental funds (non major special revenue funds, debt service funds, capital project funds) are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining statements on pages, which begin on page 79.

The City of Grand Forks adopts annual appropriated budgets for the general fund and the special revenue funds. Budgetary comparison statements have been provided for the general fund and the community development special revenue fund to demonstrate compliance with the budget.

The basic governmental fund financial statements begin on page 22 of this report.

Proprietary Funds. The City of Grand Forks maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its Sanitation, Water, Sewer, Storm Sewer, Job Development Authority and Alerus Center operations as major funds and its Public Transit, Dial-A-Ride, Downtown Parking and Mosquito Control operations as non-major funds. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for goods and services provided by its Computer Service, Central Garage, Central Purchasing, and Public Works Facility funds. Because these internal service funds predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements.

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail and additional information, such as cash flow statements. Internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. Individual fund data for internal service funds is provided in the form of combining statements, which begin on page 124. Individual fund data for the non-major proprietary funds is provided in the form of combining statements, which begin on page 116.

The basic proprietary fund statements begin on page 30.

Fiduciary Funds. The City of Grand Forks is a trustee for its employees’ pension plan. The City also accounts for resources held in an agent capacity for other governments, individuals or private organizations, namely, Grand Forks Convention and Visitor’s Bureau and Grand Forks Humane Society. The City’s fiduciary activities are reported in separate Statement of Fiduciary Net Position and Changes in Fiduciary Net Position. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds.

The basic fiduciary fund financial statements begin on page 36.

6 Notes to the Financial Statements

The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 39-76 of this report.

Other Information

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s progress in funding its obligation to provide pension benefits to its employees. Required supplementary information can be found on page 77 of this report.

The combining statements in connection with non-major governmental funds, enterprise funds and internal service funds are presented immediately following the required supplementary information on pension. Combining and individual funds statements and schedules can be found on pages 79-153 of this report.

Government-wide Financial Analysis

The following two Tables present condensed information on the City’s Net Position and changes in City’s Net Position for the fiscal year ended December 31, 2012.

As noted earlier, net assets may, over time, serve as a useful indicator of the City’s financial position. At the close of the current fiscal year the City of Grand Forks assets exceeded liabilities by $466,101,778. City of Grand Forks Net Position*

Governmental Business-type Activities Activities Total 2012 2011 2012 2011 2012 2011

Current and other assets $ 93,333,743 $ 110,755,941 $ 57,415,744 $ 49,385,086 $ 150,749,487 $ 160,141,027 Capital assets 181,069,782 176,718,303 338,168,980 338,125,632 519,238,762 514,843,935 Total assets 274,403,525 287,474,244 395,584,724 387,510,718 669,988,249 674,984,962

Long-term liabilities outstanding 82,120,299 100,455,273 110,837,108 114,334,979 192,957,407 214,790,252 Other liabilities 6,253,780 7,020,614 4,675,284 3,024,421 10,929,064 10,045,035 Total liabilities 88,374,079 107,475,887 115,512,392 117,359,400 203,886,471 224,835,287

Net position: Net Investmenet in capital assets, net of related debt 108,829,130 86,234,283 236,054,053 231,694,228 344,883,183 317,928,511

Restricted 72,943,322 81,898,883 13,693,995 13,540,646 86,637,317 95,439,529 Unrestricted 4,256,994 11,865,191 30,324,284 24,916,444 34,581,278 36,781,635 Total net position $ 186,029,446 $ 179,998,357 $ 280,072,332 $ 270,151,318 $ 466,101,778 $ 450,149,675

*Internal Service Funds' net position are included in this table.

By far the largest portion of the City’s net position, seventy four percent (74%), reflects its investment in capital assets (e.g., land, buildings, machinery, equipment, and infrastructure), less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

An additional portion of the City’s net position, nineteen percent (19%), represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position $34.6 million may be used to meet the City’s ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, for the government as a whole, as well as for its separate governmental and business-type activities.

The City’s net position increased by $16 million during the current fiscal year. The majority of this increase is due to continued growth in the local economy which provided increases in property tax and local sales tax revenue as well as state aid distributions which are based on state sales tax. Building permit revenue also increased. The Alerus Center, Water Fund, Sanitation Fund and Storm Sewer Fund all had good increases in charges for services due to an increase in customers/conventions, usage, and rate increases. The Job Development Authority had a decrease in maintenance expense and the Sanitation Fund’s landfill closure expenses decreased.

Governmental Activities. Governmental activities increased the City’s net position by $6,031,089, accounting for 37.8% of the increase in the City’s net position. Key elements of this increase in net assets are as follows:

CHANGES IN NET POSITION

Governmental Activities Business-type Activities Total

2012 2011 2012 2011 2012 2011 Revenues: Program Revenues: Charges for services $ 9,619,491 $ 9,349,940 $ 35,955,599 $ 33,532,494 $ 45,575,090 $ 42,882,434 Operating grants and contributions 9,871,690 9,041,441 1,873,567 1,366,447 11,745,257 10,407,888 Capital grants and contributions 5,299,838 7,625,664 2,451,513 2,597,326 7,751,351 10,222,990 General Revenues: - - Property taxes 15,680,508 15,360,710 836,047 811,463 16,516,555 16,172,173 Sales taxes 10,941,495 9,946,223 8,554,897 7,776,631 19,496,392 17,722,854 State aid distribution 4,271,719 3,312,280 4,271,719 3,312,280 Other taxes 2,609,299 2,642,033 19,129 17,825 2,628,428 2,659,858 Miscellaneous 1,435,478 1,625,347 1,843,286 2,394,294 3,278,764 4,019,641 Total Revenues 59,729,518 58,903,638 51,534,038 48,496,480 111,263,556 107,400,118

Expenses: General Government 14,634,258 15,598,096 14,634,258 15,598,096 Health and Welfare 2,602,529 2,580,583 2,602,529 2,580,583 Public Safety 19,122,732 17,838,004 19,122,732 17,838,004 Highways and Streets 5,780,505 5,896,760 5,780,505 5,896,760 Culture and Recreation 1,737,105 1,771,715 1,737,105 1,771,715 Public Works 4,179,045 4,247,688 4,179,045 4,247,688 Interest on Long-term Debt 3,706,349 3,654,519 3,706,349 3,654,519 Sanitation 7,792,809 8,411,026 7,792,809 8,411,026 Sewer 8,502,137 8,627,547 8,502,137 8,627,547 Waterworks 9,063,768 8,699,845 9,063,768 8,699,845 Stormwater 2,500,655 2,591,535 2,500,655 2,591,535 Mosquito Control 656,754 799,264 656,754 799,264 Public Transit 2,550,478 2,400,839 2,550,478 2,400,839 Dial-A-Ride 729,942 734,313 729,942 734,313 Alerus Center 9,226,064 9,072,787 9,226,064 9,072,787 Job Development Authority 2,211,890 3,608,692 2,211,890 3,608,692 Downtown Parking 344,326 237,682 344,326 237,682 Total Expenses 51,762,523 51,587,365 43,578,823 45,183,530 95,341,346 96,770,895

Increase in net position before transfers 7,966,995 7,316,273 7,955,215 3,312,950 15,922,210 10,629,223 Gain (loss) on disposal of capital assets - - 29,893 42,227 29,893 42,227 Transfers (1,935,906) (91,892) 1,935,906 91,892 - - Increase (decrease) in net position 6,031,089 7,224,381 9,921,014 3,447,069 15,952,103 10,671,450 Net position - 1/1/12 179,998,357 172,773,976 270,151,318 266,704,249 450,149,675 439,478,225 Net position - 12/31/12 $ 186,029,446 $ 179,998,357 $ 280,072,332 $ 270,151,318 $ 466,101,778 $ 450,149,675

8 • State aid distribution (state sales tax) increased $959,439, an increase of 29%, reflecting our growing state economy. • Local sales tax revenue increased by $995,272, an increase of 10%, spurred by our City’s growing economy. • Total governmental charges for services revenue increased $269,551 or 2.9%, largely due to an increase in building permit revenue, court levied fines and administrative reimbursements. • Operating grants and contributions were up $830,249 or 9.2% due mainly to a Department of Justice Safer Tomorrow Grant. This was a $2 million grant award of which $877,148 was earned in 2012. • The capital grants and contributions decreased $2,325,826 or 30.5% largely due to a $1.6 million Department of Transportation Grant received in 2011 for construction of South 48th Street and a Department of Commerce Neighborhood Stabilization Program Grant of $1 million received in 2011. Both of these grants were completed in 2011 so our 2012 revenue was down. • Revenue from property taxes increased by $319,798, an increase of 2.1% during the year due to new construction, property revaluations and a 1 mill increase for the construction of a fire station in 2016.

Below are specific graphs which provide comparisons of governmental revenues and expenses:

Expenses and Program Revenues – Governmental Activities

Total governmental expenses increased by $175,158, or 0.3%, due primarily to costs associated with the Department of Justice Safer Tomorrow Grant received by the City, this amounted to $877,148 in 2012 expenses. There also were wage increases along with decreases in Community Development and Housing Authority expenses.

Revenues by Sources – Governmental Activities

Business-type Activities. Business-type activities increased the City’s net assets by $9,921,014, accounting for 62.2% of the increase in the City’s net position. Key elements of this increase are as follows:

• Capital contributions made by developers for underground utilities and capitalized special assessment projects assessed to benefiting properties.

• Charges for services increased by $2,423,105, an increase of 7.2%. $1,056,746 is attributable to increases in the Alerus Center revenue from more events and conventions. The balance of the increase is largely due to increased water usage and various utility rate increases. There was a 6% increase in water rates, a 7% increase in wastewater rates, a 5% increase in sanitation rates, a 15 % increase in the storm sewer fees and a 6% increase in flood protection/greenway fees.

• Sales tax revenue increased by $778,266, an increase of 10%, from the previous year. This represents the City’s increased economic activity.

• The Job Development Authority received a transfer of a tract of land from governmental activities valued at $1,546,486.

Below are specific graphs which provide comparisons of business-type activities revenues and expenses:

Expenses and Program Revenues – Business-type Activities

Revenues by Source – Business-type Activities

The business-type expenses decreased $1,604,707, or 3.6%, in 2012. This was due in part to a decrease in landfill closure costs in the Sanitation Fund and a dry summer resulting in less need for mosquito spraying in the Mosquito Fund. There was also a decrease in maintenance expenses in the Job Development Authority.

11 Financial Analysis of the Government’s Funds

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds. The focus of the City of Grand Forks governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of City’s net resources available for spending at the end of the fiscal year.

As of the end of current fiscal year, the City of Grand Forks governmental funds reported combined ending fund balances of $50,830,279, a decrease of $10,463,906, in comparison with the prior year. Approximately 17.9% of this total amount, $9,088,319, constitutes unassigned fund balance, which is available for spending at the government’s discretion. $1,857,439, or 3.7%, of this total represents assigned fund balance which has been designated by the Director of Finance or the City Administrator for certain purposes detailed in the table on page 66 of the notes to these financial statements. The remainder of the fund balance is not available for new spending because it has already been committed, restricted or is nonspendable. The committed fund balance is $4,815,367, or 9.5% of the total and has been committed by the City Council for certain purposes detailed in the table on page 66 of the notes to these financial statements. $28,901 is nonspendable consisting of inventories or advances. The remaining 68.9% or $35,040,253 is restricted for various purposes including $11,570,755 for debt service and $23,469,498 for specific grants, tax related or bonded items or a variety of other purposes which are also detailed in the table on page 66 of the notes to these financial statements.

The general fund is the chief operating fund of the City of Grand Forks. At the end of the current fiscal year, unassigned fund balance of the general fund was $9,088,319, while the total fund balance reached $12,623,389.

As a measure of general fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents thirty one percent (31%) of the total general fund expenditures, while total fund balance represents forty three percent (43%) of that same amount.

The fund balance of the City of Grand Forks’ general fund increased by $1,023,312 during the current fiscal year. This increase in fund balance was due to the growth in economic activity in the City and in the State of North Dakota resulting in increases in sales tax, state aid and building permits. This increase would have been larger, however the City decided to forego a budgeted transfer in from the Highway User Fund of $1,164,210 for street related expenditures. The city sales tax increased $452,390, the state aid (city’s share of state sales tax) increased by $959,439 and building permit revenue increased by $89,752 due to an increase in economic activity. Property tax increased $315,948 due to new construction, property revaluations and a 1 mill increase for a future fire station. Administrative reimbursements increased $161,076 as a result of more project activity. And court levied fines were up $159,727 due to a change in North Dakota state law regarding the split of fines between the City Municipal Court and the County District Court.

The special assessment debt service fund has a fund balance of $9,247,937 all of which is restricted for debt service. This is a decrease of $11,963,966 from 2011. This is largely due to the completion of the crossover refunding of the 2003A Refunding Improvement Bonds in the

12 amount of $5,755,000 and the early payoff of the 2001C State Revolving Fund loan from cash on hand in the amount of $5,640,000.

The community development fund has a fund balance of $379,668. This balance is restricted for various grant purposes. This is a decrease of $224,512 which is the result of a transfer out to the downtown parking fund of $381,000 for needed repairs.

Proprietary Funds. The City of Grand Forks’ proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail.

Unrestricted net position of the major enterprise funds amounted to $24,891,609; sanitation ($107,793), sewer $666,733, storm sewer $2,007,834, water $10,378,898, Job Development Authority $11,691,035, and those for the Alerus Center were $254,902. The non-major funds amounted to $2,421,417 for a total unrestricted net position of $27,313,026. The total growth in the net position of proprietary funds was $2,431,395. A large part of this increase is attributable to an increase in charges for services which were up due to increased demand and various utility rate increases. The Alerus Center operating revenue was up $1,056,746 due to an increase in conventions and other events. The Sanitation Fund settled a lawsuit regarding the slope stabilization project at the landfill in the amount of $275,000 while expenses were down due to a decrease in landfill closure costs. Sales tax also increased 10%.

General Fund Budgetary Highlights

During the year there was an increase of $24,243 in appropriations between the original and final amended budget. Following are the main components of the increase:

• A net decrease of $473,344 in appropriation in general government for wage market adjustments, transfer of budgeted health and public safety wage market adjustments in general government to public health and public safety functions. • $86,940 appropriation in health and welfare for wage market adjustment, an increase in contracted personnel services and a replacement vehicle. • $263,405 appropriation in public safety for wage market adjustment, an increase in sponsored seminar expenditures, overtime wages and callout reimbursements. • $45,843 appropriation in highways and streets to cover wage market adjustment and an increase in overtime. • An increase of $101,399 in appropriation for capital outlay for upgrades to air conditioning and security cameras in city hall, a new vehicle for the health department, computer server for engineering and new software.

Increases in appropriations were funded from unanticipated revenues and appropriated but unspent funds from prior years (departmental cash carryovers).

Capital Assets and Debt Administration

Capital Assets. The City of Grand Forks’ investment in capital assets for its governmental and business type activities as of December 31, 2012, amounts to $519,238,762 (net of accumulated depreciation). This investment in capital assets includes land, buildings, improvements other than buildings, machinery and equipment, work in progress, and infrastructure. The investment in capital assets in governmental funds increased by 2.5% and in business type activities increased

13 by .01%, resulting in a total increase in the City’s investment in capital assets for the current fiscal year compared to fiscal year 2011 of .85%.

Major capital asset events during the current fiscal year included the following:

• Work on sewermains, storm-sewermains, watermains, stormwater ponds and lift station rehab and replacement projects, and construction of underground utilities in newly developed areas of the City. • Work began on the first phase of a major rehab of Columbia Road. • Sanitation major items included the replacement of a bailer at the bailing facility. • Sewer projects included sanitary sewer, forcemain and lift station rehab projects. • Stormwater projects included storm sewer rehab projects. • The Alerus Center installed new turf in the arena which included expansion of the pit. • With the exception of minor miscellaneous work and the final paper work submission, work on the permanent flood protection project is substantially complete. • Major projects in the Water Fund included a residual pond system upgrade and various watermain replacement projects. • A variety of infrastructure projects including, paving, street lighting and traffic signals were completed in 2012.

CAPITAL ASSETS (net of depreciation)

Governmental Activities Business-type Activities Total

2012 2011 2012 2011 2012 2011 Land $ 37,428,254 $ 38,803,317 $ 13,354,713 $ 11,808,227 $ 50,782,967 $ 50,611,544 Building & Structures 29,691,531 30,168,862 162,890,106 159,213,793 192,581,637 189,382,655 Improvement other than buildings 57,212,525 58,223,167 146,719,447 149,095,189 203,931,972 207,318,356 Machinery and equipment 7,900,829 8,241,015 14,880,995 14,840,782 22,781,824 23,081,797 Infrastructure 41,132,820 37,322,290 41,132,820 37,322,290 Construction in Progress 1,766,655 834,756 323,719 131,926 2,090,374 966,682 Total $ 175,132,614 $ 173,593,407 $ 338,168,980 $ 335,089,917 $ 513,301,594 $ 508,683,324 Internal Service Fund Capital Assets net of accumulated depreciation $ 5,937,168 $ 3,124,897 $ - $ 3,035,715 5,937,168 6,160,612 $ 181,069,782 $ 176,718,304 $ 338,168,980 $ 338,125,632 $ 519,238,762 $ 514,843,936

Additional information on the City of Grand Forks’ capital assets can be found in note III.C on pages 53-55 of this report.

Long-term Debt

At the end of the current fiscal year, the City of Grand Forks had total bonded and state revolving fund loan debt outstanding of $173,395,957. Of this amount, $9,842,270 comprises debt backed by the full faith and credit of the City and $48,243,123 is special assessment debt for which the government is liable in the event of default by the property owners subject to the assessment. The remaining $115,310,564 of this debt represents bonds secured solely by specified revenue sources (i.e., revenue bonds). Other long-term liabilities total $19,561,448 which will be funded through a variety of revenue sources.

14 CITY OF GRAND FORKS – OUTSTANDING DEBT

City of Grand Forks Outstanding Debt

Governmental Business-Type Total Total Activities Activities 12/31/2012 12/31/2011

General Obligation Bonds $ 10,440,000 $ 10,440,000 $ 13,740,000 Unamortized Premium 55,909 55,909 62,058 Unamortized Discount (38,709) (38,709) (41,506) Unamortized Def Amt on Refunding (614,930) (614,930) (703,835) Special Assessment with GO commitment 47,799,000 47,799,000 61,860,000 Unamortized Premium 819,455 819,455 573,833 Unamortized Discount (163,126) (163,126) (288,447) Unamortized Def Amt on Refunding (212,206) (212,206) (236,005) Sales Tax Revenue 11,140,000 53,095,000 64,235,000 67,375,000 Unamortized Premium 781,239 1,302,387 2,083,626 2,249,270 Unamortized Discount (282,741) (282,741) (299,132) Unamortized Def Amt on Refunding (3,620,142) (3,620,142) (3,830,005) Revenue bonds 26,840,000 26,840,000 24,650,000 Unamortized Premium 180,470 180,470 203,469 Unamortized Discount (197,209) (197,209) (177,900) NDBB-SRF Loans 26,071,560 26,071,560 28,951,560

Total Bonded & SRF Loan Debt 70,006,632 103,389,325 173,395,957 194,088,360 Notes 2,234,020 3,655,896 5,889,916 7,157,232 Landfill closure/postclosure 1,828,636 1,828,636 1,644,608 Special Assessments - - 9,508 Captial Leases 595,123 595,123 807,895 Compensated Absences 4,711,834 1,368,126 6,079,960 6,099,338 Net Pension Obligation 5,131,000 - 5,131,000 4,950,000 Total Debt Outstanding $ 82,083,486 $ 110,837,106 $ 192,920,592 $ 214,756,941 Internal Serivce Fund long-term compensated absences 36,813 - 36,813 33,310 $ 82,120,299 $ 110,837,106 $ 192,957,405 $ 214,790,251

The City's total debt decreased by $21,832,846 during the current fiscal year.

The City's total bonded and State Revolving Fund Loan debt decreased by $20,692,403 during the current fiscal year.

The City’s total debt decreased by $21,832,846 during the current fiscal year.

During the current year the City issued $5,290,000 in special assessment bonds to finance various improvement projects in the city limits and to refund the Refunding Improvement Bonds, Series 2003B and the Refunding Improvement Bonds, Series 2002F in the amounts of $1,630,000 and $365,000 respectively. As a result of this refunding, the City is expected to realize a total future value benefit of $656,804 with a net present value benefit of $463,594.

The City also issued $3,880,000 of Water Reserve Revenue bonds to finance water pond system improvements.

Also in 2012, the City paid off the 2001C Refunding Bonds (State Revolving Fund Loan) of $5,640,000 from cash on hand and completed the crossover refunding of the 2003A Refunding Improvement Bonds and the 2002G General Obligation Dike Bonds in the amounts of $5,755,000 and $2,215,000 respectively.

The City continues to use North Dakota State Revolving Loan funds to finance its water and wastewater projects.

In 2006, the Jobs Development Authority entered into loan agreements with Bremer Bank in the amount of $6,500,000 for Cirrus Design Corporation and $3,487,500 for LM Wind Power. These loan agreements were for the expansion projects of LM Wind Power and Cirrus Design Corporation. The loan payments will be made by the JDA and collected through lease payments from LM Wind Power and Cirrus Design Corporation from 2006 to 2021. The total amount outstanding on these loans is $3,655,896.

The City of Grand Forks bonds continue to receive excellent ratings and interest rates. The following issues were sold during this fiscal year and received rating and interest rates as follows:

2012A Refunding Improvement and 2.171% Aa2 Refunding Bonds 2012B Water Reserve Revenue Bonds 2.511% Aa2

State statutes limit the amount of general obligation debt a government entity may issue to five percent of its total assessed valuation. The current debt limitation for the City of Grand Forks is $79,750,155, which is significantly in excess of the City’s outstanding net general obligation debt of $11,347,908 (Table 15A, page 177).

Additional information on the City of Grand Forks long-term debt can be found in note III.F on pages 59-64 of this report.

Economic Factors and Next Year’s Budget and Rates

North Dakota’s statewide economy is thriving. This is largely due to the oil extraction activities in the western part of the state. The local economy is also very strong. Much of our local economy stems from traditional economic sectors such as agriculture and retail in addition to a strong State economy and the presence of the University of North Dakota and the Grand Forks Air Base. We are poised to continue building our economy in areas of aviation, energy, medicine, border security and other research and commercial sectors.

Local sales tax increased 10% and state aid (the city’s share of state sales tax) increased 29% over 2011. The value of the local tax base is growing, especially residential construction. In 2012, property tax increased 2.1%.

With the oil boom in the western part of North Dakota, we are also seeing positive economic impacts locally. Some new businesses are locating in Grand Forks and many local businesses are benefiting from increased commercial activity in the oil patch.

16 should be online in the spring of 2017. Over approximately twenty four months of construction, the workforce will peak at about 2,000 workers in all facets of construction such as welders, electricians, instrument technicians and machine operators. Once completed the plant will employ about 135 full time employees.

The Grand Forks Air Force Base is working with the University of North Dakota and Northrop Grumman to create a new high-tech UAS Technology and Training complex on unused space at the Air Base.

In addition, North Dakota is among the states vying to become a UAS pilot training site for the Federal Aviation Administration. A decision is expected to be made in 2013. While many states in the nation are scrounging for ways to repair budget deficits, our state, the State of North Dakota, had a very large surplus at the end of 2012. In fact, the state’s budget reserve by June 30, 2015 is expected to be $2.655 billion. In addition, the State Legacy Fund, which can not be accessed until 2017, is projected to be $2.98 billion.

The Alerus Center and the Ralph Engelstad Arena continue to be major economic engines for the community. The Alerus Center is the number one trade-show, conference and ballroom complex in the State and the region. The Ralph Engelstad Arena led the nation for NCAA Division 1 men’s hockey home attendance in the 2012-2013 season, averaging 11,592 fans per game in its’ 21 home games. Both of these venues bring thousands of visitors to our city each year.

City’s CPI increase was 2.1 percent for 2012 equal to the average U.S. city increase of 2.1 percent. The City’s 3.4 percent unemployment rate was much lower than the national unemployment rate of 8.1 percent for 2012.

Taxable sales and purchases for the City of Grand Forks have increased according to the North Dakota State Tax Department. Taxable sales and purchases were $1.2 billion in 2012 as compared to $1.1 billion in 2011.

All of the statistical information stated above was considered in completing the City of Grand Forks’ budget for the 2013 fiscal year. Our economic environment has been stable and Grand Forks is now seeing definite signs of a growing economy. Sales tax revenue continues on an upward trend it was up 7% in 2011 and 10% in 2012. The City’s share of state sales tax increased 29% in 2012 over the prior year.

The City has experienced a moderate growth in valuation due to new construction and revaluation. Property taxes generated by new construction and valuation increases are estimated

17 to be 3.08%, .74% for property revaluation and 2.34% for new construction. In 2013 the value of a mill is expected to increase from $148,899 to $153,481 per mill. The mill levy for the City of Grand Forks’ 2013 budget is increasing by 1 mill to 110.07 mills compared to 2012. This mill will be set aside for the addition of a fire station in the southeast part of the city in 2016. The Mayor, administration and City Council are making a consistent effort to reduce the burden of property taxes to the residents of the City of Grand Forks, while still producing a fiscally sound budget.

The total budget appropriation for 2013 which includes operating, capital and debt service expenditures is $130 million compared to $128 million in 2012, an increase of 1.76%. The increase is largely due to increases in fuel and utility costs as well as a 2.71% average increase in wages and 1% increase in pension expense per the North Dakota State Legislature for those employees in the NDPERS pension plan.

There is a decrease in capital projects from $29.4 million in the 2012 budget to $25.5 million in 2013 budget, a decrease of $3.8 million. The 2013 budget of $25.5 million in capital improvement projects include $2.4 million in utility infrastructure projects, $2.8 million of facilities and buildings, $16 million in streets and bikepath projects and $4.1 million of equipment replacement. Some of the larger projects planned for 2013 include various street reconstruction projects, planning for a new water treatment plant, rehabilitation of the Central Parking Ramp, various utility infrastructure projects and the replacement of a transit vehicle and two garbage trucks.

The recommended rate increases for the 2013 budget for Utility service charges are 4% for water, 4% for wastewater, 7% for storm sewer, 7% for flood protection/greenway and a 3.5% increase for sanitation. User fees and charges are established to promote efficiency by shifting payment of costs to specific users of services and avoiding general taxation.

The City continues to invest in infrastructure to keep retail vibrant and in partnerships throughout the region to create economic opportunities in the areas of aviation, energy, medicine, border security and other research and commercial sectors.

Request for Information

This financial report is designed to provide a general overview of the City of Grand Forks finances and to demonstrate the City’s accountability for the money it receives to the citizens of Grand Forks. If you have any questions concerning any of the information provided in this report or need further information, contact the City of Grand Forks Office of Finance and Administrative Services, 255 North 4th St. P.O. Box 5200, Grand Forks, North Dakota 58206- 5200.

18 Exhibit 1

CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF NET POSITION December 31, 2012 Primary Government Component Unit Governmental Business-type GF Regional Activities Activities Total Airport Authority ASSETS Cash and cash equivalents $ 12,459,532 $ 6,348,939 $ 18,808,471 $ 4,028,174 Investments 36,117,702 2,300,000 38,417,702 32,142 Receivables Accounts 825,108 4,070,672 4,895,780 306,837 Property taxes 329,960 2,305 332,265 20,358 Capital lease receivable 7,795,830 7,795,830 Special assessments 824,050 893,919 1,717,969 Deferred special assessments 37,396,076 37,396,076 Sales tax 928,489 724,375 1,652,864 Notes receivable 2,412,573 4,605,327 7,017,900 Due from other governments 2,797,956 505,761 3,303,717 296,691 Internal balances (1,562,801) 1,562,801 - Inventories 115,629 435,113 550,742 25,781 Assets held for resale - - - Prepaids 96,171 1,331,328 1,427,499 70,981 Deferred charges 593,298 - 593,298 Restricted assets: Cash and cash equivalents 11,246,075 11,246,075 478,500 Investments 15,571,040 15,571,040 Accounts receivable 22,259 22,259 Capital assets (net of accumulated depreciation): Land 37,708,314 13,354,713 51,063,027 1,746,081 Buildings and structures 34,673,209 162,890,106 197,563,315 14,224,086 Improvements other than buildings 57,578,710 146,719,446 204,298,156 26,760,636 Machinery and Equipment 8,208,881 14,880,996 23,089,877 2,290,296 Infrastructure 41,132,820 41,132,820 Construction-in-progress 1,767,848 323,719 2,091,567 826,148 Total assets 274,403,525 395,584,724 669,988,249 51,106,711

LIABILITIES Accounts payable 1,736,365 1,054,747 2,791,112 718,937 Contracts payable 78,399 - 78,399 51,072 Customer deposit payable 78,811 2,000 80,811 - Accrued interest payable 311,141 672,862 984,003 14,634 Compensated absences payable - 190,404 Unearned revenue 4,049,064 2,186,521 6,235,585 Retainage payable 759,154 759,154

Noncurrent liabilities: Due within one year 7,786,774 8,282,663 16,069,437 180,000 Due in more than one year 74,333,525 102,554,445 176,887,970 3,970,000 Total liabilities 88,374,079 115,512,392 203,886,471 5,125,047

NET POSITION

Net investments in capital assets 108,829,130 236,054,053 344,883,183 41,646,175 Restricted for: Debt Service 49,658,038 13,285,103 62,943,141 478,500 Infrastructure and Capital Projects 16,705,621 307,868 17,013,489 Library 1,343,358 1,343,358 Economic Development 3,455,005 3,455,005 Community Development 379,668 379,668 Emergency 984,149 984,149 Other purposes 417,483 101,024 518,507 Unrestricted 4,256,994 30,324,284 34,581,278 3,856,989 Total net position $ 186,029,446 $ 280,072,332 $ 466,101,778 $ 45,981,664

The notes to the financial statements are an integral part of this statement.

20 CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 2 STATEMENT OF ACTIVITIES FOR THE YEAR ENDED DECEMBER 31, 2012

Program Revenues Net (Expense) Revenue and Chjanges in Net Position Operating Capital Primary Government Component Unit Charges for Grants & Grants & Governmental Business-type Regional Airport Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Authority Primary government:

Governmental activities: General government $ 14,634,258 $ 6,865,735 $ 2,906,568 $ - $ (4,861,955) $ (4,861,955) Health and welfare 2,602,529 747,414 1,130,023 (725,092) (725,092) Public safety 19,122,732 1,911,542 1,868,904 524,364 (14,817,922) (14,817,922) Highways and Streets 5,780,505 49,035 3,322,345 1,213,893 (1,195,232) (1,195,232) Culture and recreation 1,737,105 45,765 643,850 - (1,047,490) (1,047,490) Public Works 4,179,045 - - 3,561,581 (617,464) (617,464) Interest on long-term debt 3,706,349 (3,706,349) (3,706,349) Total governmental activities 51,762,523 9,619,491 9,871,690 5,299,838 (26,971,504) (26,971,504)

Business-type activities: Sanitation 7,792,809 8,119,857 $ 327,048 327,048 Wastewater 8,502,137 8,178,056 218,275 (105,806) (105,806) Waterworks 9,063,768 8,783,984 109,843 (169,941) (169,941) Stormwater 2,500,655 2,105,626 1,433,330 1,038,301 1,038,301 Mosquito Control 656,754 812,942 15,000 171,188 171,188 Public Transit 2,550,478 526,513 1,277,945 52,110 (693,910) (693,910) Dial-A-Ride 729,942 2,633 347,605 (379,704) (379,704) Alerus 9,226,064 4,643,761 44,185 (4,538,118) (4,538,118) Job Development Authority 2,211,890 2,298,244 233,017 593,770 913,141 913,141 Downtown Parking 344,326 483,983 139,657 139,657 Total business-type activities 43,578,823 35,955,599 1,873,567 2,451,513 - (3,298,144) (3,298,144) Total primary government $ 95,341,346 $ 45,575,090 $ 11,745,257 $ 7,751,351 $ (26,971,504) $ (3,298,144) $ (30,269,648)

Component units: Regional Airport Authority $ 7,232,631 $ 3,832,381 $ 4,045,300 $ 645,050 Total component units $ 7,232,631 $ 3,832,381 $ - $ 4,045,300 $ 645,050

General revenues: Property taxes levied for general purpose $ 14,867,273 $ 836,047 $ 15,703,320 $ 869,770 Property taxes levied for debt service 813,235 813,235 Sales taxes 10,941,495 8,554,897 19,496,392 Unrestricted state aid distribution 4,271,719 4,271,719 Franchise taxes 2,112,520 2,112,520 Other taxes 496,779 19,129 515,908 Unrestricted investment earnings 999,883 1,032,021 2,031,904 17,631 Gain on sale of capital assets - 29,893 29,893 4,239 Miscellaneous 435,595 536,265 971,860 80,928 Lawsuit Settlement 275,000 275,000 Transfers (1,935,906) 1,935,906 - Total general revenue and transfers 33,002,593 13,219,158 46,221,751 972,568 Change in net assets 6,031,089 9,921,014 15,952,103 1,617,618 Net position - beginning 179,998,357 270,151,318 450,149,675 44,364,046 Net position - ending $ 186,029,446 $ 280,072,332 $ 466,101,778 $ 45,981,664

The notes to the financial statements are an inergral part of this statement. Exhibit 3

CITY OF GRAND FORKS, NORTH DAKOTA BALANCE SHEET GOVERNMENTAL FUNDS

DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2011

Debt Service Special Funds Revenue Fund Other 2012 2011 Special Non-Major Total Total General Assessment Community Governmental Governmental Governmental Fund Bonds Development Funds Funds Funds ASSETS Cash and cash equivalents $ 1,104,772 $ 641,736 $ 2,053,464 $ 8,233,637 $ 12,033,609 $ 18,570,155 Investments 9,500,000 8,617,702 18,000,000 36,117,702 39,493,989 Receivables, net: - Accounts 720,758 617 103,733 825,108 756,186 Special assessments (including liens) 378,646 436,388 9,016 824,050 1,076,979 Deferred special assessments 37,348,455 47,621 37,396,076 40,921,830 Property taxes 249,242 80,718 329,960 159,460 Sales tax 420,960 507,529 928,489 864,270 Notes 2,412,573 - 2,412,573 2,785,704 Intergovernmental 1,529,337 4,543 1,264,076 2,797,956 3,638,278 Assets held for resale - 299,518 Prepaid Items 94,074 94,074 6,000 Due from other funds 415,000 1,943,333 2,358,333 2,084,096 Advances to other funds 28,901 - 28,901 28,901

Total assets $ 14,347,616 $ 47,044,281 $ 4,471,197 $ 30,283,737 $ 96,146,831 $ 110,685,366

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 1,086,477 11,500 $ 109,239 $ 524,439 $ 1,731,655 $ 1,739,819 Contracts payable 20,096 58,303 78,399 262,142 Surety deposits 78,811 78,811 75,740 Due to other funds 415,000 415,000 220,000 Advance from other funds 504,777 504,777 569,677 Deferred revenue 558,939 37,784,844 3,962,194 201,933 42,507,910 46,523,803

Total liabilities 1,724,227 37,796,344 4,091,529 1,704,452 45,316,552 49,391,181

Fund Balances: Non-spendable: 28,901 28,901 328,419 Restricted 9,247,937 379,668 25,412,648 35,040,253 48,017,485 Committed 1,648,730 3,166,637 4,815,367 3,073,976 Assigned 1,857,439 1,857,439 2,275,983 Unassigned 9,088,319 9,088,319 7,598,322

TOTAL FUND BALANCE (DEFICIT) 12,623,389 9,247,937 379,668 28,579,285 50,830,279 61,294,185

Total Liabilities and Fund Balance $ 14,347,616 $ 47,044,281 $ 4,471,197 $ 30,283,737 $ 96,146,831 $ 110,685,366

The accompanying notes to the financial statements are an integral part of this statement.

22 Exhibit 3 (con't)

CITY OF GRAND FORKS, NORTH DAKOTA Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position December 31, 2012

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

Total Fund Balance - Governmental Funds $ 50,830,279

Capital Assets used in governmental activities are not financial resources and therefore not reported in the fund financial statements: Land $ 37,428,254 Construction in progress 1,766,655 Infrastructure net of depreciation 41,132,820 Buildings net of depreciation 29,691,531 Machinery & Equipment net of depreciation 7,900,829 Improvement Other Than Buildings net of depreciation 57,212,525 175,132,614 175,132,614

Liabilities that are not due and payable in the current period and therefore not reported in the governmental funds: Bonds Payable $ 69,379,000 Deferred Amount on Refunding (827,136) Notes Payable 2,234,020 Compensated Absences 4,711,834 Net Pension Obligation 5,131,000 Accrued Interest Payable 311,141 80,939,859 (80,939,859)

Unamortized Discount/Premium and Bond Issue Costs (861,470)

Tax revenues in the governmental funds were not recorded (deferred) because they were not collected within 60 days after year end. The accrual basis recognizes these revenues as earned 38,458,846

Assets or liabilities of internal service funds that primarily serve governmental funds 3,409,036

Net Position of Governmental Activities $ 186,029,446

23 Exhibit 4

CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2012 WITH COMPARATIVE TOTALS FOR DECEMBER 31, 2011 Special Other Total Total Debt Service Revenue Non-Major Governmental Governmental General Special Community Governmental Funds Funds Fund Assessments Development Funds 2012 2011 REVENUES Taxes: Property $ 12,120,178 3,497,855 $ 15,618,033 $ 15,263,574 Sales 4,973,338 5,968,157 10,941,495 9,946,223 Licenses and permits 1,806,907 1,806,907 1,735,385 Intergovernmental 5,154,994 $ 2,895,566 8,402,759 16,453,319 14,846,338 Charges for services 5,542,853 59,404 1,228,888 6,831,145 6,777,101 Special assessments $ 7,036,219 104,273 7,140,492 7,613,680 Fines and forfeits 936,279 22,356 958,635 819,005 Investment earnings 230,806 288,229 22,545 452,954 994,534 827,756 Miscellaneous 2,252,343 120,948 38,268 149,472 2,561,031 2,858,221 Total revenues 33,017,698 7,445,396 3,015,783 19,826,714 63,305,591 60,687,283

EXPENDITURES Current: General government 9,399,210 2,574,273 1,755,951 13,729,434 14,394,064 Health & welfare 1,718,457 854,975 2,573,432 2,539,420 Public safety 14,713,287 3,434,227 18,147,514 16,930,756 Highway & streets 3,281,431 385,694 3,667,125 3,736,947 Culture and recreation 1,714,234 1,714,234 1,751,306 Debt service: Principal 9,511,000 2,420,000 11,931,000 7,959,040 Defeasance costs - - Advance Refunding Escrow - 37,810 Interest and fiscal charges 2,232,323 1,459,337 3,691,660 3,531,008 Bond issuance costs 54,086 54,086 222,471 Contractual services 7,021 7,021 48,988 Capital outlay: Public works 789,501 602,532 9,892,252 11,284,285 10,018,332 Total expenditures 29,901,886 11,804,430 3,176,805 21,916,670 66,799,791 61,170,142 Excess (deficiency) of revenues over (under) expenditures 3,115,812 (4,359,034) (161,022) (2,089,956) (3,494,200) (482,859)

OTHER FINANCING SOURCES (USES) Transfers in 112,325 2,518,610 223,784 7,218,997 10,073,716 9,582,297 Transfers out (2,219,968) (2,403,708) (381,000) (5,512,410) (10,517,086) (9,766,189) Bonds issued 2,120,166 3,169,834 5,290,000 8,525,000 Issuance of refunding bonds - 12,950,000 Redemption of refunded bonds (9,840,000) (2,390,000) (12,230,000) (11,570,604) Bond (discount) premium 301,211 301,211 1,067,093 Sale of capital assets 15,143 93,726 3,584 112,453 38,259

Total other financing sources and uses (2,092,500) (7,604,932) (63,490) 2,791,216 (6,969,706) 10,825,856

Net change in fund balances 1,023,312 (11,963,966) (224,512) 701,260 (10,463,906) 10,342,997

Fund balances - beginning 11,600,077 21,211,903 604,180 27,878,025 61,294,185 50,951,188

Fund balances - ending $ 12,623,389 $ 9,247,937 $ 379,668 $ 28,579,285 $ 50,830,279 $ 61,294,185

The notes to the financial statements are an integral part of this statement.

24 Exhibit 4 (con't)

CITY OF GRAND FORKS, NORTH DAKOTA Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended December 31, 2012

Amounts reported for governmental activities in the statement of activities (page 21) are different because:

Net change in fund balances - total governmental funds (page 24) $ (10,463,906)

Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities the cost of capital assets is allocated over the estimated useful lives as depreciation expense. In the current period, these amounts are:

Capital outlays $ 9,172,146 Depreciation expense - current year (5,192,130) 3,980,016 3,980,016

Gross proceeds from the sale of capital assets is reported as revenue in the governmental fund. However, in the statement of activities only the gain or loss on the sale transaction is reported (112,453)

Loss on disposition of capital assets (781,870) Transfer out of governmental capital asset to business type activity fund (1,546,486)

Bond proceeds are reported as financing sources in governmental funds and thus contribute to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position.

Debt issued: Special Assessment Refunding Bonds $ (5,290,000) General Obligation Bonds $ - Sales Tax Revenue Bonds $ - Sidewalk Warrants - Bond issuance costs 54,086 Bond discount/premium (301,211) Repayments: Bond Principal 24,161,000 Amortization of advanced refunding cost - Bond deferred charges amortization (112,704) Bonds discount and issuance cost amortization (30,707) Net Adjustment 18,480,464 18,480,464

Certain items reported in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. These activities consist of:

Change in accrued interest payable 135,743 Change in compensated absences 58,290 Change in net pension obligation (181,000)

Change in revenue accruals - the purpose of this adjustment is to recognize the net change in unavailable revenues. Under the modified accrual basis of accounting, revenues are not recognized unless they are deemed 'available' to finance the expenditures of the current period. In accrual basis recognition is not limited by availability. This adjustment records a net change in deferred revenues Deferred revenue December 31, 2012 $ 38,458,846 Deferred revenue December 31, 2011 (42,047,335) Net change (3,588,489) (3,588,489)

Internal service funds are used by the City to charge the cost of the Central Garage, Public Works Facility, Central Purchasing and Information Systems. the net revenue of internal service funds is reported with governmental activities. 50,780

Change in net position of governmental activities (Exhibit 2) $ 6,031,089

25 Exhibit 5

CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND

Year Ended December 31, 2012 With Comparative Actual Totals for Year Ended December 31, 2011

Variance with 2012 Final Budget 2011 Original Budget Actual Positive Actual Budget As Amended Amounts (Negative) Amounts REVENUES Taxes: Property $ 12,396,900 $ 12,396,900 $ 12,120,178 $ (276,722) $ 11,804,230 Sales 4,433,432 4,433,432 4,973,338 539,906 4,520,947 Licenses and permits 1,362,090 1,362,090 1,806,907 444,817 1,735,385 Intergovernmental 3,393,992 3,427,050 5,154,994 1,727,944 4,262,039 Charges for services 5,383,246 5,466,524 5,542,853 76,329 5,458,294 Fines and forfeits 776,300 776,300 936,279 159,979 799,059 Interest 167,626 167,626 230,806 63,180 174,918 Miscellaneous 2,198,735 2,261,292 2,252,343 (8,949) 2,317,819

Total Revenues 30,112,321 30,291,214 33,017,698 2,726,484 31,072,691

EXPENDITURES Current: General Government: Assessor 670,154 688,119 650,340 37,779 662,697 Attorney 255,900 301,794 310,231 (8,437) 241,029 Finance and Administrative Services 1,162,206 1,159,707 1,121,713 37,994 1,128,793 Planning & Zoning 374,483 364,368 361,662 2,706 390,064 City Hall 320,327 259,651 258,814 837 314,550 Information Services 836,132 859,593 852,862 6,731 825,276 Engineering 1,873,918 1,885,142 1,826,529 58,613 1,718,654 Inspections 1,017,331 1,024,647 985,155 39,492 948,726 Mayor and Council 328,272 379,580 378,446 1,134 347,995 City Administrator 263,432 281,582 280,402 1,180 260,734 Public Information Center 206,083 205,947 200,778 5,169 196,435 Miscellaneous 2,251,046 1,628,316 1,550,583 77,733 1,457,255 Human Resources 570,665 618,159 621,695 (3,536) 555,158

Total General Government 10,129,949 9,656,605 9,399,210 257,395 9,047,366

Health and Welfare: Health 1,761,259 1,848,199 1,718,458 129,741 1,681,775

Total Health and Welfare 1,761,259 1,848,199 1,718,458 129,741 1,681,775

Continued

26 Exhibit 5

CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND

Year Ended December 31, 2012 With Comparative Actual Totals for Year Ended December 31, 2011

Variance with 2012 Final Budget 2011 Original Budget Actual Positive Actual Budget As Amended Amounts (Negative) Amounts

Public Safety: Fire $ 5,829,999 $ 5,760,652 $ 5,657,470 $ 103,182 $ 5,580,745 Municipal Court 626,944 633,402 588,752 44,650 606,286 Police 7,965,178 8,263,382 8,084,292 179,090 7,803,645 Training & Evidence Facility 15,494 15,494 10,905 4,589 16,598 Police Building 298,375 312,167 266,476 45,691 242,104 Public Safety Training Center 66,084 74,225 51,881 22,344 43,950 Emergency Program Management 48,108 54,265 53,511 754 49,706

Total Public Safety 14,850,182 15,113,587 14,713,287 400,300 14,343,034

Highways and Streets: Street 3,503,370 3,549,213 3,281,430 267,783 3,384,821

Total Highway and Streets 3,503,370 3,549,213 3,281,430 267,783 3,384,821

Capital Outlay 826,785 928,184 789,501 138,683 799,345

Total Expenditures 31,071,545 31,095,788 29,901,886 1,193,902 29,256,341 Excess (Deficiency) of Revenues Over Expenditures (959,224) (804,574) 3,115,812 3,920,386 1,816,350

OTHER FINANCING SOURCES (USES) Sale of property - 6,294 15,143 8,849 11,081 Transfers in 1,276,535 1,277,715 112,325 (1,165,390) 1,122,863 Transfers out (682,429) (2,213,541) (2,219,968) (6,427) (838,726)

Total Other Financing Sources (Uses) 594,106 (929,532) (2,092,500) (1,162,968) 295,218

Net Change in Fund Balance (365,118) (1,734,106) 1,023,312 2,757,418 2,111,568

Fund Balances - Beginning 11,600,077 11,600,077 11,600,077 7,762,156

GASB 54 Adjustment 1,726,353

Fund balance-Beginning Restated 11,600,077 11,600,077 11,600,077 9,488,509

Fund Balances - Ending $ 11,234,959 $ 9,865,971 $ 12,623,389 $ 2,757,418 $ 11,600,077

Notes to the financial statements are an integral part of this statement.

27 Exhibit 5A CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL SPECIAL REVENUE - COMMUNITY DEVELOPMENT FUND

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

Community Development Variance with 2012 Final Budget 2011 Original Budget Actual Positive Actual Budget As Amended Amounts (Negative) Amounts Revenues: Taxes: Intergovernmental $ 1,545,599 $ 2,554,249 $ 2,895,566 $ 341,317 $ 2,712,436 Charges for services 50,000 50,000 59,404 9,404 50,653 Fines forfeits Interest 15,000 15,000 22,545 7,545 26,199 Miscellaneous 38,268 38,268 11,274

Total Revenues 1,610,599 2,619,249 3,015,783 396,534 2,800,562

Expenditures: Current: General government 1,834,383 2,709,538 2,574,273 135,265 3,464,441 Debt service: Principal payment Interest and fiscal charges Capital Outlay: Public works 554,525 602,532 (48,007) 36,503 Total Expenditures 1,834,383 3,264,063 3,176,805 87,258 3,500,944

Excess (Deficiency) of Revenues Over Expenditures (223,784) (644,814) (161,022) 483,792 (700,382)

Other Financing Sources (Uses): Bonds issued Transfers in 223,784 223,784 223,784 281,063 Transfers Out (380,600) (380,600) (381,000) (400) Sale of capital assets 16,500 93,726 77,226 27,178 Total Other Financing Sources (Uses) (156,816) (140,316) (63,490) 76,826 308,241

Net change in fund balance (380,600) (785,130) (224,512) 560,618 (392,141)

Fund Balances (Deficits) at Beginning of Year 604,180 604,180 604,180 996,321

Fund Balances (Deficits) at End of Year $ 223,580 $ (180,950) $ 379,668 $ 560,618 $ 604,180

Notes to the financial statements are an integral part of this statement.

28 Exhibit 6 CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2012 BUSINESS TYPE ACTIVITIES - ENTERPRISE FUNDS Governmental Job Non Major Total Activities- Sanitation Sewer Storm Sewer Water Alerus Development Enterprise Enterprise Internal Fund Fund Fund Fund Center Authority Funds Funds Service Funds ASSETS Current Assets: Cash and cash equivalents $ 130,798 $ 478,748 $ 435,411 $ 447,241 $ 328,069 $ 3,089,824 $ 1,438,848 $ 6,348,939 $ 425,923 Investments 200,000 500,000 500,000 600,000 500,000 2,300,000 Restricted cash, cash equivalents, and investments: Customer deposits 2,000 2,000 Construction account 675 1,172,533 641,728 7,300,519 69 9,115,524 Concert fund 101,023 101,023 Trust acct..-advance ticket sales/suite rev. 2,037,428 2,037,428 Revenue bond construction account 31,965 450,066 482,031 Revenue bond current debt service acct. 317,190 1,042,046 175,762 685,418 4,551,303 36,869 6,808,588 Receivables (net of allowances for uncoll.): Accounts 851,944 780,908 176,339 727,657 655,116 619,873 258,835 4,070,672 Capital Lease Receivable 7,795,830 7,795,830 Notes Receivable 4,605,327 4,605,327 Taxes - property 2,305 2,305 Taxes - sales 724,375 724,375 Special assessments 3,874 661,431 228,614 893,919 Due from other funds - 90,000 Advances to other funds 1,341,855 1,341,855 Intergovernmental: Federal government 361,865 361,865 State of North Dakota 143,896 143,896 Restricted receivables: Accounts Receivable 22,259 22,259 Inventories 268,099 71,134 95,880 435,113 115,629 Prepaid items 143,080 100,862 10,868 128,217 904,184 19,378 24,739 1,331,328 2,097 Total current assets 1,475,652 3,578,971 2,301,539 11,851,072 10,123,505 16,730,232 2,863,306 48,924,277 633,649

Noncurrent Assets: Restricted cash, cash equivalents, and investments: Revenue bond reserve account 856,431 3,170,565 532,949 1,806,070 300,000 110,500 6,776,515 Reserved for Landfill Closure 1,494,006 1,494,006 Total restricted cash, cash equivalents, and investments 2,350,437 3,170,565 532,949 1,806,070 300,000 110,500 8,270,521 Deferred Charges 120,107 30,814 6,316 31,186 282,741 8,785 479,949 Capital Assets: Land 1,831,896 242,861 658,609 735,883 2,944,898 6,579,740 360,826 13,354,713 280,060 Buildings 5,081,798 67,686,857 5,702,816 43,306,263 83,869,866 14,711,134 3,714,253 224,072,987 7,244,634 Improvements other than buildings 15,713,716 91,213,946 47,438,932 66,957,768 1,391,061 1,374,906 1,184,194 225,274,523 420,500 Machinery and equipment 13,302,749 2,773,995 695,679 5,917,668 6,958,731 17,151 6,400,836 36,066,809 1,637,476 Construction in progress 164,372 13,051 51,276 64,340 30,680 323,719 1,193 Less accumulated depreciation (16,003,686) (59,233,040) (12,095,459) (40,329,441) (24,080,332) (4,155,065) (5,026,748) (160,923,771) (3,646,695) Total Capital Assets (net of accumulated depreciation) 19,926,473 102,848,991 42,413,628 76,639,417 71,148,564 18,527,866 6,664,041 338,168,980 5,937,168 Total Noncurrent Assets 22,397,017 106,050,370 42,952,893 78,476,673 71,431,305 18,827,866 6,783,326 346,919,450 5,937,168 Total Assets $ 23,872,669 $ 109,629,341 $ 45,254,432 $ 90,327,745 $ 81,554,810 $ 35,558,098 $ 9,646,632 $ 395,843,727 $ 6,570,817 Continued Exhibit 6 CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF NET POSITION PROPRIETARY FUNDS DECEMBER 31, 2012 BUSINESS TYPE ACTIVITIES - ENTERPRISE FUNDS Governmental Job Non Major Total Activities- Sanitation Sewer Storm Sewer Water Alerus Development Enterprise Enterprise Internal Fund Fund Fund Fund Center Authority Funds Funds Service Funds LIABILITIES Current Liabilities: Accounts payable $ 214,573 $ 163,945 $ 65,262 $ 104,767 $ 366,510 $ 27,277 $ 112,413 $ 1,054,747 $ 4,710 Due to other funds 1,041,518 901,815 1,943,333 90,000 Compensated absences payable-current 49,433 15,777 434 19,446 13,398 11,112 109,600 Retainage payable 61,584 149,238 3,804 161,546 369,818 13,164 759,154 Customer deposits payable 2,000 2,000 Advance ticket and suite revenue 2,186,521 2,186,521 Accrued interest payable 168,857 244,860 27,429 110,547 104,300 16,869 672,862 Unearned revenue - grants - Capital leases payable-current 190,561 190,561 Notes payable-current 1,000,942 1,000,942 Special assessments payable - Bonds payable-current 445,000 2,466,560 445,000 1,460,000 2,105,000 60,000 6,981,560 Total Current Liabilities 1,130,008 3,040,380 541,929 1,858,306 6,187,065 1,943,198 200,394 14,901,280 94,710

Noncurrent Liabilities: Compensated absences payable 341,490 298,309 21,014 324,832 28,847 244,035 1,258,527 36,813 Revenue bonds payable (net of deferred amount on refunding) 10,170,358 22,020,541 2,080,000 12,899,571 48,672,245 1,045,000 96,887,715 Capital leases payable 404,562 404,562 Notes payable 2,654,954 2,654,954 Special assessments payable - Advances from other funds 846,979 846,979 19,000 Landfill closure and postclosure care 1,828,636 1,828,636 Total Noncurrent Liabilities 12,745,046 23,165,829 2,101,014 13,224,403 48,701,092 2,654,954 1,289,035 103,881,373 55,813 Total Liabilities 13,875,054 26,206,209 2,642,943 15,082,709 54,888,157 4,598,152 1,489,429 118,782,653 150,523

NET POSITION Net investment in capital assets 8,931,787 78,543,788 39,894,944 62,374,650 21,451,625 19,268,911 5,588,348 236,054,053 5,937,168 Net position-restricted Debt Service 1,173,621 4,212,611 708,711 2,491,488 4,551,303 147,369 13,285,103 Concert fund 101,024 101,024 Capital 307,799 69 307,868 Net position-unrestricted (107,793) 666,733 2,007,834 10,378,898 254,902 11,691,035 2,421,417 27,313,026 483,126 Total Net Position $ 9,997,615 $ 83,423,132 $ 42,611,489 $ 75,245,036 $ 26,666,653 $ 30,959,946 $ 8,157,203 $277,061,074 $6,420,294

Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 3,011,258 Net assets of business-type activities $ 280,072,332

The notes to the financial statements are an integral part of this statement. CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 7 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION-PROPRIETARY FUNDS

Year Ended December 31, 2012 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS Governmental Job Non-Major Activities- Sanitation Sewer Storm Sewer Water Alerus Development Enterprise Totals Internal Fund Fund Fund Fund Center Authority Funds 2012 Service Funds Operating Revenues: Charges for sales and services: Utility fees $ 8,093,757 $ 8,177,056 $ 2,105,626 $ 8,731,128 $ $ $1,341,214 $ 28,448,781 Rents - concessions and other 4,643,761 2,244,051 6,887,812 Operating assessment 483,983 483,983 $ 1,496,169 Miscellaneous 26,100 1,000 52,856 54,193 874 135,023

Total Operating Revenues 8,119,857 8,178,056 2,105,626 8,783,984 4,643,761 2,298,244 1,826,071 35,955,599 1,496,169

Operating Expenses: Salaries and wages 1,658,089 1,102,276 273,046 1,467,099 2,074,504 205,916 1,201,626 7,982,556 274,091 Supplies 278,450 152,569 9,317 1,136,920 47,785 5,680 242,253 1,872,974 434,124 Contractual services 1,574,854 820,742 279,158 1,115,682 337,106 225,813 310,306 4,663,661 64,127 Maintenance - structures and equipment 1,515,256 539,146 358,166 631,834 161,395 632,219 766,671 4,604,687 214,559 Concession and Catering 739,001 739,001 Advertising and Marketing 202,046 202,046 Self Promoted Events Settlements 99,557 99,557 Sundry expenses 24,225 28,080 (25,818) 27,968 30,563 (384,063) 2,658 (296,387) 2,110 Utilities - heat and lights 79,490 727,620 101,689 467,786 441,119 260,321 80,497 2,158,522 110,521 Pension and social security 459,544 257,362 62,389 415,755 32,408 209,507 1,436,965 60,655 Administrative and general 746,620 755,764 239,437 1,008,589 203,067 539,427 792,446 4,285,350 58,936

Total Operating Expenses 6,336,528 4,383,559 1,297,384 6,271,633 4,336,143 1,517,721 3,605,964 27,748,932 1,219,123

Net Income (Loss) from Operations before Depreciation 1,783,329 3,794,497 808,242 2,512,351 307,618 780,523 (1,779,893) 8,206,667 277,046 Less - Depreciation 905,280 3,299,213 1,110,872 2,403,052 2,106,250 428,017 620,649 10,873,333 309,027

Net Operating Income (Loss) 878,049 495,284 (302,630) 109,299 (1,798,632) 352,506 (2,400,542) (2,666,666) (31,981)

Nonoperating Revenues (Expenses): Interest 35,464 69,644 23,005 120,050 89,476 664,507 28,907 1,031,053 6,313 Federal grants 184,329 1,355,084 1,539,413 State grants 48,688 285,466 334,154 General property taxes 836,047 836,047 Personal property replacements 19,129 19,129 Sales tax 8,554,897 8,554,897 Lawsuit Settlement 275,000 275,000 Miscellaneous 284,400 241 147,064 100,000 4,560 536,265 Gain (loss) on capital assets 40 10,837 (36,979) (10,035) 8,409 (27,728) 17,679 Interest expense (517,097) (801,774) (92,399) (332,754) (2,773,636) (266,152) (54,887) (4,838,699)

Total Nonoperating Revenues (Expenses) 77,807 (721,293) (69,153) (102,619) 5,860,702 731,372 2,482,715 8,259,531 23,992

Income (Loss) Before Capital Contributions and Transfers 955,856 (226,009) (371,783) 6,680 4,062,070 1,083,878 82,173 5,592,865 (7,989) Continued CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 7 STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET POSITION-PROPRIETARY FUNDS

Capital Contributions and Transfers: Capital Contributions $ 218,275 $ 1,433,330 $ 109,843 $ 44,185 $ 2,140,256 $ 52,110 $ 3,997,999 Transfers in $ 34,526 $ 97,392 834,899 454,300 1,421,117 Transfers out (58,295) (54,450) (845,252) (73,700) (1,031,697) (500)

Total Capital Contributions and Transfers 34,526 159,980 1,433,330 152,785 44,185 2,129,903 432,710 4,387,419 (500)

Change in Net Position 990,382 (66,029) 1,061,547 159,465 4,106,255 3,213,781 514,883 9,980,284 (8,489)

Total Net Position-Beginning 9,007,233 83,489,161 41,549,942 75,085,571 22,560,398 27,746,165 7,642,320 6,428,783

Total Net Position-Ending $ 9,997,615 $ 83,423,132 $ 42,611,489 $ 75,245,036 $ 26,666,653 $ 30,959,946 $ 8,157,203 $ 6,420,294

Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (59,269) Change in net position of business-type activities $ 9,921,014

The notes to the financial statements are an integral part of this statement.

CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 8 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended December 31, 2012 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS Governmental Job Non-Major Activities Sanitation Sewer Storm Sewer Water Alerus Development Enterprise Totals Internal Service Fund Fund Fund Fund Center Authority Funds 2012 Funds Cash Flows from Operating Activities: Receipts from customers $ 7,969,333 $ 8,212,390 $ 2,126,098 $ 8,805,096 $ 6,182,669 $ 1,362,860 $ 1,817,518 $ 36,475,964 $ 1,496,169 Payments to suppliers (4,470,063) (3,186,773) (982,634) (5,040,648) (2,202,389) (1,344,047) (2,401,104) (19,627,658) (944,140) Payments to employees (1,700,164) (1,095,639) (272,146) (1,453,694) (1,984,907) (205,483) (1,185,877) (7,897,910) (270,588) Payments for interfund services used (42,176) 121,413 79,237 Net cash provided (used) by operating activities 1,799,106 3,929,978 871,318 2,310,754 1,953,197 (65,257) (1,769,463) 9,029,633 281,441

Cash Flows from Non-Capital Financing Activities: Transfers from other funds 34,526 97,392 834,899 454,300 1,421,117 Transfers to other funds (58,295) (54,450) (845,252) (73,700) (1,031,697) (500) Proceeds of repayment of advances from other funds 64,900 64,900 Operating subsidies from federal grants 1,698,356 1,698,356 Operating subsidies from state grants 318,550 318,550 Operating subsidies from Taxes 467,382 862,491 1,329,873 Net cash provided (used) by non-capital financing activities 34,526 (58,295) 107,842 467,382 (10,353) 3,259,997 3,801,099 (500)

Cash Flows from Capital & Related Financing Activities: Proceeds of revenue bonds and notes 3,880,000 3,880,000 Proceeds from capital lease receivable 946,554 946,554 Proceeds from lawsuit settlement 275,000 275,000 Capital contributions 217,815 1,366,567 109,843 8,089,568 2,188,944 52,110 12,024,847 Acquisition and construction of capital assets (789,272) (1,248,087) (1,274,503) (3,620,499) (3,635,264) (2,088,201) (355,406) (13,011,232) (99,998) Principal paid on capital debt (647,772) (2,395,000) (425,000) (1,255,000) (2,030,000) (867,316) (60,000) (7,680,088) Interest paid on capital debt (519,228) (790,296) (96,452) (395,391) (2,579,819) (266,152) (53,679) (4,701,017) Net cash provided (used) by capital & related financing activities (1,681,272) (4,215,568) (429,388) (1,281,047) (155,515) (86,171) (416,975) (8,265,936) (99,998)

Cash Flows from Investing Activities: Proceeds from sales and maturities of investments 2,182,010 3,136,725 544,038 8,825,360 394,591 3,000,000 113,156 18,195,880 Purchase of investments (2,350,437) (3,170,565) (732,949) (9,606,589) (500,000) (900,000) (610,500) (17,871,040) Interest and dividends received 35,464 69,644 23,005 120,050 89,476 69,759 28,908 436,306 6,313 Net cash provided (used) by investing activities (132,963) 35,804 (165,906) (661,179) (15,933) 2,169,759 (468,436) 761,146 6,313

Net increase (decrease) in cash and cash equivalents 19,397 (308,081) 276,024 476,370 2,249,131 2,007,978 605,123 5,325,942 187,256

Cash and cash equivalents - beginning of the year 461,231 3,001,408 976,877 1,108,355 4,768,692 1,081,846 870,663 12,269,072 238,667

Cash and cash equivalents - end of the year $ 480,628 $ 2,693,327 $ 1,252,901 $ 1,584,725 $ 7,017,823 $ 3,089,824 $ 1,475,786 $ 17,595,014 $ 425,923 Continued CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 8 STATEMENT OF CASH FLOWS PROPRIETARY FUNDS Year Ended December 31, 2012 BUSINESS-TYPE ACTIVITIES - ENTERPRISE FUNDS Governmental Job Non-Major Activities Sanitation Sewer Storm Sewer Water Alerus Development Enterprise Totals Internal Service Fund Fund Fund Fund Center Authority Funds 2012 Funds

Reconciliation of operating income to net cash provided (used) by operating activities:

Operating Income (loss) $ 878,049 $ 495,284 $ (302,630) $ 109,299 $ (1,798,632) $ 352,506 $ (2,400,542) $ (2,666,666) $ (31,981)

Adjustments to reconcile operating income to net cash provided (used) by operating activities:

Depreciation Expense 905,280 3,299,213 1,110,872 2,403,052 2,106,250 428,017 620,649 10,873,333 309,027 (Increase) decrease in accounts receivable (150,524) 34,334 20,472 21,112 (147,614) (172,202) (8,553) (402,975) (Increase) decrease in inventories (19,191) (18,640) (222) (38,053) 572 (Increase) decrease in prepaid items (77,755) 4,545 (808) 2,212 (89,677) (8,788) (70) (170,341) 1,718 Increase (Decrease) in customer deposits 1,686,522 1,686,522 (Increase) decrease in notes receivable (763,182) (763,182) Increase (decrease) in accounts payable 98,299 88,033 42,840 (215,176) 214,919 (13,513) 2,923 218,325 (1,398) (Decrease) in SA payable (9,508) (9,508) Increase (decrease) in compensated absences payable (38,271) 8,569 572 9,446 42,245 16,352 38,913 3,503 (Decrease) in landfill closure/postclosure liability 184,028 184,028 Increase (decrease) in due to other funds (42,176) 121,413 79,237 Total Adjustments 921,057 3,434,694 1,173,948 2,201,455 3,751,829 (417,763) 631,079 11,696,299 313,422 Net cash provided by operating activities $ 1,799,106 $ 3,929,978 $ 871,318 $ 2,310,754 $ 1,953,197 $ (65,257) $ (1,769,463) $ 9,029,633 $ 281,441

Noncash Investing, Capital and Financing Activities: Net (decrease) in fair value of investments $ 1,600 $ 3,359 $ 3,701 $ 7,391 $ 9,841 $ 10,874 $ 36,766

Reconcilliation of cash and cash equivalents:

Current Assets: Cash and cash equivalents $ 130,798 $ 478,748 $ 435,411 $ 447,241 $ 328,069 $ 3,089,824 $ 1,438,848 $ 6,348,939

Restricted cash, cash equivalents, and investments: Customer deposits 2,000 $ 2,000 Construction account 675 1,172,533 641,728 69 $ 1,815,005 Concert fund 101,023 $ 101,023 Trust account/advance ticket sales 2,037,428 $ 2,037,428 Revenue bond construction account 31,965 450,066 $ 482,031 Revenue bond current debt service acct. 317,190 1,042,046 175,762 685,418 4,551,303 36,869 $ 6,808,588

Total Cash and Cash equivalents $ 480,628 $ 2,693,327 $ 1,252,901 $ 1,584,725 $ 7,017,823 $ 3,089,824 $ 1,475,786 $ 17,595,014

The notes to the financial statements are an integral part of this statement. Exhibit 9 CITY OF GRAND FORKS, NORTH DAKOTA STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS

DECEMBER 31, 2012

Pension Agency Trust Funds

ASSETS Cash and cash equivalents $ 4,850,314 $ 96,725 Investments at fair value: ND State Investment Board 45,473,264 Accounts receivable Taxes Receivable: Hotel/Motel 79,763 Property 1,681

Total Assets $ 50,323,578 $ 178,169

LIABILITIES Accounts payable $ - $ 119,146 Due to other agencies 59,023

Total Liabilities $ - $ 178,169

NET POSITION Held in trust for pension benefits other purposes 50,323,578

Total Net Position $ 50,323,578

The notes to the financial statements are integral part of this statement. A schedule of funding progress is presented as RSI on page 80

36 CITY OF GRAND FORKS, NORTH DAKOTA Exhibit 10 STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS

Year Ended December 31, 2012 With Comparative Totals for December 31, 2011

Pension Trust Pension Trust Fund Fund 2012 2011 Additions: Contributions: Employer contributions $ 3,410,332 $ 3,261,913 Employee contributions 574,384 608,336

Total contributions 3,984,716 3,870,249

Investment Earnings: Net appreciation (depreciation) in fair value of assets & Interest, dividends and other income 6,113,689 (436,755)

Net investment earnings 6,113,689 (436,755)

Total additions 10,098,405 3,433,494

Deductions: Benefits paid to participants 3,931,482 3,673,086 Administrative charges 209,563 219,425

Total Deductions 4,141,045 3,892,511

Change in net position 5,957,360 (459,017)

Net position - beginning 44,566,218 45,025,235

Net position - ending $ 50,523,578 $ 44,566,218

The notes to the financial statements are an integral part of this statement.

37 CITY OF GRAND FORKS, NORTH DAKOTA Notes to the Financial Statements December 31, 2012

I. Summary of significant accounting policies

Narrative Profile – The City of Grand Forks, North Dakota was incorporated in 1881. The City adopted its Home Rule Charter in 1970. It is a municipal corporation governed by an elected mayor and seven-member council. The council members are elected by wards to serve four-year staggered terms and the mayor is elected at large.

The financial statements of the City have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP), as applied to governmental units by the Governmental Accounting Standards Board (GASB). The more significant of the City’s accounting policies are described below.

A. New Accounting Pronouncements

GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position was implemented for the City for the year ended December 31, 2012. This statement identifies net position as the residual of all other elements presented in a statement of financial position. It renames net assets as net position.

GASB Statement No. 65, Items Previously Reported as Assets and Liabilities, this statement establishes accounting and financial reporting standards that reclassify, as deferred outflows of resources or deferred inflows of resources, certain items that were previously reported as assets and liabilities and recognizes, as outflows of resources or inflows of resources, certain items that were previously reported as assets and liabilities. The provisions of this Statement are effective for financial statements for periods beginning after December 15, 2012.

GASB Statement No. 67 Financial Reporting for Pension Plans, this Statement replaces the requirements of Statements No. 25, Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans, and No. 50, Pension Disclosures, as they relate to pension plans that are administered through trusts or equivalent arrangements (hereafter jointly referred to as trusts) that meet certain criteria. This statement requires defined benefit pension plans to present two financial statements – a statement of fiduciary net position and a statement of changes in fiduciary net position. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2013.

Statement No. 68, Accounting and Financial Reporting for Pensions, establishes accounting and financial reporting requirements related to pensions for governments whose employees are provided with pensions through pension plans that are covered by the scope of this Statement, as well as for nonemployer governments that have a legal obligation to contribute to those plans. This statement requires the liability of employers and nonemployer contributing entities to employees for defined benefit pensions (net pension liability) to be measured as the portion of the present value of projected benefit payments to be provided through the pension plan to current active and inactive employees that is attributed to those employees’ past periods of service (total pension liability), less the amount of the pension plan’s fiduciary net position. The provisions of this Statement are effective for financial statements for periods beginning after June 15, 2014.

39 B. Financial Reporting Entity of the City

The financial statements present the City and its component unit. Component units are legally separate organizations for which the elected officials of the City are financially accountable and are included within the basic financial statements of the City because of the significance of their operational or financial relationships with the City.

As a result of applying the component unit definition criteria above, the Grand Forks Regional Airport Authority is determined to be a component unit of the City. The Grand Forks Regional Airport Authority is a separate legal entity. The Mayor with the approval of the City Council appoints three of the five members of the Authority Board. Tax levies and bond issuance authorizations are approved by the City Council, and the legal liability for the general obligation portion of the Authority’s debt remains with the City. Thus the Authority activities are discretely presented in a separate column in the City’s government-wide financial statements. The Authority is reported as a business-type activity. Complete and audited financial statements of the Grand Forks Regional Airport Authority may be obtained at the Authority’s administrative office.

C. 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 City of Grand Forks and its component unit. All fiduciary activities are reported only in the fund financial statements. Governmental activities, which are normally 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. Likewise, the primary government is reported separately from legally separate component unit for which the primary government is financially accountable.

The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are 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 segment. Taxes and other items not properly included among program revenues are reported instead as general revenues.

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.

D. Measurement focus, basis of accounting and financial statement presentation

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 recognized 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 the eligibility requirements imposed by the

40 provider have been met. Agency funds have no measurement focus but utilize the accrual basis of accounting for reporting assets and liabilities.

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 City 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. General capital asset acquisitions are reported as expenditures in governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other financing sources.

Property taxes, sales taxes, franchise taxes, licenses, intergovernmental revenues, charges for services and interest on investments 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. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items, which include miscellaneous revenue, are considered to be measurable and available only when cash is received by the City.

Deferred revenues arise when potential revenue does not meet both the “measurable” and “available” criteria for recognition in the current period. Deferred revenues also arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when all revenue recognition criteria are met, the liability for deferred revenue is removed and revenue is recognized.

The City reports the following major governmental funds:

The General Fund is the City’s primary operating fund. It accounts for all financial resources of the City, except those that are required to be accounted for in another fund. Most of the current day to day operations of the governmental units are financed from this fund.

The Special Assessment Debt Service Fund accounts for the resources accumulated and payments made for principal and interest on special assessment long-term debt associated with various special assessment districts within the City.

The Community Development Fund accounts for the receipt and disbursement of the community development block grants, Home funds, and the HUD special purpose grants.

The City reports the following major proprietary funds:

The Sanitation Fund accounts for the provision of garbage pick-up services, landfill operation and alley upkeep to the residents of the city and some surrounding communities.

41 The Sewer Fund accounts for the activities related to the operation and maintenance of wastewater treatment plant, sewage pumping stations and collection systems to provide sewer services to the residents of the city.

The Stormsewer Fund accounts for the activities related to the operation and maintenance of surface water collection and drainage system to provide storm sewer services to the residents of the city.

The Water Fund accounts for the activities related to the operation and maintenance of water intake, treatment and distribution systems to provide water service to the residents of the city.

The Alerus Center Fund accounts for the operation and maintenance of the Alerus Center which is a multi-purpose sports and entertainment stadium and a convention center.

The Job Development Authority accounts for the administration, operation, and debt service activities of the Authority. The Job Development Authority provides economic development opportunities to the community and region at large. It encourages the creation of new jobs while saving existing jobs, creates new wealth, enhances the local property tax base, encourages capital investment and diversifies the local economy.

Additionally, the City reports the following fund types:

Internal Service Funds account for goods and services provided by computer service, central garage, central purchasing and public works facility on a cost reimbursement basis to other departments or agencies of the city. The City has allocated the balance sheet and the statement of revenues, expenditures, and changes in fund balances between governmental and business-type activities.

Agency Funds are used to account for assets held by the City as agent for other individuals, private organizations, or other governmental units and/or funds. The City acts as an agent in collecting a two percent room tax and the disbursement of these funds to the Convention and Visitor’s Bureau for its use. The City also acts as an agent in collecting and disbursing a .5 mill levy to the Humane Society. No liability exists on behalf of the City beyond the extent of revenue received for these agency funds.

The Pension Trust Fund accounts for the activities of the City Employee’s Pension Plan, which accumulates resources for pension benefit payments to qualified employees.

The City follows the pronouncements of the Governmental Accounting Standards Board (GASB), which is the nationally accepted standard setting body for establishing generally accepted accounting principles for governmental entities.

As a general rule the effect of inter-fund activity has been eliminated from the government- wide financial statements. Exceptions to this general rule are payments-in-lieu of taxes and other charges between the city’s utility funds and various other functions of the city.

42 Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned.

Amounts reported as program revenue include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internal dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

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 connections with a proprietary fund’s principal ongoing operations. The principal operating revenue of the city’s utility funds and of the internal service funds are charges to customers for sales and services. The utility funds also recognize as operating revenue the portion of tapping fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenues and expenses.

Sometimes the government will fund outlays for a particular purpose from 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 and proprietary fund financial statements, a flow assumption must be made about the order in which the resources are considered to be applied. It is the government’s policy to consider restricted – net position to have been depleted before unrestricted – net position is applied.

E. Assets, liabilities, deferred outflows/inflows of resources, and net position/fund balance

1. Deposits and investments

The City’s cash and cash equivalents are considered to be cash on hand, demand deposits, cash with fiscal agent, and short-term investments with maturities of three months or less from the date of acquisition.

Cash balances for all funds are combined and invested to the extent available in authorized investments. Interest earnings from such investments are allocated to the respective funds based on average monthly balances.

Investments for the City as well as for its component unit are reported at fair value in accordance with GASB Statement No. 31, “Accounting and Financial Reporting for Certain Investments and for External Investment Pools”.

2. Receivables and payables

Activities between funds, which 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 inter-fund loans) or “advances to/from other funds” (i.e., the non-current portion of inter-fund loans). All other outstanding balances between funds are reported as

43 “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.” 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.

The City calculates allowance for uncollectible accounts using historical collection data.

3. Deferred outflows/inflows of resources

In addition to assets, the statement of financial 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 resources (expense/expenditure) until then. The government only has one item that qualifies for reporting in this category. It is the deferred charge on refunding reported in the government-wide statement of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt.

In addition to liabilities, the statement of financial 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 government has only one type of item, which arises only under a modified accrual basis of accounting that qualifies for reporting in this category. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues, from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available.

4. Inventories and prepaid items

Inventories are valued at cost using first-in/first-out (FIFO) method. The costs of inventory items are recognized as expenses in proprietary funds when consumed.

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements.

5. Restricted assets

Certain proceeds of the City’s enterprise fund revenue bonds, as well as certain resources set aside for their payment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. The “revenue bond reserve account is used to segregate resources from the bond proceeds or from the utility revenue, to an amount equal to the lesser of 1) the maximum annual debt service on, 2) 125% of the average annual debt service on, or 3) ten percent 10% of the proceeds of all bonds payable from the reserve revenue bond account. The reserve revenue bond account is a protection to bondholders and the City in the event utility revenues are inadequate to meet debt service expenses. In the event the use of the reserve revenue bond reserve account results in a deficiency in said

44 account, the City agrees pursuant to Article 9 of Chapter 2 of the Grand Forks City Code, as amended, to levy an unlimited ad valorem tax upon all taxable property in the city in an amount required to restore the balance in said account. The “revenue bond construction account” is used to report those proceeds of revenue bond issuances that are restricted for use in construction. The “revenue bond current debt service” account is used to segregate resources accumulated for debt service payments over the next twelve months. The “revenue bond renewal and replacement account” is used to report resources set aside to meet unexpected contingencies or to fund asset renewals and replacements.

6. Capital assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, pavements, street lights, traffic signals, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined as having an initial, individual cost of more than $1,000 and an estimated useful life in excess of two years. Capital assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at estimated fair market value at the date of donation.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed.

Capital outlays are recorded as expenditures in the City’s fund financial statements, which use the modified accrual basis of accounting. Capital outlays are capitalized in the City’s government-wide statement of net assets, which use the full accrual basis of accounting. Infrastructure assets have been capitalized retroactively to 1980 upon adoption of GASB Statement No. 34. Depreciation on the City’s capital assets, including infrastructure is recorded on a government-wide basis. For retroactive capitalization of infrastructure the City valued the assets through backtrending (i.e., estimating the current replacement cost of the infrastructure to be capitalized and using an appropriate price-level index to deflate the cost to the acquisition year or estimated acquisition year).

Depreciation has been provided over the estimated useful lives using the straight-line method. The estimated useful lives are as follows:

Building and structures 10 – 50 years Improvements 10 – 100 years Infrastructure 30 – 50 years Machinery and equipment 3 – 30 years

7. Compensated absences

Employees accrue vacation leave at a rate of various hours per month for years of continuous service. The maximum amount of vacation leave that can be accumulated is an amount that can be earned in the prior two years. All outstanding vacation leave is payable upon termination.

All vacation pay is accrued when incurred in the government-wide and proprietary fund statements.

45 Sick leave is accrued at a rate of fourteen days per year of continuous service. Sick leave accumulation is unlimited. However, an employee has the right to be paid for fifty (50) percent of his/her unused sick leave, either annually by being paid fifty (50) percent of the prior year accrual, or at termination by being paid for fifty percent of the accumulated amount. The options for payback are based on banking 960 hours (120) days and having completed 5 years of continuous service. Accrued liability is recorded in the government-wide and proprietary fund statements.

8. 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 bond. Bond discounts are recorded as deferred charges.

In the fund financial statements, governmental fund types recognize bond premium and discounts, as well as bond issuance costs, during the current period. The face amount of the debt is reported as other financing sources while discounts on debt issuance are reported as other financing uses or expenditures. Issuance costs are withheld from the actual debt proceeds received, and are reported as debt service expenditures.

9. Fund Balance

Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. 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) or are required to be maintained intact.

Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions.

Committed - consists of amounts constrained to specific purposes by formal action of the government’s highest level of decision-making authority. The City Council is the highest level of decision making authority. To be reported as committed the City Council must adopt a resolution prior to the end of the year to commit fund balance. Amounts cannot be used for any other purpose unless the City Council takes the same highest level action to remove or change the constraint.

Assigned - consists of amounts a government intends to use for a specific purpose. These constraints are established by the Council and/or management. The Council delegates the power to assign fund balances to the City Administrator and the Director of Finance per the Fund Balance Policy adopted December 8, 2011.

Unassigned - consists of amounts that are available for any purpose; positive amounts are reported only in the general fund.

In accordance with the City’s Fund Balance Policy, to maintain adequate cash flow requirements and contingency needs, the City will strive to maintain an unassigned fund balance in the general fund of 18% of the next year’s budgeted operating expenditures of the general fund. This will assist in maintaining an adequate level of fund balance as a majority of property tax revenue is received in March.

If spending unassigned fund balance in designated circumstances has reduced unassigned fund balance to a point below the minimum targeted level as noted above, the replenishment will be made within one to three years

If resources from more than one fund balance classification could be spent, the City will strive to spend resources from fund balance classifications in the following order: restricted, committed, assigned and unassigned.

10. Property Tax

Property tax levies are set by the City Council in September of 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.

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 1st of the year following the assessment date and are recorded as receivable by the City at that date. Within the fund financial statements, property taxes are accrued and recognized as revenue, excluding delinquent taxes received over 60 days after year-end. Deferred revenue in governmental activities is susceptible to full accrual on the government-wide statements.

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

Taxes are collected by the County and remitted monthly to the City. The City is permitted under the provisions of its Home Rule Charter to levy a maximum of one hundred and thirty (130) mills for general governmental services, excluding debt service, social security, special assessments, and city’s share of special assessments. In its 2012 budget, the city levied 38.06 mills under its limit.

11. Special assessments receivable

Special assessments receivable include the following components:

Unremitted – includes amounts held by the county as collection agent Delinquent – includes amounts billed to property owners but not paid as of December 31 of the year Deferred – includes assessment installment which will be billed to property owners in future years.

47 Special assessment-principal revenues are recognized as installments become measurable and available. Special assessment-interest are recognized when due, net of delinquencies. Deferred revenue in governmental activities is susceptible to full accrual on the government- wide statements.

12. Comparative data/reclassifications

Comparative total data for the prior year have been presented in the fund financial statements in order to provide an understanding of the changes in the financial position and operation of these funds. Also certain amounts/accounts presented in the prior year data have been reclassified in order to be consistent with the current year’s presentation. These reclassifications resulted in no changes in fund balances or retained earnings.

II. Stewardship, compliance, and accountability

A. Budgetary information

The process of compiling the annual budget is a year-round activity. The basis of the process is a framework of statutory deadlines established by the State of North Dakota. The City Finance Department, mayor and City Council establish the remainder of the process. The City Finance Director sets interim deadlines to insure necessary information is collected, priorities are determined, and the mayor can make a recommendation to the City Council. Early in the budget process, the Mayor and Administration meet with City Council in planning sessions to keep everyone informed. The Finance Director has been designated to serve as the official budget officer for the City of Grand Forks, to the City Council, which, in turn establishes tax rates and adopts the annual budget and 6-year operations and capital improvement plan.

While the process may change from year to year the 2012 budget was developed in four phases; the planning phase, the preparation phase, the review phase and the adoption phase. Each phase is explained in detail in the City’s budget document.

The Mayor, City Administrator and the Finance Director presented the recommended budget for 2012 to the City Council on August 24, 2011. The budget work sessions were scheduled as needed to discuss the budget. Once the Council is satisfied with recommended budget, it is forwarded to the regular City Council meeting in September 2011 for preliminary approval. This meeting is open to the public and notice of this meeting is published in the local newspaper. The City Council gives preliminary approval of the city budget and set first reading of the annual appropriation ordinance in early September. The City Council may hold public hearings and may subtract from or change appropriations.

Any changes in the budget must be made with the revenues and reserves estimated as available by the Director of Finance or the revenue estimates must be changed by an affirmative vote of a majority of the City Council.

The City Council gives final approval of the annual budget and second reading of the annual appropriation ordinance by the third Monday of September each year. By October 10th, the proposed budget and proposed tax levy is certified to the county.

The appropriated budget is prepared by fund, function and department. The legal level of control is the fund level. The management of the City of Grand Forks has the authority to make transfers between object level within a department, function and fund as long as the total

48 fund appropriations are not exceeded. City Council approval is required for an increase in the aggregate total of appropriations in order to reflect additional revenues that were not anticipated at the time of original adoption of the annual budget and appropriation ordinance. Several supplementary appropriations were made during the year.

Expenditures made, liabilities incurred, or warrants issued in excess of the total appropriations in the final amended budget are a joint and several liability of the members of the City Council who authorized the making, incurring, or issuing thereof or who were present when they were authorized and did not vote against authorizing the same. “Total appropriations” means the total appropriation made for each fund in the annual budget ordinance.

Formal budgetary integration is employed as a management control devise during the year for the General and Special Revenue funds. Such budgets are adopted on a basis consistent with accounting principles accepted in the United States of America.

B. Excess of expenditures over appropriations

For the year ended December 31, 2012, expenditures exceeded appropriations in the Municipal Band Fund by $26, and the Asset Forfeiture Fund by $100. These over expenditures were covered by cash carryover from previous years. +

C. Deficit fund equity

For the year ended December 31, 2012, all funds had positive fund equity.

III. Detailed notes on all funds

A. Deposits and investments

In accordance with North Dakota statutes, the City and the component unit maintain deposits at those depository banks and savings and loans authorized by the City Council or Authority Commission, as appropriate, all of which are members of the Federal Reserve System or the Federal Home Loan Bank System.

Statutes require that all city and component unit deposits be protected by insurance, surety bond, or collateral. The market value of the collateral pledged must equal one-hundred ten (110) percent of the deposits not covered by insurance or bonds.

Deposits - Primary Government

At December 31, 2012 the carrying amount of the City’s deposits was $30,151,268 and the bank balance was $30,159,531. Of the bank balance, $3,000,000 was covered by federal depository insurance and $27,159,531 was either covered by collateral held by the City’s agent in safekeeping in the City’s name, covered by the Bank of North Dakota, or held in US Bank escrow account secured by US Treasury securities.

Deposits - Component Unit

At December 31, 2012 the carrying amount of the Airport Authority’s deposits was $4,506,674 and the bank balance was $4,610,337 all of which was covered by Federal Depository Insurance or collateral held in safekeeping in the Authority’s name.

Investments – Primary Government

As of December 31, 2012 the City had the following investments and maturities:

Investment Maturities (in Years) Fair Less More Credit Rating Investment Type Value than 1 1-5 6-10 than 10 Rating Agency Certificates of Deposit (various banks) $ 22,023,027 $ 14,347,027 $ 7,676,000 - - n/a n/a Federal Farm Credit - - - - - Aaa Moody Federal National Mortgage Assn Pool 17,094,111 - 13,611,741 3,482,370 - Aaa Moody Federal National Mortgage 5,632,225 - 5,632,225 - - Aaa Moody Federal Home Loan Bank 1,541,850 1,541,850 - - - Aaa Moody Federal Home Loan Note - - - - - Aaa Moody Freddie Mac 7,597,529 - 7,597,529 - - Aaa Moody

Common Stock (1) 100,000 - - - - n/a n/a (2) Pension Plan 50,323,578 - - - - n/a n/a Total $ 104,312,320 $ 15,888,877 $ 34,517,495 3,482,370 -

(1) This investment type does not have a stated maturity. (2) January 1, 2012 valuation date.

Interest Rate Risk In accordance with its investment policy, the City manages its exposure to declines in fair value by limiting the weighted average maturities of its investment portfolio by:

• Structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity.

• Investing operating funds primarily in shorter-term securities, money market mutual funds, or similar investment pools and limiting the average maturity of the portfolio. The maturities of investments shall be five years or less.

Credit Risk

North Dakota State Statute limits local governments to invest in:

a) Bonds, treasury bills and notes, or other securities that are a direct 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 the type listed above.

c) Certificates of Deposit fully insured by the federal deposit insurance corporation.

d) Obligations of the state.

It is the City’s policy to limit its investments in these investment types. The above table lists the investment types and their credit ratings.

Concentration of Credit Risk

In accordance with the City’s investment policy, the City diversifies its investments by:

• Limiting investments to avoid over concentration in securities from a specific issuer or business sector (excluding U.S. Treasury and U.S. government backed securities)

• Limiting investment in securities that have higher credit risks

• Investing in securities with varying maturities, and

• Continuously investing a portion of the portfolio in readily available funds such as money market funds or overnight repurchase agreements to ensure that appropriate liquidity is maintained in order to meet ongoing obligations

Custodial credit risk

For an investment, this is a risk that; in the event of the failure of the counterparty, the government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. To minimize the custodial credit risk exposure all trades of marketable securities are executed by delivery vs. payment (DVP) to ensure that securities are deposited in an eligible financial institution prior to the release of funds.

Securities are held by an independent third-party custodian selected by the City of Grand Forks as evidenced by safekeeping receipts in the City of Grand Forks name. The safekeeping institution annually provides a copy of their most recent report on internal controls to the City.

The investment in the Pension Plan is not subject to the credit risk classifications as noted in paragraph 9 of GASB Statement 40.

51 B. Receivables

Receivables as of year-end for the City’s individual major and non-major funds, internal service funds, and the fiduciary funds in aggregate, including the applicable allowances for uncollectible accounts, are as follows:

Special Debt Service Revenue Enterprise Enterprise Enterprise Enterprise Enterprise Enterprise Non Major General Special Community Fund Fund Fund Fund Fund Fund and Other Fund Assessment Development Sanitation Sewer Water Stormwater Alerus JDA Funds Total Receivables: Notes - - $ 2,412,573 - - - - - $ 5,379,468 - $ 7,792,041 Taxes $ 670,202 ------$ 724,375 - $ 671,996 * 2,066,573 Accounts 720,758 - 617 $ 875,675 $ 785,113 $ 733,890 $ 177,774 677,375 619,873 362,568 4,953,643 Capital Leases ------7,795,830 - 7,795,830 Special Assessments 378,646 $ 37,784,843 $ - - 3,874 - 661,431 228,614 - 56,637 39,114,045 Intergovernmental 1,529,337 - 4,543 $ - - - - - 1,769,837 3,303,717 Gross Receivables 3,298,943 37,784,843 2,417,733 875,675 788,987 733,890 839,205 1,630,364 13,795,171 2,861,038 65,025,849 Less: Allowance for Uncollectibles - - - (23,731) (4,205) (6,233) (1,435) - (774,141) (809,745) Net Total Receivables $ 3,298,943 $ 37,784,843 $ 2,417,733 $ 851,944 $ 784,782 $ 727,657 $ 837,770 $ 1,630,364 $ 13,021,030 $ 2,861,038 $ 64,216,104

* Includes Fiduciary Fund taxes receivable Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of deferred revenue and unearned revenue reported in the governmental funds were as follows:

Unearned Deferred Total Delinquent property taxes receivable $ - $ 238,718 $ 238,718 Special assessments not yet due - 38,220,128 38,220,128 Grant draw-downs prior to meeting all eligibility requirements 4,049,064 - 4,049,064 Total deferred/unearned revenue $ 4,049,064 $ 38,458,846 $ 42,507,910

The Alerus Center is reporting $2,186,521 of Advance Ticket and Suite Revenue. This consists of suite revenue received in advance and ticket sales for a large George Straight concert held in February of 2013. C. Capital assets

Capital asset activity for the year ended December 31, 2012 was as follows:

Balance Balance Governmental activities: 12/31/2011 Additions Deletions 12/31/2012 Capital assets not being depreciated: Land $ 33,158,073 $ (1,816,370) $ 31,341,703 Infrastructure - ROW 5,645,244 441,307 - 6,086,551 Construction in progress 834,756 1,401,492 (469,593) 1,766,655

Total capital assets not being depreciated 39,638,073 1,842,799 (2,285,963) $ 39,194,909

Capital assets being depreciated: Buildings 39,524,862 392,501 - 39,917,363 Improvements other than buildings 66,049,307 51,206 - 66,100,513 Machinery & equipment 20,458,573 1,234,973 (1,445,334) 20,248,212 Infrastructure 130,682,793 5,650,667 136,333,460

Total capital assets being depreciated $ 256,715,535 $ 7,329,347 $ (1,445,334) $ 262,599,548

Less accumulated depreciation for: Buildings 9,356,000 869,832 - 10,225,832 Improvements other than buildings 7,826,140 1,061,848 - 8,887,988 Machinery & equipment 12,217,558 1,420,313 (1,290,488) 12,347,383 Infrastructure 93,360,503 1,840,137 - 95,200,640

Total accumulated depreciation 122,760,201 5,192,130 (1,290,488) $ 126,661,843

Capital assets net of accumulated depreciation $ 133,955,334 $ 135,937,705

Total governmental activities capital assets net $ 173,593,407 $ 175,132,614

Internal Service Fund capital assets net of accumulated depreciation included in governmental activities 5,937,168 Total capital assets reported in the statements of net assets $ 181,069,782 Includes reclassifications from one class of asset to another

Balance Balance Business-Type Activities: 1/1/2012 Additions Deletions 12/31/2012 Capital assets not being depreciated: Land $ 11,808,227 $ 1,546,486 $ 13,354,713 Construction in progress 131,926 303,038 (111,245) 323,719

Total capital assets not being depreciated $ 11,940,153 1,849,524 (111,245) $ 13,678,432

Capital assets being depreciated: Buildings 215,975,418 8,250,495 (152,926) 224,072,987 Improvements other than buildings 224,367,854 2,229,902 (1,323,233) 225,274,523 Machinery & equipment 36,576,143 1,776,294 (2,285,628) 36,066,809 - Total capital assets being depreciated $ 476,919,415 $ 12,256,691 $ (3,761,787) $ 485,414,319

Less accumulated depreciation for: Buildings 56,761,625 4,562,146 (140,890) 61,182,881 Improvements other than buildings 75,272,665 4,565,786 (1,283,375) 78,555,076 Machinery & equipment 21,735,361 1,745,402 (2,294,949) 21,185,814

Total accumulated depreciation 153,769,651 10,873,334 (3,719,214) $ 160,923,771

Capital assets net of accumulated depreciation $ 323,149,764 $ 324,490,548

Total business type activities capital assets net $ 335,089,917 $ 338,168,980

Includes reclassifications from one class of asset to another

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

Governmental activities: General Government $ 848,536 Health & Welfare 49,116 Public Safety 1,001,993 Highways and Streets 3,269,614 Culture and Recreation 22,871 Total depreciation expense - governmental activities $ 5,192,130

Business-type activities: Sanitation $ 905,280 Sewer 3,299,213 Water 2,403,052 Stormwater 1,110,872 Public Transit 509,386 Dial A Ride 8,911 Mosquito Control 83,918 Alerus Center 2,106,250 Job Development Authority 428,017 Downtown Parking 18,434 Total depreciation expense - business-type activities $ 10,873,333

Depreciation expense for capital assets held by the City’s internal service funds are charged to the various functions based on usage of the assets.

Construction commitments

Construction commitments as of December 31, 2012 were approximately $2,110,865. Funds are designated for capital expenditures in various funds to cover these commitments.

54 Discretely presented component unit

Capital asset activity for the Grand Forks Regional Airport Authority for the year ended December 31, 2012 was as follows:

Beginning Ending Balance Transfers and Transfers and Balance 01/01/2012 Additions Deletions 12/31/2012 Capital assets not being depreciated: Land $ 1,331,919 $ 414,162 $ - $ 1,746,081 Construction in progress 731,166 480,838 (385,856) 826,148 Total capital assets not being depreciated $ 2,063,085 $ 895,000 $ (385,856) $ 2,572,229

Capital assets being depreciated: Equipment $ 3,756,527 $ 450,439 $ (331) $ 4,206,635 Motor Vehicles 2,237,270 11,054 (4,682) 2,243,642 Buildings 17,806,623 42,824 - 17,849,447 Systems and Structures 61,578,269 2,861,522 - 64,439,791

Total capital assets being depreciated $ 85,378,689 $ 3,365,839 $ (5,013) $ 88,739,515

Less accumulated depreciation for: Equipment $ (1,812,860) $ (286,891) $ 331 $ (2,099,420) Motor Vehicles (1,987,040) (78,203) 4,682 (2,060,561) Buildings (3,073,932) (551,429) - (3,625,361) Systems and Structures (34,925,351) (2,753,804) - (37,679,155)

Total accumulated depreciation $ (41,799,183) $ (3,670,327) $ 5,013 $ (45,464,497)

Capital assets net of accumulated depreciation $ 43,579,506 $ (304,488) $ - $ 43,275,018

Total component unit capital assets net $ 45,642,591 $ 590,512 $ (385,856) $ 45,847,247

55 D. Interfund receivables, payables, and transfers

The composition of interfund balances as of December 31, 2012, is as follows:

Due to/Due from other funds:

Receivable Payable Fund Fund Amount General Fund Other Governmental $ 415,000 (1) Other Governmental Job Development Authority 901,815 (2) Other Governmental Alerus Center 1,041,518 (3) Internal Service Internal Service 90,000 (1) Total $ 2,448,333

1. The purpose of this interfund receivable is to maintain a positive fund balance at year end. 2. The purpose of this interfund receivable is for the accelerated payment of the Cirrus note. 3. The purpose of this interfund receivable is to assist the Alerus Center with its cash flow needs.

Advances to Advances From Other Funds Other Funds Amount General Fund Other Governmental $ 9,901 (1) General Fund Internal Service 19,000 (1) Water Other Governmental 494,876 (3) Water Wastewater 846,979 (2) Total $ 1,370,756

1. The purpose of this long term advance is to maintain a positive fund balance in the receiving fund.

2. The purpose of this long term advance is to loan money from the Water Fund to allow the Wastewater Fund to pay for flood expenses deemed ineligible by FEMA.

3. The purpose of this long term advance is to loan money from the Water Fund to finance the construction of the Public Safety Answering Point addition to the Police Building.

56 Interfund Transfers

Transfers In Other Special Non-Major Job Non Major General Assessment Community Governmental Sanitation Water Development Enterprise Transfers Out Fund Fund Development Funds Fund Fund Authority Funds Purpose

General Fund $ 2,219,968 (1) Special Assessment Fund $ 2,330,085 $ 73,623 (2) Community Development 400 $ 380,600 (3) Other Governmental Funds $ 112,325 188,525 $ 223,784 4,152,877 $ 834,899 (3) Wastewater Fund 34,526 23,769 (3) Job Development Authority 845,252 (3) Non-Major Enterprise Funds 73,700 (3) Internal Service Funds 500 Total $ 112,325 $ 2,518,610 $ 223,784 $ 7,218,997 $ 34,526 $ 97,392 $ 834,899 $ 454,300

Other Governmental Funds $ 1,546,486 * Water Fund $ 54,450 **

* Transfer of capital asset out of Governmental Activities to Job Development Authority ** Transfer of capital asset out of the Water Fund to Governmental Activity

1. Transfer to cover City's share of the Public Safety Answering Point function, transfer sick leave to sick leave fund and transfer for capital items 2. Close debt service funds when the bonds are paid off or refinanced and transfer special assessment collections to the appropriate funds. 3. Transfer share of debt service payments, capital and project expenses and wage reimbursements E. Leases

Operating and Capital Leases

The Job Development Authority, an enterprise fund of the City of Grand Forks leases buildings and office facilities under capital and non-cancelable operating leases. Total lease revenue was $2,838,799 for the year ended December 31, 2012.

Business-type Activities Assets: Buildings $ 33,897,792 Less: Accummulated depreciation (8,670,003) Capital Lease Receivable 7,795,830 Total $ 33,023,619

The future expected minimum lease payments including scheduled rent increases to be received are as follows:

Year Ending December 31 Amount 2013 $ 4,336,750 2014 2,736,364 2015 2,225,290 2016 2,225,290 2017 2,133,392 2018-2021 4,932,293 Total $ 18,589,379

Capital Leases

The City has entered into a lease agreement as lessee for financing the acquisition of certain trucks and equipment. These lease agreements qualify as capital leases for accounting purposes and, therefore, have been recorded at the present value of their future minimum lease payments as of the inception date.

The assets acquired through capital leases are as follows:

Business- type Activities Assets: Machinery and equipment $ 982,759 Less: Accummulated depreciation (430,174) Total $ 552,585

58 The future minimum lease obligations and the net present value of these minimum lease payments as of December 31, 2012, were as follows:

Sanitation Total

2013$ 190,561 $ 190,561 2014 198,269 198,269 2015 206,293 206,293 2016 - - 2017 - - 2018 and future - - Total Minimum Lease Payments $ 595,123 $ 595,123 Less: amount representing interest (42,538) (42,538) Present value of minimum lease payments $ 552,585 $ 552,585

F. Long-term debt

Governmental activities include the following types of long-term debt:

General Obligation bonds

General obligation bonds are issued to provide funds for the acquisition and construction of major capital items. They are direct obligations and pledge the full faith and credit of the City of Grand Forks. GO bonds are paid through the debt service funds by a mill levy sufficient to meet the current year’s principal and interest payments. These bonds are generally issued as 20-year serial bonds with varying amounts of principal maturing each year. The outstanding bonds have varying interest rates ranging from 2.0% to 4.625%.

General Obligation Bonds outstanding as of December 31, 2012 totaled $10,440,000. Their original issue amount totaled $12,900,000. The City is subject to a statutory limit by the State of North Dakota for indebtedness payable principally from property taxes. At December 31, 2012 the statutory limit for the City was $79,750,155. The general obligation debt, net of cash available for bond retirement was $11,347,908 leaving a legal debt margin of $68,402,247.

Special Assessment Bonds

Special assessment bonds are issued to provide funds for the construction of various improvements deemed to benefit the properties against which special assessments are levied. Special assessment bonds are paid from the debt service funds by the annual certification payments made by the property owners. These bonds are also backed by GO commitments. The City is required by law to levy a tax upon all taxable property within the city limits to restore any deficiency in the improvement district funds for the payment of all warrants and interest thereon, and the city is authorized, and it is its policy, to levy such a tax whenever such a deficiency is anticipated to occur. Such tax levies are not subject to any constitutional or statutory limitations as to rate or amount. Special assessment bonds are generally issued as 20-year serial bonds with varying amounts of principal maturing each year. The outstanding bonds have a varying interest rate ranging from .75% to 5%.

During the current year the City issued $5,290,000 of Special Assessment Refunding Improvement and Refunding Bonds, Series 2012A to finance various improvement projects

59 within the City as well as refund the Refunding Improvement Bonds, Series 2003B and the Refunding Improvement Bonds, Series 2002F. This refunding was conducted to achieve interest cost savings. The City pledges special assessments against benefited properties for payment of the Series 2012A Bonds.

As a result of the refunding, the City is expected to realize a total future value benefit of $656,804 with a net present value benefit of $463,594.

The special assessment bonds outstanding as of December 31, 2012 totaled $47,799,000. Their original issue amount totaled $67,574,647.

Sales Tax Revenue Bonds

Sales tax revenue bonds are revenue obligations of the City payable solely from the collection of the City’s local sales and use taxes, and do not constitute a debt for which the faith and credit or taxing powers of the city is pledged. The City is required to fund a reserve account from the proceeds of the bonds. In the event the use of the reserve results in a deficiency in the reserve account, the City has covenanted to levy an ad valorem tax upon all taxable property in the city, in the amount required to restore the reserve account balance.

The sales tax revenue bonds outstanding as of December 31, 2012 for governmental activities totaled $11,140,000. Their original issue amount totaled $13,135,000.

Special Project Bonds

Pursuant to a financing plan established by the City Council to fund the City’s share of the cost associated with the construction of the permanent flood protection project, the City has issued special assessment bonds totaling $12,247,147 (to be paid from city-wide special assessments, these bonds have been refinanced, original amount was $41,117,147, current outstanding $8,861,500), general obligation bonds totaling $7,945,000 (net of crossover refunding) (to be paid from 5.51 mills pledged out of general property taxes, these bonds have been refinanced, original amount was $14,480,000, current outstanding $6,445,000), and sales tax revenue bonds totaling $6,830,000 (to be paid from dedicated sales tax revenues, original amount was $19,235,000, current outstanding $6,315,000) as of December 31, 2012.

Notes

At December 31, 2012 the amount outstanding on Industrial Development Revenue Note, Corporate Center Project, Series 1999 is $2,234,020. This note was restructured in 2010, lowering the interest rate from 7.5% to 5.55 % for five years, after which the rate can change, however it cannot increase over the original 7.5% for the three remaining years. The realized savings are being used to repay an internally funded loan that is being used to make deferred maintenance improvements to the Corporate Center Building.

In 2006, the City’s Job Development Authority entered into loan agreements with Bremer Bank in the amount of $6.5 million for Cirrus Design Corporation and $3,487,500 for LM Glasfiber. These loans financed the expansion projects for LM Glasfiber and Cirrus Design Corporation. The loan payments will be made by the Job Development Authority collected through lease payments from LM Glasfiber and Cirrus Design Corporation from 2006-2021. As of December 31, 2012 the amounts outstanding are $2,914,851 and $741,045 respectively.

60 Revenue Bond

The City also issues bonds where the City pledges income derived from the acquired or constructed assets to pay debt service. Monthly transfers that will adequately pay the annual principal and interest installments of the revenue bonds are made from the enterprise funds to individual sinking funds of those funds.

During the current year, the City issued $3,880,000 of Water Reserve Revenue Bonds, Series 2012B to finance water pond system improvements.

Revenue bonds outstanding as of December 31, 2012 for business-type activities totaled $106,006,560; $26,840,000 for revenue bonds, $53,095,000 for sales tax bonds, and $26,071,560 for SRF loans. Their original issue amounts totaled $160,618,061; revenue bonds $32,365,000, Sales tax revenue bonds $68,295,000, and SRF loans $59,958,061 respectively.

Annual debt service requirements to maturity for the bonded debt for governmental and business-type activities are as follows:

Governmental Activities

Year Ending General Obligation Special Assessment Sales Tax Revenue Industrial Development Total Principal & December 31 Bonds (3) Bonds (1) (4) Bonds (2) Revenue Notes Interest Principal Interest Principal Interest Principal Interest Principal Interest 2013 970,000 393,655 4,809,000 1,609,843 1,285,000 406,194 422,774 113,342 10,009,808 2014 1,010,000 359,905 4,661,000 1,458,912 1,320,000 368,071 446,844 89,271 9,714,003 2015 1,035,000 324,616 4,263,000 1,321,035 1,360,000 322,129 472,285 63,832 9,161,897 2016 1,065,000 288,542 3,996,000 1,195,287 1,380,000 274,400 499,174 36,944 8,735,347 2017 1,100,000 249,686 3,808,000 1,075,825 1,295,000 228,780 392,943 9,142 8,159,376 2018-2022 3,950,000 684,991 15,292,000 3,539,293 4,500,000 462,725 28,429,009 2023-2027 1,310,000 145,080 7,700,000 1,361,759 10,516,839 2028-2032 3,170,000 303,847 3,473,847 2033 100,000 3,000 103,000 Total Governmental Activities $ 10,440,000 $ 2,446,475 $ 47,799,000 $ 11,868,801 $ 11,140,000 $ 2,062,299 $ 2,234,020 $ 312,531 $ 88,303,126

1. Special assessment bonds includes sidewalk warrants, SRF loans and Temporary Improvement Warrants. 2. To be paid from dedicated sales tax revenue. 3. In the Statement of Net Position the deferred amount on refunding of $614,930 is netted against GO bonds payable 4. In the Statement of Net Position the deferred amount on refunding of $212,206 is netted against Refunding bonds payable

Business-type Activities

Year Ending Revenue Sales Tax Revenue Industrial Devlopment Total Principal & December 31 Bonds (1) Bonds (2)(3) Revenue Note SRF - Loans (4) Interest Principal Interest Principal Interest Principal Interest Principal Interest 2013 1,905,000 826,784 2,105,000 2,503,200 1,000,942 309,610 2,971,560 651,599 12,273,695 2014 1,930,000 947,786 2,190,000 2,419,000 658,324 210,753 3,045,000 577,500 11,978,363 2015 1,980,000 744,318 2,275,000 2,331,400 381,636 170,693 3,125,000 501,375 11,509,422 2016 1,655,000 691,232 2,390,000 2,217,650 397,750 145,454 3,210,000 423,250 11,130,336 2017 1,695,000 645,851 2,505,000 2,105,650 415,071 119,007 3,285,000 343,000 11,113,579 2018-2022 6,600,000 2,463,301 14,535,000 8,518,750 802,173 135,511 9,610,000 652,125 43,316,860 2023-2027 4,175,000 1,650,456 18,465,000 4,563,000 - 825,000 41,500 29,719,956 2028-2032 3,815,000 957,204 8,630,000 586,800 - - - 13,989,004 2033-2037 2,105,000 436,612 ------2,541,612 2038-2040 980,000 56,758 ------1,036,758 Total Business- type Activities $ 26,840,000 $ 9,420,302 $ 53,095,000 $ 25,245,450 $ 3,655,896 $ 1,091,028 $ 26,071,560 $ 3,190,349 $ 148,609,585

1. Revenue bonds will be paid from the utlity user fee. 2. Sales tax revenue bonds includes Alerus bond - to be paid from dedicated sales tax revenue. 3. In the Statement of Net Position the deferred charges of $3,620,142 are netted against revenue bonds payable. 4. SRF loans include loans for clearwell, wastewater treatment plant and bio-solids management project-to be paid from user utility fee.

61 Changes in Long-term Liabilities Long-term liability activity for the year ended December 31, 2012, is as follows:

Beginning Ending Due within Balance Additions Reductions Balance One Year Governmental Activities: Bonds Payable: General obligation $ 13,740,000 $ - $ 3,300,000 $ 10,440,000 $ 970,000 Unamortized Premium 62,058 - 6,149 55,909 Unamortized Discount (41,506) - (2,797) (38,709) Unamortized Def Amt on Refunding (703,835) - (88,905) (614,930) Special Assessment with GO commitment 61,860,000 5,290,000 19,351,000 47,799,000 $ 4,809,000 Unamortized Premium 573,833 301,211 55,589 819,455 Unamortized Discount (288,447) - (125,321) (163,126) Unamortized Def Amt on Refunding (236,005) - (23,799) (212,206) Sales Tax Revenue 12,250,000 - 1,110,000 11,140,000 1,285,000 Unamortized Premium 871,382 - 90,143 781,239 - Total bonds payable $ 88,087,480 $ 5,591,211 $ 23,672,059 $ 70,006,632 $ 7,064,000 Industrial Development Revenue Note 2,634,020 - 400,000 2,234,020 422,774 FNMA Note payable - - - - - Compensated absences 4,770,124 231,329 289,619 4,711,834 300,000 Net pension obligations 4,950,000 181,000 - 5,131,000 - Governmental Activity Long-term Liabilities $ 100,441,624 $ 6,003,540 $ 24,361,678 $ 82,083,486 $ 7,786,774

Internal Service Fund long-term liabilities included in governmental activities 36,813 Total long-term liabilities in the statement of net assets $ 82,120,299

Beginning Ending Due within Balance Additions Reductions Balance One Year Business-type Activities: Bonds payable: Revenue bonds $ 24,650,000 $ 3,880,000 $ 1,690,000 $ 26,840,000 $ 1,905,000 Unamortized Discount (177,900) (28,497) (9,188) (197,209) Unamortized Premium 203,469 - 22,999 180,470 Sales tax revenue bonds 55,125,000 - 2,030,000 53,095,000 2,105,000 Unamortized Discount (299,132) - (16,391) (282,741) Unamortized Def Amt on Refunding (3,830,005) - (209,863) (3,620,142) Unamortized Premium 1,377,888 - 75,501 1,302,387 Total Bonds payable $ 77,049,320 $ 3,851,503 $ 3,583,058 77,317,765 $ 4,010,000 NDBB-SRF Loan 28,951,560 - 2,880,000 26,071,560 2,971,560 Landfill closure/postclosure 1,644,608 285,016 100,988 1,828,636 - Special assessments 9,508 - 9,508 - - Capital leases 807,895 - 212,772 595,123 190,561 Notes 4,523,212 - 867,316 3,655,896 1,000,942 Compensated absences 1,329,214 93,431 54,519 1,368,126 109,600 Business-type Activity Long-term Liabilities $ 114,315,317 $ 4,229,950 $ 7,708,161 $ 110,837,106 $ 8,282,663

Internal Service Fund long-term liabilities included in business type activities - Total long-term liabilities in the statement of net assets $ 110,837,106

62 Prior year defeasance of debt

In prior years, the City defeased $7,680,000 of outstanding 2001D Sales Tax Reserve Revenue Bonds by issuing $6,830,000 in 2011F Sales Tax Reserve Revenue Refunding Bonds, a full advance refunding. The net proceeds were used to purchase government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments on the bonds. As a result, the bonds were considered to be defeased in 2011 and the liability for those bonds was removed from the 2011 financial statements. There are no defeased bonds outstanding as of December 31, 2012.

Debt defeasance in 2012

The 2001C State Revolving Fund loan of $5,640,000 from cash on hand.

$365,000 of Refunding Improvement Bonds, Series 2002F and $1,630,000 of Refunding Improvement Bonds, Series 2003B which were refunded by the Refunding Improvement and Refunding bonds, Series 2012A. This was a current refunding.

The City completed the crossover refunding of the 2003A Refunding Improvement Bonds and the 2002G General Obligation Dike Bonds in the amounts of $5,755,000 and $2,215,000 respectively during 2012.

Compensated absences and net pension obligations for governmental activities are generally liquidated by the general fund.

Component Unit

The Long-Term Debt of the Airport Authority at December 31, 2012 is comprised of the following individual issues:

Revenue Bonds:

$4,500,000 serial bonds due in annual installments of $175,000 to $340,000 through June 1, 2029; interest at 2 percent to 5 percent $4,150,000

Total $4,150,000

The airport revenue bonds are to be repaid from authority revenue, however, if the principal and interest cannot be paid from revenue, a tax can be levied on the property in the County of Grand Forks, North Dakota for debt service.

The annual requirements to amortize all bonds and notes payable as of December 31, 2012 for the component unit are as follows:

63 December 31, 2012 (In Thousands of Dollars) Year Ending December 31, Principal Interest Total 2013 $ 180,000 $ 173,802 $ 353,802 2014 185,000 169,690 354,690 2015 190,000 164,528 354,528 2016 195,000 158,509 353,509 2017 200,000 151,840 351,840 2018-2022 1,130,000 631,622 1,761,622 2023-2027 1,405,000 346,775 1,751,775 2028-2029 665,000 33,625 698,625 $ 4,150,000 $ 1,830,391 $ 5,980,391

The Grand Forks Regional Airport Authority entered into a non-revolving line of credit with Alerus Financial on June 16, 2009 which was renewed May 31, 2012. The total amount available under the line is $1,200,000. No balance was outstanding related to this line of credit at December 31, 2012. This line of credit has a variable interest rate of 3.75% and matures May 31, 2013.

Conduit Debt

From time to time, the City has issued Municipal Industrial Development Act Revenue Bonds to provide financial assistance to private-sector entities for construction projects and renovations and to finance capital equipment purchases deemed to be in the public interest. The bonds are secured by mortgage and security agreements, indentures of trust, an irrevocable letter of credit, liquidity facility agreement and by the Municipal Bond Investors Assurance Corporation. The City is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements.

As of December 31, 2012, the aggregate principal amount payable of the nine series issued was $226,700,000. Their original issue amounts totaled $456,655,000.

Arbitrage Rebate

In accordance with the provisions of sections 148(f) of the Internal Revenue Code of 1986, as amended, bonds must satisfy certain arbitrage rebate requirements. Positive arbitrage is the excess of (1) the amount earned on investments purchased with bond proceeds over (2) the amount that such investments would have earned had such investments been invested at a rate equal to the yield on the bond issue. In order to comply with the arbitrage rebate requirement, positive arbitrage must be paid to the U.S. Treasury at the end of each five-year anniversary date of the bond issue. As of December 31, 2012, there were no amounts for arbitrage rebates.

G. Segment Information

The City maintains ten enterprise funds that account for the Sanitation, Sewer, Water, Storm- water, Public Transit, Dial-A-Ride, Alerus Center, Job Development Authority, Mosquito Control, and Downtown Parking. The City considers each of its enterprise funds to be a segment. Since the required segment information is already included in the City’s proprietary funds balance sheet and statement of revenues, expenditures, and changes in fund balance, this information has not been repeated in the notes to the financial statements.

H. Restricted Assets

The balances of the current and non-current restricted asset accounts in the enterprise funds are as follows:

Trust account for advance ticket sales/suite revenue $ 2,037,428 Customer deposits 2,000 Concert Fund 101,023 Construction account 9,115,524 Revenue bond construction account 482,031 Revenue bond current debt service account 6,808,588 Revenue bond reserve account 6,776,515 Reserve for landfill closure 1,494,006 Accounts receivable from suites and advertising 22,259 Total restricted assets $ 26,839,374

I. Fund Balance Classifications:

Nonspendable - consists of amounts that are not in spendable form (such as inventory and prepaid items) or are required to be maintained intact. Restricted - consists of amounts related to externally imposed constraints established by creditors, grantors or contributors; or constraints imposed by state statutory provisions.

Unassigned - consists of amounts that are available for any purpose; positive amounts are reported only in the general fund.

The fund balances of the governmental funds are as follows:

Major Debt Major Special Service Fund Revenue Fund Special Other General Assessment Community Governmental Fund Fund Development Funds Total Fund Balances:

Nonspendable: Advances to other funds $ 28,901 $ 28,901 Assets held for resale $ - - Restricted for: Debt service $ 9,247,937 $ 2,322,818 11,570,755 Community development 379,668 379,668 Emergency 462,743 462,743 Economic development 3,455,005 3,455,005 Public buildings 46,210 46,210 Public safety 521,406 521,406 Health and welfare 358,835 358,835 Library 1,343,358 1,343,358 Flood control/greenway projects 568,492 568,492 Infrastructure 16,137,129 16,137,129 City share of special improvements 33,285 33,285 City special assessments 150,929 150,929 Insurance 6,813 6,813 Other purposes 5,625 5,625 Committed to: Special assessement deficiencies, infrastructure and pension needs 942,838 942,838 Sick leave liability 555,893 555,893 Bikeway projects 422,179 422,179 Bridges and Underpasses 1,224,298 1,224,298 Public safety 149,999 - 149,999 Future capital purchases 1,520,160 1,520,160 Assigned to: Purchases on order 179,364 179,364 Department cash carryover 1,298,607 1,298,607 Excess sales tax 357,301 357,301 Other purposes 22,167 22,167 Unassigned 9,088,319 - 9,088,319

Total Fund Balance $ 12,623,389 $ 9,247,937 $ 379,668 $ 28,579,285 $ 50,830,279

IV. OTHER INFORMATION

A. Risk Management

The City of Grand Forks is exposed to various risks of loss related to torts; theft of; damage to; and destruction of assets; errors and omissions; injuries to employees; and natural disasters.

66 In 1986, state agencies and political subdivisions of the State of North Dakota joined together to form the North Dakota Insurance Reserve Fund (NDIRF), a public entity risk pool currently operating as a common risk management and insurance program for the state and over 2,000 political subdivisions. The City of Grand Forks pays an annual premium to NDIRF for its general liability, auto, and inland marine insurance coverage. The coverage by NDIRF is limited to losses of two million dollars per occurrence.

The City of Grand Forks participates in the North Dakota Fire and Tornado Fund and State Bonding Fund. The City of Grand Forks pays an annual premium to the Fire and Tornado Fund to cover the property damage to buildings and personal property. Replacement cost coverage is provided by estimating replacement cost in consultation with the Fire and Tornado Fund. The Fire and Tornado Fund is reinsured by a third party insurance carrier for losses in excess of two million dollars per occurrence during a 12 month period. The State Bonding Fund currently provides the City of Grand Forks with blanket fidelity bond coverage with no limit of liability. The State Bonding Fund does not currently charge any premium for this coverage.

The City of Grand Forks also participates in the North Dakota Public Employees Retirement System (NDPERS) Health Insurance Fund. The City of Grand Forks pays an annual premium to cover a portion of the employees’ health insurance. There is no lifetime maximum in accordance with federal law.

The City of Grand Forks carries insurance for worker’s compensation, boiler and machinery, and flood insurance.

Settled claims resulting from these risks have not exceeded insurance coverage in any of the past three years.

B. Contingent Liabilities

Amounts received or receivables from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time.

The government is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the City Attorney the resolution of these matters will not have a material adverse effect on the financial condition of the city.

The City has also guaranteed to pay a portion of $4,500,000 of Grand Forks Regional Airport Authority debt issued in 2009 in the event the debt is not paid by the Authority. The amount the City is guaranteeing will be based on an apportioned amount of taxable valuation between the City and County of Grand Forks. It is anticipated there will be no liability for the City.

C. Solid Waste Landfill Closure and Post-closure Care Costs

The State and federal laws required the City of Grand Forks to place a final cover on its Highway 2 landfill site when it stopped accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after the closure. The City closed this “old” solid waste landfill (permit #SW-069) on July 28, 2011. The remaining costs for post

67 closure care cost for this landfill are estimated to be $1.4 million as of December 31, 2012. There is approximately $1.5 million in reserve to finance these costs.

In 2010 the City opened the new Regional Solid Waste Landfill. This landfill site design has a total of 10 cells on approximately 190 acres of land. The estimated total MSW landfill capacity is 14,046,582 cubic yards with a waste volume capacity of 11,828,678 cubic yards and the remaining cubic yards for soil/cover volume. The individual cell capacity varies. Assuming an average of 85,000 tons of solid waste per year, the landfill would last approximately 83 years.

The City has constructed one cell (Cell A). Based on design this cell has 869,516 cubic yards of waste volume capacity. In 2012 the estimated volume used was 137,941 cubic yards with 497,749 solid waste cubic yards capacity remaining.

The City will close each cell when it is filled to capacity and stops accepting waste. Although closure and post-closure care costs will be paid only near or after the date the cell stops accepting waste, the City reports a portion of these closure and post-closure care costs as operating expense in each period based on landfill capacity used as of each balance sheet date. The $451,654 reported as MSWLF closure and post-closure care liability for the new landfill at December 31, 2012 represents the cumulative amount reported to date based on the use of 43% of the estimated capacity of Cell A. The City will recognize the remaining estimated cost of closure and post-closure care of $604,707 ($1,056,361-$451,654) as the remaining estimated capacity is filled. The actual costs may be higher due to inflation, changes in technology, or changes in applicable laws or regulations.

The City is in compliance with the financial assurance provision set under Subtitle D of Resource Conservation and Recovery Act which requires owners and operators of municipal solid waste landfills to establish a mechanism to demonstrate financial assurance for the cost of closure, post-closure care, and corrective action. Mechanisms used to demonstrate financial assurance must ensure the amount of funds assured are adequate and the funds will be available when needed. The City is meeting this obligation by applying a financial test mechanism as specified in the North Dakota Administrative code sections 33-20-14-02 through 33-20-14-07. Because the City is able to meet the financial test, the reservation of cash in a landfill assurance fund/account is not required.

D. Deferred Compensation

The City offers its employees a deferred compensation plan created in accordance with Internal Revenue code section 457(b). The plan, available to all city employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available until termination, retirement, death, or unforeseeable emergency.

Due to certain statutory changes made by the Small Business Job Protection Act of 1996 and the Tax Reform Act of 1997 to Section 457 of the Internal Revenue Code, assets and income deferred under an eligible Section 457(b) plan of a state or local government employer must be held in trust or in custodial accounts. The trust requirement for governmental plans is described in new Section 457(g) of the Internal Revenue Code. The assets must be held for the exclusive benefit of participants and beneficiaries.

All amounts of compensation deferred under the plan, all property rights purchased with those amounts, and all income attributable to those amounts, property, or rights are held in trust for

68 the exclusive benefit of participants and beneficiaries under the plan. Pursuant to this requirement the City of Grand Forks established a tax-exempt trust for its 457 deferred compensation plan in December of 1998 and entered into a trust agreement with the Alerus Financial, N.A. formerly known as First National Bank ND to be effective January 1, 1999. Deferred compensation is no longer reported in the financial statements of the City of Grand Forks as of January 1, 1999.

E. Employee Retirement Systems and Pension Plans

Defined Benefit Pension Plan

A. Plan Description

The City administers a single employer defined benefit pension plan (The City of Grand Forks, North Dakota Pension Plan) which covers substantially all of its employees hired before January 1, 1996. The plan is included in the City’s financial reports as Pension Trust Fund, a separate actuarial report for the pension plan is available in the Finance Office. The defined benefit pension plan has been frozen since January 1, 1996 in an effort to control the City’s contribution requirements. City employees hired after January 1, 1996 participate in the City’s Defined Contribution Plan or the NDPERS Hybrid Defined Benefit Plan. The following table summarizes membership information of the plan at the actuarial valuation date:

At January 1, 2013 membership consisted of: Retired employees and beneficiaries 217 Terminated Participants with deferred benefits 42 Nonvested terminated participants entitled to a refund 0 All other employees with vested employer provided benefits 168 TOTAL 427

The payroll for the employees covered by the City Employee Pension Plan for the year ended December 31, 2012 was $9,248,169. The total payroll was $9,828,149.

SUMMARY OF THE PRINCIPAL PROVISIONS OF THE PLAN

1. Effective Date: The effective date of the plan is July 1, 1970. The anniversary date is January 1.

2. Eligible Employees: All full-time employees, hired before January 1, 1996, of the City of Grand Forks are eligible to participate in the Plan.

3. Participation: An eligible employee becomes a participant on the first day of the month coincident with or following completion of one year of service and attainment of age 21.

4. Considered Compensation: Considered compensation is the annual base compensation but does not include overtime, bonuses, or extra compensation.

69 5. Contributions: Contributions are based upon the retirement age selected by the participant (for the retirement with full benefits). The following table summarizes the required contribution.

Selected Retirement Age Contribution Rate 55 7.4% 62 4.7% 65 3.7%

6. Average Earnings: The average considered compensation for the seven highest consecutive calendar years during the last ten consecutive years preceding the retirement or termination date.

7. Past Benefit Service: All service with employer prior to January 1, 1970, limited to 10 years.

8. Future Benefit Service: Any calendar year after 1969 in which a participant completes at least 1,000 hours of service.

9. Normal Retirement Date: The first day of the month coinciding with or next following the participant’s 65th birthday.

10. Normal Retirement Benefit: Sum of Past Service Benefit for service prior to January 1, 1970 and Future Service Benefit for service after January 1, 1970.

Past Service Benefit- 2.3% of Considered Compensation at January 1, 1970 multiplied by Past Benefit Service for employees eligible to retire with full benefits at 55.

2.0% of Considered Compensation at January 1, 1970 multiplied by Past Service Benefit for all other employees.

Future Service Benefit- 2.3% of Average Earnings multiplied by Future Benefit Service for those eligible to retire with full benefits at 55.

2.0% of Average Earnings multiplied by Future Benefit Service for all other employees.

In no event will a participant’s accrued benefits be lower than their December 31, 1998 accrued benefits.

11. Early Retirement Benefit: Accrued benefit as of early retirement date, reduced by 5/9ths of 1% per month for the first 60 months and 5/18ths of 1% for each of the next 60 months by which the commencement date precedes the selected retirement date. The earliest possible retirement age for all contribution rates is age 55.

12. Late Retirement Benefit: Same as normal retirement using earnings and service credits to late retirement date.

70 13. Disability Benefit: Same as early retirement benefit.

14. Vesting: An employee is fully vested after completing five years of service as a participant. Accumulated employee contributions with interest are vested at all times. The interest rate credited on employee contributions for each year is the same as the federal mid-term rate for the fifth month preceding the beginning of the plan year.

15. Normal Form of Benefit: Life annuity with a modified cash refund death benefit.

16. Vested Termination Benefit: The greater of the value of the deferred vested benefit or accumulated contributions.

17. Pre-Retirement Death or Nonvested Termination Benefit: Return of employee contributions with interest.

18. Spouse Benefit: A spouse of a deceased participant who was vested may be eligible for a preretirement spouse benefit equal to 100% of the joint annuity benefit which the participant could have received if the participant terminated on his or her date of death and selected the 100% joint and survivor option. Other spouses will receive a return of contributions, with interest.

B. Summary of Significant Accounting Policies and Plan Asset Matters.

Basis of Accounting: The City Employees’ Pension Plan Financial Statements are prepared using the accrual basis of accounting.

Method Used to Value Investments: The actuarial value of assets is determined on a five-year smoothing fair value method. A change to this method was made effective as of January 1, 2002 with the 2001 asset gain/loss being the first to be smoothed. Prior to January 1, 2002 the actuarial value of assets was equal to the fair value of assets.

Funding Policy: The contribution provisions are established by city ordinance and may be amended by the City Council. The City is required to contribute at an actuarially determined rate: the current rate is 38.7 % of annual covered payroll.

Annual Pension Cost and Net Pension Obligation: The city’s annual pension cost and net pension obligation for the current year were as follows:

Annual Required Contribution $3,410,332 Interest on Net Pension Obligation 384,000 Adjustment to annual required contribution 468,000 Annual Pension Cost 3,591,000 Contributions Made 3,410,332 Increase (decrease) in net pension 181,000 obligation Net pension obligation beginning of year 4,950,000 Net pension obligation end of year $5,131,000

The annual required contribution for the current year was determined as part of the January 1, 2013 actuarial valuation using projected unit credit cost method. The actuarial assumptions included (a) 7.75% investing rate of return (net of administrative expenses) and (b) projected salary increases of 3% per year. The assumptions did not include postretirement benefit increases. The unfunded actuarial accrued liability is being amortized as a level dollar amount on closed basis. The remaining amortization period at January 1, 2013 was 22 years.

The following table develops the GASB No. 27 expense for the 2003 through December 31, 2012 calendar year:

Annual Required Interest Percent of Year Contribution on ARC Amortization Pension Amount ARC Change NPO Ended (ARC)(1) NPO Adjustment Factor Cost Contributed Contributed in NPO Balance December 31, 2003(3) 1,574,332 265,000 269,000 11.9046 1,700,000 1,217,000 72% 483,000 3,690,000 December 31, 2004 1,961,243 304,000 336,000 10.9974 2,091,000 1,902,000 91% 189,000 3,879,000 December 31, 2005(4) 2,097,211 320,000 336,000 10.9974 2,237,000 2,087,000 93% 150,000 4,029,000 December 31, 2006(5) 2,344,327 332,000 369,000 10.9046 2,501,000 2,344,000 94% 157,000 4,186,000 December 31, 2007 2,515,199 345,000 387,000 10.8043 2,681,000 2,571,000 96% 110,000 4,296,000 December 31, 2008 2,513,915 354,000 402,000 10.6956 2,673,000 2,526,000 95% 147,000 4,443,000 December 31, 2009 3,000,210 344,000 402,000 11.0503 3,175,000 3,000,210 94% 175,000 4,618,000 December 31, 2010 3,233,210 358,000 423,000 10.9067 3,419,000 3,233,210 95% 186,000 4,804,000 December 31, 2011 3,232,139 372,000 447,000 10.7520 3,408,000 3,261,913 96% 146,000 4,950,000 December 31, 2012 3,410,332 384,000 468,000 10.5853 3,591,000 3,410,332 95% 181,000 5,131,000

(1) Includes interest to the end of the year. (2) The valuation interest rate was changed from 8.25% to 7.75% effective January 1, 2009. (3) The amortization period was changed from 14 years to 30 years, effective January 1, 2003. (4) The salary increase assumption was changed from 5% to 3% effective January 1, 2005. (5) The amortization period decreases by one year with each year effective January 1, 2006

C. Actuarial Methods and Assumptions.

Actuarial Methods and Significant Assumptions Used to Determine the Annual Required Contributions

Valuation Date January 1, 2013 Actuarial Cost Method Projected Unit Credit Amortization Method Level Dollar over a thirty year period beginning January 1, 2005 and ending December 31, 2034 Remaining Amortization Period 22 Years Asset Valuation Method Market Value of assets plus contributions receivable Actuarial Assumptions: Investment Rate of Return 7.75 % Compounded Annually (changed from 8.25% effective Jan 1, 2009) Salary Scale/ Inflation Rate 3.0% Per Year (changed from 5% effective Jan. 1, 2005) Post Retirement Cost of Living Adjustment None Mortality Police and Firefighters: RP-2000 Blue Collar Mortality Table with generational mortality projection using Scale AA

72 All Other Participants: RP-2000 Combined Healthy Mortality Table with generational mortality projections using Scale AA Withdrawal Benefits Greater of the value of the deferred vested benefit or accumulated contributions Retirement Age Participants contributing 7.4% are assumed to retire at age 55. Participants contributing 4.7% are assumed to retire at age 62. Participants contributing 3.7% are assumed to retire at age 65. Normal Form of Benefit Life annuity with modified cash refund death benefit. Marital Status 95% of all participants are assumed to be married with the female spouse one year younger than the male spouse. Expense Expenses payable from the trust are assumed to be equal to the expense amount of the previous year rounded to the nearest $10,000 ($210,000 for 2013).

The unfunded actuarial accrued liability as of January 1, 2013 for the City Employee Pension Plan was $30,176,643. The breakdown of the unfunded actuarial accrued liability for the plan is as follows:

Actuarial Liability for: Active Employees $ 39,684,172 Retirees, Beneficiaries, and disabled employees 35,430,923 Terminated employees with vested benefits 3,869,165 Terminated employees entitled to a refund - TOTAL $ 78,984,260 Actuarial value of plan assets as of January 1, 2013 48,807,617 Unfunded actuarial accrued liability as of January 1, 2013 $ 30,176,643

Unfunded (Assets in Excess of Net Unfunded Pension Benefit Assets Pension (Assets in Excess Annual Obligation as a Fiscal Available Benefit Percentage of Pension Benefit Covered Percentage of Year for Benefits Obligation Funded Obligation) Payroll Covered Payroll) 2012$ 48,807,617 $ 78,984,260 61.8%$ 30,176,643 $ 9,248,169 326.3%

On page 80, immediately following the notes to the financial statements, there is a table showing the schedule of funding progress for this defined benefit plan which presents multi-year trend information about the actuarial value of plan assets relative to the actuarial accrued liability for benefits.

D. Contributions Recommended and Contributions Made.

The recommended contributions consist of normal costs which includes allowance for plan expenses, and amortization of any unfunded liability. The normal cost is associated with the actuarial liability for future years. This cost is the present value at the current age of the projected benefit, based on actuarial assumptions, discounted from the assumed retirement age, divided by the participant’s total

73 expected years of credited service at the assumed retirement age. The considered payroll as of January 1, 2013 for participants under normal retirement age is $9,248,169.

The total recommended contributions to cover normal costs for the plan year ended January 1, 2013 totaled $3,583,317 or 38.7% of annual covered payroll of $9,248,169. The recommended contributions for employer and employee are $891,882, 9.6% of the annual covered payroll and $568,477, 6.2% of the annual covered payroll, respectively. The allowance for expenses is $210,000, 2.3% which is included in the total normal cost. The actuarially recommended contribution to amortize the unfunded accrued liability at January 1, 2013 was $2,691,435 calculated on a 30-year level dollar amortization. This is equivalent to 29.1% of annual covered payroll. As of January 1, 2013, there are 22 years remaining. The total recommended employer contribution of $3,583,317 in the 2013 plan year is a little higher than the recommended employer contribution of $3,410,332 in 2012. This is primarily due to continued recognition of past asset losses and the deferred recognition of a portion of past asset gains as well as a decrease in the amortization period for the unfunded liability.

Contributions made for the City Pension Plan totaled $3,984,716 ($3,410,332 employer, $574,384 employee). The employer contribution was equivalent to 36.9% of annual covered payroll and the employee contributions were the equivalent of 6.2% of annual covered payroll, respectively.

The unfunded actuarial accrued liability has increased from $28,811,527 in the 2012 plan year to $30,176,643 in the 2013 plan year. The increase in unfunded liability is due primarily to the continued recognition of a portion of past asset losses and the deferred recognition of a portion of past asset gains. 2012 was the last year to recognize a portion of the large losses incurred in 2008.

Effective January 1, 2006 the City changed three assumptions and methods used in valuing the plan’s liability and calculating annual expense.

The mortality assumption was updated from the 1983 Group Annuity Mortality Table for all participants to the RP-2000 Blue Collar Mortality Table with Scale AA for police and firefighter and the RP-2000 Combined Healthy Mortality table with Scale AA for all other participants.

The retirement assumption was changed from age 55 for participants with a selected age of 55 and 62 for all other participants to graded retirement assumptions between ages 55 and 65. The graded table was developed in part from the City’s own experience over the past eight years.

The amortization period for the unfunded liability was changed from a rolling 30-year amortization period to a fixed amortization period of 30 years from January 1, 2005, such that the entire unfunded liability would be amortized by December 31, 2034. As a result, the 2013 amortization period decreased from 30 to 22 years.

For the five years ended January 1, 2009, 2010, 2011, 2012 and 2013 the city’s contribution to the system, all made in accordance with actuarially determined requirements, were 27.3 percent, 30.3 percent, 31.6 percent, 33.8 percent, and 36.9 percent of the annual covered payroll, respectively. Schedule of funding progress is presented immediately following notes. The City of Grand Forks Pension Plan actuarial report is prepared by Deloitte & Touche LLP and is available in the City Auditor’s Office and can be obtained by writing to City of Grand Forks, 255 N 4th St., Grand Forks, ND 58206-5200.

Defined Contribution Plan Plan description - Effective January 1, 1997, the City of Grand Forks, North Dakota established a tax qualified defined contribution plan, named as the City of Grand Forks, North Dakota Retirement Savings Plan, for the benefit of eligible employees (employees hired after January 1, 1996). City of Grand Forks, North Dakota is the Principal Sponsor of the plan.

The principal sponsor reserves the power to amend this plan in any respect and either prospectively or retroactively or both in any respect by resolution of its City Council.

Each employee becomes a participant on the enrollment date coincident with or next following the date as of which the employee has both: a) attained age twenty one (21) years, b) completed one (1) year of service.

Funding policy - Each participant as a condition of employment with the City contributes four percent (4%) of his/her recognized compensation to the plan. No participant has the right to elect to make or not make such contributions. Such required employee contributions for a calendar month must be delivered to the trustee, Alerus Financial, for deposit in the fund no later than fifteen (15) days after the end of that calendar month. However, the City delivers the contributions to the trustee no later than three (3) working days after the pay day.

The City of Grand Forks, the employer, contributes four percent (4%) of the participant’s recognized compensation for the plan year. Employer contribution must be delivered to the trustee, Alerus Financial, for deposit in the fund no later than four (4) months after the end of the plan year. However, the City delivers the contributions to the trustee, the Alerus Financial no later than three working days after pay day. For the year ended December 31, 2012 the employees contributed $7,725 and City of Grand Forks contributed $7,725 to the plan. The market value of the plan assets at December 31, 2012 was $3,010,943. This plan is administered by Alerus Financial and the funds are invested in bonds and domestic and international equities.

North Dakota PERS Hybrid Defined Benefit Plan

The City of Grand Forks joined the North Dakota Public Employees’ Retirement System (NDPERS) Hybrid Defined Benefit Plan July 1, 2008. All employees hired after July, 1, 2008 are required to participate in the NDPERS Pension Plan, which is administered by the State of North Dakota. All eligible employees were given the opportunity to enroll in the NDPERS Plan. As of December 31, 2012, 293 employees were enrolled. Following is a brief description of the plan.

NDPERS is a cost-sharing multiple-employer defined benefit pension plan. The plan provides retirement, disability and death benefits. If an active employee dies with less than three years of credited service, a death benefit equal to the value of the employee’s accumulated contributions, plus interest, is paid to the employee’s beneficiary. If the employee has earned more than three years of credited service, the surviving spouse will be entitled to a single payment refund, lifetime monthly payments in an amount equal to 50% of the employee’s accrued normal retirement benefit, 60 monthly payments equal to the employee’s accrued normal retirement benefit calculated as if the employee were age 65 the day before death occurred or monthly payments in an amount equal to the employees’ 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 employee’s accumulated pension benefits are paid, the balance will be payable to the surviving spouse’s designated beneficiary.

75 Eligible employees who become totally disabled after a minimum of 180 days of service, receive monthly disability benefits that are equal to 25% of their final average salary with a minimum benefit of $100. To qualify under this section, the employee must meet the criteria established by the Retirement Board for being considered totally disabled.

Employees are entitled to unreduced monthly pension benefits equal to 2.0% of their final average salary for each year of service beginning when the sum of age and years of credited service equal or exceed 85, or at normal retirement age (65). The plan permits early retirement at ages 55-64, with three or more years of service.

Benefit and contribution provisions are administered in accordance with chapter 54-52 of the North Dakota Century Code. This state statute requires that 5% of the participant’s salary be contributed to the plan by either the employee or by the employer under a “salary reduction” agreement. The City of Grand Forks has not elected to implement a salary reduction agreement. The City of Grand Forks is required to contribute 5.12% of each participant’s salary as the employer’s share. In addition to the 5.12% employer contribution the employer is required to contribute 1.14% of each participating employee’s gross wage to a prefunded retiree health insurance program. The required contributions are determined using an entry age normal actuarial funding method and are included in state statute. The North Dakota Retirement Board was created by the State Legislature and is the governing authority of NDPERS. The City of Grand Forks’ required contributions to NDPERS for the years ended December 31, 2010, December 31, 2011 and December 31, 2012 were $609,157, $650,143 and $861,256 respectively. The City contributed 100% of the required contribution each year.

NDPERS issues a publicly available financial report that includes financial statements and the required supplementary information for NDPERS. That report may be obtained by writing to NDPERS; 400 East Broadway, Suite 505; PO Box 1657; Bismarck, ND 58502-1657.

Post Employment Benefits The City participates in the Post Employment Health Plan for Public Employees. The PEHP is a Defined Contribution Health Reimbursement Arrangement (HRA). The plan provides postemployment reimbursements of qualifying medical care expenses for the benefit of employees and their dependents. The City Council established this plan and has agreed to make contributions pursuant to the plan on behalf of employees on a pay-as-you-go basis. The City Council has the authority to amend the plan and the contribution requirements by resolution.

The contributions are held in trust by the LaSalle National Bank as trustee of the PEHP for the exclusive benefit of the plan participants and their qualified dependents. Nationwide Retirement Solutions, Inc. is the administrator for the Post Employment Health Plan. The City contributed $222,103 for the plan year ended December 31, 2012. Total market value of plan assets as of December 31, 2012 was $2,791,502.

F. Concentration

Approximately 23% of the City’s sewer operating revenue is derived from sewer utility charges to J.R. Simplot, a food and agri-business corporation.

76 CITY OF GRAND FORKS, NORTH DAKOTA Required Supplementary Information Pension Trust Fund December 31, 2012

Pursuant to GASB Statement No. 25 and 27, required disclosure of supplementary contributions are provided below:

Schedule of Funding Progress

Projected Unit Unfunded UAAL as a Credit Actuarial Actuarial percentage Actuarial Actuarial Accrued Accrued of Covered Valuation Value of Liability Liability Funded Covered Payroll Payroll Date Assets (a) (AAL) (b) (UAAL) (b-a) Ratio (a/b) ( c) ((b-a)/c) January 1, 2004 37,566,359 49,611,951 12,045,592 75.7% 10,915,360 110.4% January 1, 2005 (3) 38,019,924 52,478,905 14,458,981 72.4% 10,948,717 132.1% January 1, 2006 (4) 38,368,885 54,082,932 15,714,047 70.9% 11,690,288 134.4% January 1, 2007 40,322,732 57,495,728 17,172,996 70.1% 11,552,635 148.7% January 1, 2008 44,066,555 60,847,825 16,781,270 72.4% 11,325,611 148.2% January 1, 2009 (5) 44,191,838 67,174,457 22,982,619 65.8% 10,976,703 209.4% January 1, 2010 44,501,471 70,546,309 26,044,838 63.1% 10,651,863 244.5% January 1, 2011 46,067,810 73,399,014 27,331,204 62.8% 10,227,256 267.2% January 1, 2012 47,254,745 76,066,272 28,811,527 62.1% 9,659,818 298.3% January 1, 2013 48,807,617 78,984,260 30,176,643 61.8% 9,248,169 326.3%

Schedule of Employer Contribution Annual Required Employer Percentage Fiscal Year Contribution Contribution Contribution (2) December 31, 2003 1,574,332 1,216,896 77.3% December 31, 2004 1,961,243 1,901,592 97.0% December 31, 2005 2,097,211 2,087,098 99.5% December 31, 2006 2,344,327 2,344,327 100.0% December 31, 2007 2,515,199 2,571,289 102.2% December 31, 2008 2,513,915 2,526,168 100.5%

December 31, 2009 3,000,210 3,000,210 100.0% December 31, 2010 3,233,210 3,233,210 100.0% December 31, 2011 3,232,139 3,261,913 100.9%

December 31, 2012 3,410,332 3,410,332 100.0%

(1) The amortization period was changed from 14 years to 30 years, effective January 1, 2003. (2) The salary increase assumption was changed from 5% to 3% effective January 1, 2005. (3) The mortality and retirement assumptions were updated and the amortization period was reduced effective January 1, 2005. (4) The investment return assumption was changed from 8.25% to 7.75% effective January 1, 2009.

7 7

CITY OF GRAND FORKS, NORTH DAKOTA A-1 COMBINING BALANCE SHEET NON-MAJOR GOVERNMENTAL FUNDS

DECEMBER 31, 2012 Total Non-Major Non-Major Non-Major Non-Major Special Revenue Debt Service Capital Project Governmental Funds Funds Funds Funds ASSETS Cash and cash equivalents $ 3,981,218 $ 1,327,587 $ 2,924,832 $ 8,233,637 Investments 15,000,000 1,000,000 2,000,000 18,000,000 Receivables, net: - Accounts 103,733 103,733 Special assessments (including liens) 5,690 3,326 9,016 Deferred special assessments 45,029 2,592 47,621 Property taxes 62,138 18,580 80,718 Sales tax 507,529 507,529 Intergovernmental 1,264,076 1,264,076 Prepaid Items 94,074 94,074 Due from other funds 1,943,333 1,943,333

Total assets $ 22,956,101 $ 2,396,886 $ 4,930,750 $ 30,283,737

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 502,208 $ 22,231 $ 524,439 Contracts payable 58,303 58,303 Due to other funds 415,000 415,000 Advances from other funds 494,876 $ 9,901 504,777 Deferred revenue 131,848 64,167 5,918 201,933

Total liabilities 1,543,932 74,068 86,452 1,704,452

Fund Balances: Nonspendable - Restricted 21,412,169 2,322,818 1,677,661 25,412,648 Committed 3,166,637 3,166,637 Assigned - Unassigned - -

TOTAL FUND BALANCE 21,412,169 2,322,818 4,844,298 28,579,285

Total Liabilities and Fund Balance $ 22,956,101 $ 2,396,886 $ 4,930,750 $ 30,283,737

79 CITY OF GRAND FORKS, NORTH DAKOTA A-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENTAL FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2012

Total Non-Major Non-Major Non-Major Non-major Special Debt Capital Governmental Revenue Service Projects Funds Revenues: Taxes $ 8,652,777 $ 813,235 $ $ 9,466,012 Licenses and permits Intergovernmental 8,374,868 18,312 9,579 8,402,759 Charges for services 1,228,888 1,228,888 Special assessments 91,619 12,654 104,273 Fines and forfeits 22,356 22,356 Interest 320,107 49,729 83,118 452,954 Miscellaneous 149,472 149,472

Total Revenues 18,748,468 972,895 105,351 19,826,714

Expenditures: Current: General government 1,742,972 12,979 1,755,951 Health & welfare 854,975 854,975 Public safety 3,434,227 3,434,227 Highways & streets 385,694 385,694 Culture & recreation 1,714,234 1,714,234 Capital outlay 3,864,742 6,027,510 9,892,252 Debt service: Issuance costs Advance Refunding Escrow Principal retirement 2,420,000 2,420,000 Interest and fiscal charges 16,200 1,443,137 1,459,337

Total Expenditures 12,013,044 3,876,116 6,027,510 21,916,670

Excess (Deficiency) of Revenues Over Expenditures 6,735,424 (2,903,221) (5,922,159) (2,089,956)

Other Financing Sources (Uses): Bonds issued 3,169,834 3,169,834 Issuance of refunding bonds 301,211 301,211 Redemption of refunded bonds (2,390,000) (2,390,000) Sale of Property 3,584 3,584 Transfers in 1,144,360 3,378,954 2,695,683 7,218,997 Transfers out (4,518,877) (760,970) (232,563) (5,512,410) Total Other Financing Sources (Uses) (3,374,517) 227,984 5,937,749 2,791,216

Net change in fund balances 3,360,907 (2,675,237) 15,590 701,260

Fund balance Beginning 18,051,262 4,998,055 4,828,708 27,878,025

Fund Balances Ending $ 21,412,169 $ 2,322,818 $ 4,844,298 $ 28,579,285

80 NON-MAJOR SPECIAL REVENUE FUNDS

Special Revenue Funds. Account for the proceeds of specific revenue (other than those for major capital projects) that are restricted legally to expenditure for specified purposes. Additional information is provided below for some of the significant funds in this category.

Emergency Levy This is a fund to account for the receipts and disbursement of funds for use in the event of an emergency. Property taxes are levied in accordance with State Law Sec. 57-15-48 and limited to unexpended funds equal to five dollars per capita or five mills on the taxable valuation of the City, whichever is greater.

Municipal Band This is a fund to account for the receipt and disbursement of funds for City’s Municipal Band. Municipal Band provides musical entertainment for the citizens of Grand Forks. Funds are allocated from the city’s property tax levy.

Highway Tax Distribution Fund This is a fund to receive and disburse funds allocated to the City from North Dakota users taxes. These funds are to be used for street maintenance, repair, construction and related expenditures.

Public Building Fund This is a fund to receive and disburse funds provided by a specific tax levy for building repair and construction. Property taxes are levied in accordance with State Law Sec. 57-15-44.

Library This is a fund to account for the operation and maintenance of the City’s Library. Financing is provided by a specific annual property tax levy, in accordance with State Law Sec. 40-38-02 to the extent that miscellaneous revenues are not sufficient to provide adequate financing.

Library Capital Maintenance Fund This is a fund to account for the monies set aside from Library Fund to purchase library books, computer equipment and other capital items.

City Share of Special Improvements This is a fund to receive and disburse funds provided by a specific levy for payment of the City’s share of special improvements. Property taxes are levied in accordance with State Law Sec. 40- 24-10.

City Special Assessment Fund This is a fund to receive and disburse funds provided by a specific levy for payment of special assessments on city owned property. Property taxes are levied in accordance with State Law Sec. 40-24-10.

Economic Development Sales Tax This is a fund to receive and disburse the portion of the funds provided by the City sales tax set aside for economic development expenditures as designated by the City Council. Sales tax is levied in accordance with the City’s Home Rule Charter.

Infrastructure This is a fund to receive and disburse the portion of the funds provided by the City’s sales tax set aside for transfer to infrastructure projects as designated by the City Council. Sales tax is levied in accordance with the City’s Home Rule Charter.

Special Grants Fund This is a fund to receive and disburse federal and state grants for Historic Preservation activities and for the Community Violence Intervention Center that administers the Edward Byrne Formula Grant and The US Department of Justice, Office of Justice Programs grant to Encourage Arrest Policies.

Health, Fire and Police Grants Funds These funds receive and disburse federal and state grants for the health and the public safety functions.

E-911 This is a fund to receive and disburse funds collected through a telephone surcharge for the purpose of furnishing enhanced 911- system service to the city.

Public Safety Answering Point This is a fund to receive and disburse funds collected from charges to various governmental and private entities for the purpose of furnishing a central communication center.

Noxious Weeds This is a fund to receive and disburse funds provided by a specific mill levy. These funds are to be used for destruction of all known weeds within the City of Grand Forks.

Insurance Reserve Fund This is a fund to receive and disburse funds provided by a specific tax levy to pay insurance premium to North Dakota Insurance Reserve Fund for general liability, public officials error and omissions and auto and inland marine coverage for the City. Property taxes are levied in accordance with State Law Sec. 57-15-10(4).

Asset Forfeiture Fund This fund accounts for assets confiscated through law enforcement activities.

Housing Administration This fund is used to account for the receipt and disbursement of funds for the Housing Authority’s payroll.

CITY OF GRAND FORKS, NORTH DAKOTA COMBINING BALANCE SHEET NON-MAJOR SPECIAL REVENUE FUNDS

DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Highway Public Emergency Municipal Tax Building Levy Band Dist. Fund Fund Library ASSETS Cash and cash equivalents $ 459,037 $ 3,677 $ 448,939 $ 42,860 $ 364,363 Investments 8,000,000 500,000 Receivables (Net of allowances for uncollectibles): Accounts Taxes: Property 3,363 370 12,131 32,225 Sales Intergovernmental: State of North Dakota 401,575 10,000 Federal 2,778 Grand Forks County 98,648 Prepaid Items Due from other funds Advances to other funds

Total Assets $ 465,178 $ 4,047 $ 8,850,514 $ 54,991 $ 1,005,236

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 53,650 $ 4,663 Contracts payable and retainage Due to other funds Advances from other funds Deferred revenue $ 2,435 $ 267 $ 8,781 23,325

Total Liabilities 2,435 267 53,650 8,781 27,988

Fund Balances: Non spendable fund balance Restricted fund balance $ 462,743 $ 3,780 $ 8,796,864 $ 46,210 $ 977,248 Assigned fund balance

Total Fund Balances 462,743 3,780 8,796,864 46,210 977,248

Total Liabilities and Fund Balances $ 465,178 $ 4,047 $ 8,850,514 $ 54,991 $ 1,005,236

Continued

84 B-1

Library City's Share Capital Special Grants Special Grants Special Grants Special Asset Of Special Mtce. Fire Police Health Grants Forfeiture Improvements

$ 366,110 $ 211 $ 8,367 $ 158,871 $ 32,691 $ 22,930 $ 32,867

1,265

1,514

31,113 103,093 5,093 200,000 141,083 6,700 192,450

94,074

$ 366,110 $ 200,211 $ 275,902 $ 268,664 $ 230,234 $ 22,930 $ 34,381

$ 14,851 $ 163,389

$ 200,000 150,000 65,000

78,036 $ 1,096

200,000 242,887 228,389 1,096

$ 366,110 $ 211 $ 33,015 $ 268,664 $ 1,845 $ 22,930 $ 33,285

366,110 211 33,015 268,664 1,845 22,930 33,285

$ 366,110 $ 200,211 $ 275,902 $ 268,664 $ 230,234 $ 22,930 $ 34,381

85 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING BALANCE SHEET NON-MAJOR SPECIAL REVENUE FUNDS

DECEMBER 31, 2010 With Comparative Totals for December 31, 2009

Economic City Special Insurance Noxious Development Assessment Reserve Weed E-911 Sales Fund Fund Control System Tax ASSETS Cash and cash equivalents $ 148,739 $ 5,560 11,658$ $ 536,574 $ 422,033 Investments 1,000,000 Receivables (Net of allowances for uncollectibles): Accounts 91,636 Taxes: Property 7,928 4,540 67 Sales 174,336 Intergovernmental: State of North Dakota Federal Grand Forks County Prepaid Items Due from other funds 1,943,333 Advances to other funds

Total Assets $ 156,667 $ 10,100 11,725$ $ 628,210 $ 3,539,702

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ 12,351 $ 84,697 Contracts payable and retainage Due to other funds Advances from other funds 494,876 Deferred revenue $ 5,738 $ 3,287 $ 49

Total Liabilities 5,738 3,287 49 507,227 84,697

Fund Balances: Non spendable fund balance Restricted fund balance $ 150,929 $ 6,813 11,676$ $ 120,983 $ 3,455,005 Assigned fund balance

Total Fund Balances 150,929 6,813 11,676 120,983 3,455,005

Total Liabilities and Fund Balances $ 156,667 $ 10,100 11,725$ $ 628,210 $ 3,539,702

86 B-1 (Cont'd)

Public Service * Infrastructures Answering Community Housing 2012 2011 Point Enhancement Administration Total Total

$ 548,216 $ 343,630 $ 23,885 $ 3,981,218 $ 8,026,122 5,500,000 15,000,000 7,500,000 -

10,832 103,733 117,996

62,138 30,611 333,193 507,529 472,501

71,543 622,417 668,392 543,011 272,859 98,648 85,083 94,074 6,000 1,943,333 1,864,096 -

$ 6,452,952 $ 354,462 $ 23,885 $ - $ 22,956,101 $ 19,043,660

$ 143,361 $ 10,195 $ 15,051 $ 502,208 $ 288,759 14,304 415,000 120,000 494,876 559,776 8,834 131,848 9,559

143,361 10,195 23,885 1,543,932 992,398

$ 6,309,591 $ 344,267 $ 21,412,169 $ 17,991,662 59,600

6,309,591 344,267 21,412,169 18,051,262

$ 6,452,952 $ 354,462 $ 23,885 $ - $ 22,956,101 $ 19,043,660

87 CITY OF GRAND FORKS, NORTH DAKOTA B-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR SPECIAL REVENUE FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Highway Public Emergency Municipal Tax Building Levy Band Dist. Fund Fund REVENUES Taxes: Property $ 145,207 $ 15,973 $ - $ 524,132 Sales Intergovernmental 3,171 363 4,536,238 11,901 Charges for services Fines and forfeits Interest 8,065 76 131,904 3,581 Miscellaneous 49,035

Total Revenues 156,443 16,412 4,717,177 539,614

EXPENDITURES Current: General government 50,161 Health & welfare Public safety 10,794 Highways & streets 385,694 Culture & recreation 16,246 Capital outlay 1,639,637 96,850 Debt service: Principal payment Interest and fiscal charges

Total Expenditures 10,794 16,246 2,025,331 147,011

Excess (Deficiency) of Revenues Over Expenditures 145,649 166 2,691,846 392,603

OTHER FINANCING SOURCES (USES) Transfers in Transfers out (37,325) (825,515) (399,656) Total Other Financing Sources (Uses) (37,325) (825,515) (399,656)

Net change in fund balances 108,324 166 1,866,331 (7,053)

Fund Balances - Beginning 354,419 3,614 6,930,533 53,263

GASB 54 Adjustment

Fund balance-Beginning Restated 354,419 3,614 6,930,533 53,263

Fund Balances Ending $ 462,743 $ 3,780 $ 8,796,864 $ 46,210

Continued

88 B-2 (cont'd)

Library Special Special Special Special Capital Grants Grants Grants Grants Library Maintenance Fire Police Health Other

$ 1,392,378 $ - $ - $ - $ - $ -

675,475 354,999 579,380 885,975 1,225,567 45,765 70,305 1,956

21,987 3,774 9,156 10,998 29,000

2,144,761 3,774 354,999 649,685 898,929 1,254,567

852,140 2,450 577,470 1,185,172

1,567,542 66,114 238,129 352,549 70,733 3,042

1,805,671 354,999 648,203 852,140 1,254,328

339,090 3,774 1,482 46,789 239

300,000 (300,000) (25,000)

(300,000) 300,000 (25,000)

39,090 303,774 1,482 21,789 239

938,158 62,336 211 31,533 246,875 1,606

$ 977,248 $ 366,110 $ 211 $ 33,015 $ 268,664 $ 1,845

89 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR SPECIAL REVENUE FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

City's Share City Special Insurance Asset Of Special Assessment Reserve Forfeiture Improvements Fund Fund REVENUES Taxes: Property $ - $ 65,343 342,654$ $ 196,029 Sales Intergovernmental 1,492 7,787 4,453 Charges for services Fines and forfeits 22,356 Interest 383 1,439 2,644 133 Miscellaneous 1,377

Total Revenues 22,739 68,274 354,462 200,615

EXPENDITURES Current: General government 10,153 358,589 263,104 Health & welfare Public safety 13,441 Highways & streets Culture & recreation Capital outlay 9,049 Debt service: Principal payment Interest and fiscal charges

Total Expenditures 22,490 10,153 358,589 263,104

Excess (Deficiency) of Revenues Over Expenditures 249 58,121 (4,127) (62,489)

OTHER FINANCING SOURCES (USES) Transfers in 48,115 Transfers out (83,907) (25,000) Total Other Financing Sources (Uses) (83,907) (25,000) 48,115

Net change in fund balances 249 (25,786) (29,127) (14,374)

Fund Balances - Beginning 22,681 59,071 180,056 21,187

GASB 54 Adjustment

Fund balance-Beginning Restated 22,681 59,071 180,056 21,187

Fund Balances Ending $ 22,930 $ 33,285 150,929$ $ 6,813

90 B-2 (cont'd)

Economic Public Noxious Development Service Weed E-911 Sales Answering Control System Tax Infrastructure Point

$ 2,904 $ - $ - $ - $ - 2,059,665 3,908,492 66 11,002 10,833 820,668 24,057 266,137

223 8,510 24,391 105,432 7,125 103 49,803

3,193 829,281 2,157,916 4,024,926 284,095

889,862 110,663 2,835 468,541 1,176,359

28,879 1,412,048 492

16,200

2,835 513,620 889,862 1,522,711 1,176,851

358 315,661 1,268,054 2,502,215 (892,756)

500 783,845 (240,194) (834,899) (1,747,381)

(239,694) (834,899) (1,747,381) 783,845

358 75,967 433,155 754,834 (108,911)

11,318 45,016 3,021,850 5,554,757 453,178

$ 11,676 $ 120,983 $ 3,455,005 $ 6,309,591 $ 344,267

91 CITY OF GRAND FORKS, NORTH DAKOTA B-2 (Cont'd) COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR SPECIAL REVENUE FUNDS

FOR THE YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Community Housing (1) 2012 2011 Enhancement Administration Total Total REVENUES Taxes: Property $ - $ - $ 2,684,620 $ 2,649,928 Sales 5,968,157 5,425,276 Intergovernmental 66,166 8,374,868 7,587,478 Charges for services 1,228,888 1,268,154 Fines and forfeits 22,356 19,946 Interest 440 320,107 203,179 Miscellaneous 149,472 529,128

Total Revenues 66,166 440 18,748,468 17,683,089

EXPENDITUES Current: General government 60,440 1,742,972 1,817,947 Health & welfare 854,975 857,645 Public safety 3,434,227 2,587,722 Highways & streets 385,694 352,126 Culture & recreation 64,332 1,714,234 1,751,306 Capital outlay 13,334 3,864,742 2,041,448 Debt service: Principal payment Interest and fiscal charges 16,200 10,584

Total Expenditures 77,666 60,440 12,013,044 9,418,778

Excess (Deficiency) of Revenues Over Expenditures (11,500) (60,000) 6,735,424 8,264,311

OTHER FINANCING SOURCES (USES) Transfers in 11,500 400 1,144,360 797,068 Transfers out (4,518,877) (5,791,847) Total Other Financing Sources (Uses) 11,500 400 (3,374,517) (4,994,779)

Net change in fund balances (59,600) 3,360,907 3,269,532

Fund Balances - Beginning 59,600 18,051,262 16,508,083

GASB 54 Adjustment (1,726,353)

Fund balance-Beginning Restated 59,600 18,051,262 14,781,730

Fund Balances Ending $ - $ - $ 21,412,169 $ 18,051,262

(1) Miscellaenous revenue represents Housing Administration's payroll reimbursements.

92 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

Emergency Levy Municipal Band Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Revenues: Taxes: Property $ 149,311 $ 145,207 $ (4,104) 15,946$ $ 15,973 $ 27 Sales Intergovernmental 2,419 3,171 752 210 363 153 Charges for services Fines forfeits Interest 4,410 8,065 3,655 64 76 12 Miscellaneous

Total Revenues 156,140 156,443 303 16,220 16,412 192

Expenditures: Current: General government Health & welfare Public safety 118,815 10,794 108,021 Highways & streets Culture & recreation 16,220 16,246 (26) Capital outlay Debt service: Principal payment Interest and fiscal charges Total Expenditures 118,815 10,794 108,021 16,220 16,246 (26)

Excess (Deficiency) of Revenues Over Expenditures 37,325 145,649 108,324 166 166 Other Financing Sources (Uses): Transfers in Transfers out (37,325) (37,325) Total Other Financing Sources (Uses) (37,325) (37,325)

Net change in fund balances 108,324 108,324 166 166

Fund Balances - Beginning 354,419 354,419 3,614 3,614

GASB 54 Adjustment

Fund balance-Beginning Restated 354,419 354,419 3,614 3,614

Fund Balances Ending $ 354,419 $ 462,743 $ 108,324 $ 3,614 $ 3,780 $ 166

Continued

94 B-3

Highway Tax Distribution Fund Public Building Fund Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative)

$ - $ - $ - $ 522,120 $ 524,132 $ 2,012

2,965,645 4,536,238 1,570,593 11,990 11,901 (89)

78,877 131,904 53,027 3,154 3,581 427 49,035 49,035

3,044,522 4,717,177 1,672,655 537,264 539,614 2,350

50,161 50,161

805,674 385,694 419,980

4,157,402 1,639,637 2,517,765 96,850 96,850

4,963,076 2,025,331 2,937,745 147,011 147,011

(1,918,554) 2,691,846 4,610,400 390,253 392,603 2,350

(1,465,484) (825,515) 639,969 (399,656) (399,656)

(3,384,038) 1,866,331 5,250,369 (9,403) (7,053) 2,350

6,930,533 6,930,533 53,263 53,263

$ 3,546,495 $ 8,796,864 $ 5,250,369 $ 43,860 $ 46,210 $ 2,350

95 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

Library Library Capital Maintenance Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Revenues: Taxes: Property $ 1,427,413 $ 1,392,378 $ (35,035) $ - $ - $ - Sales Intergovernmental 545,665 675,475 129,810 Charges for services 38,500 45,765 7,265 Fines and forfeits Interest 10,000 21,987 11,987 1,000 3,774 2,774 Miscellaneous 5,000 9,156 4,156

Total Revenues 2,026,578 2,144,761 118,183 1,000 3,774 2,774

Expenditures: Current: General government Health & welfare Public safety Highways & streets Culture & recreation 2,039,789 1,567,542 472,247 300,000 300,000 Capital outlay 282,730 238,129 44,601 Debt service: Principal payment Interest and fiscal charges Total Expenditures 2,322,519 1,805,671 516,848 300,000 300,000

Excess (Deficiency) of Revenues Over Expenditures (295,941) 339,090 635,031 (299,000) 3,774 302,774 Other Financing Sources (Uses): Transfers in 300,000 300,000 Transfers out (300,000) (300,000) Total Other Financing Sources (Uses) (300,000) (300,000) 300,000 300,000

Net change in fund balances (595,941) 39,090 635,031 1,000 303,774 302,774

Fund Balances - Beginning 938,158 938,158 62,336 62,336

GASB 54 Adjustment

Fund balance-Beginning Restated 938,158 938,158 62,336 62,336

Fund Balances Ending $ 342,217 $ 977,248 $ 635,031 $ 63,336 $ 366,110 $ 302,774

Continued

96 B-3 (Cont'd)

Special Grants - Fire Special Grants-Police Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative)

$ - $ - $ - $ - $ - $ -

557,866 354,999 (202,867) 664,927 579,380 (85,547) 104,764 70,305 (34,459)

557,866 354,999 (202,867) 769,691 649,685 (120,006)

2,450 2,450 698,958 577,470 121,488

376,052 352,549 23,503 70,733 70,733

378,502 354,999 23,503 769,691 648,203 121,488

179,364 (179,364) 1,482 1,482

211 211 31,533 31,533

$ 179,575 $ 211 $ (179,364) $ 31,533 $ 33,015 $ 1,482

97 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

Special Grants-Health Special Grants-Other Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Revenues: Taxes: Property $ - $ - $ - $ - $ - $ - Sales Intergovernmental 993,519 885,975 (107,544) 1,286,020 1,225,567 (60,453) Charges for services 13,707 1,956 (11,751) Fines and forfeits Interest Miscellaneous 11,000 10,998 (2) 32,240 29,000 (3,240)

Total Revenues 1,018,226 898,929 (119,297) 1,318,260 1,254,567 (63,693)

Expenditures: Current: General government Health & welfare 995,726 852,140 143,586 Public safety 1,255,653 1,185,172 70,481 Highways & streets Culture & recreation 60,860 66,114 (5,254) Capital outlay 1,747 3,042 (1,295) Debt service: Principal payment Interest and fiscal charges Total Expenditures 995,726 852,140 143,586 1,318,260 1,254,328 63,932

Excess (Deficiency) of Revenues Over Expenditures 22,500 46,789 24,289 239 239 Other Financing Sources (Uses): Transfers in Transfers out (25,000) (25,000) Total Other Financing Sources (Uses) (25,000) (25,000)

Net change in fund balances (2,500) 21,789 24,289 239 239

Fund Balances - Beginning 246,875 246,875 1,606 1,606

GASB 54 Adjustment

Fund balance-Beginning Restated 246,875 246,875 1,606 1,606

Fund Balances Ending $ 244,375 268,664$ $ 24,289 $ 1,606 $ 1,845 $ 239

Continued

98 B-3 (Cont'd)

Asset Forfeiture City's Share of Special Improvements Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative)

$ - $ - $ - $ 67,190 $ 65,343 $ (1,847)

1,150 1,492 342

22,390 22,356 (34) 383 383 900 1,439 539

22,390 22,739 349 69,240 68,274 (966)

10,153 10,153

13,341 13,441 (100)

9,049 9,049

22,390 22,490 (100) 10,153 10,153

249 249 59,087 58,121 (966)

(83,908) (83,907) 1

249 249 (24,821) (25,786) (965)

22,681 22,681 59,071 59,071

$ 22,681 $ 22,930 $ 249 $ 34,250 $ 33,285 $ (965)

99 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

City Special Assessment Fund Insurance Reserve Fund Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Revenues: Taxes: Property $ 350,881 342,654$ $ (8,227) 201,570$ $ 196,029 $ (5,541) Sales Intergovernmental 6,000 7,787 1,787 4,563 4,453 (110) Charges for services Fines and forfeits Interest 3,685 2,644 (1,041) 690 133 (557) Miscellaneous 1,377 1,377

Total Revenues 360,566 354,462 (6,104) 206,823 200,615 (6,208)

Expenditures: Current: General government 389,237 358,589 30,648 263,104 263,104 Health & welfare Public safety Highways & streets Culture & recreation Capital outlay Debt service: Principal payment Interest and fiscal charges Total Expenditures 389,237 358,589 30,648 263,104 263,104

Excess (Deficiency) of Revenues Over Expenditures (28,671) (4,127) 24,544 (56,281) (62,489) (6,208) Other Financing Sources (Uses): Transfers in 48,115 48,115 Transfers out (25,000) (25,000) Total Other Financing Sources (Uses) (25,000) (25,000) 48,115 48,115

Net change in fund balances (53,671) (29,127) 24,544 (8,166) (14,374) (6,208)

Fund Balances - Beginning 180,056 180,056 21,187 21,187

GASB 54 Adjustment

Fund balance-Beginning Restated 180,056 180,056 21,187 21,187

Fund Balances Ending $ 126,385 150,929$ $ 24,544 $ 13,021 $ 6,813 $ (6,208)

Continued

100 B-3 (Cont'd)

E-911 Noxious Weed Control System Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative)

$ 2,986 $ 2,904 $ (82) $ - $ - $ -

35 66 31 816,940 820,668 3,728

165 223 58 8,291 8,510 219 103 103

3,186 3,193 7 825,231 829,281 4,050

2,899 2,835 64 519,302 468,541 50,761

78,500 28,879 49,621

16,200 16,200 2,899 2,835 64 614,002 513,620 100,382

287 358 71 211,229 315,661 104,432

500 500 (302,517) (240,194) 62,323

(302,017) (239,694) 62,323

287 358 71 (90,788) 75,967 166,755

11,318 11,318 45,016 45,016

$ 11,605 $ 11,676 $ 71 $ (45,772) $ 120,983 $ 166,755

101 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011 Economic Development Sales Tax Infrastructures Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Revenues: Taxes: Property $ - $ - $ - $ - $ - $ - Sales 1,836,067 2,059,665 223,598 3,486,957 3,908,492 421,535 Intergovernmental 11,002 11,002 Charges for services 24,057 24,057 Fines and forfeits Interest 8,761 24,391 15,630 48,073 105,432 57,359 Miscellaneous 21,000 49,803 28,803

Total Revenues 1,889,885 2,157,916 268,031 3,535,030 4,024,926 489,896

Expenditures: Current: General government 956,534 889,862 66,672 159,455 110,663 48,792 Health & welfare Public safety Highways & streets Culture & recreation Capital outlay 2,126,181 1,412,048 714,133 Debt service: Principal payment Interest and fiscal charges Total Expenditures 956,534 889,862 66,672 2,285,636 1,522,711 762,925

Excess (Deficiency) of Revenues Over Expenditures 933,351 1,268,054 334,703 1,249,394 2,502,215 1,252,821 Other Financing Sources (Uses): Transfers in Transfers out (956,312) (834,899) 121,413 (2,100,129) (1,747,381) 352,748 Total Other Financing Sources (Uses) (956,312) (834,899) 121,413 (2,100,129) (1,747,381) 352,748

Net change in fund balances (22,961) 433,155 456,116 (850,735) 754,834 1,605,569

Fund Balances - Beginning 3,021,850 3,021,850 5,554,757 5,554,757

GASB 54 Adjustment

Fund balance-Beginning Restated 3,021,850 3,021,850 5,554,757 5,554,757

Fund Balances Ending $ 2,998,889 $ 3,455,005 $ 456,116 $ 4,704,022 $ 6,309,591 $ 1,605,569

Continued

102 Public Service Answering Point Community Enhancement Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative)

$ - $ - # $ - $ - $ - $ -

17,905 10,833 (7,072) 75,000 66,166 (8,834) 262,117 266,137 4,020

7,210 7,125 (85)

287,232 284,095 (3,137) 75,000 66,166 (8,834)

1,215,077 1,176,359 38,718

65,000 64,332 668 6,000 492 5,508 21,500 13,334 8,166

1,221,077 1,176,851 44,226 86,500 77,666 8,834

(933,845) (892,756) 41,089 (11,500) (11,500)

783,845 783,845 11,500 11,500

(150,000) (108,911) 41,089

453,178 453,178

$ 303,178 $ 344,267 $ 41,089 $ - $ - $ -

103 CITY OF GRAND FORKS, NORTH DAKOTA B-3 (Cont'd) COMBINING SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES BUDGET AND ACTUAL NON-MAJOR SPECIAL REVENUE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Actual Totals for December 31, 2011

Housing Administration 2012 Total 2011 Actual Variance with Variance with Final Budget Final Budget Final Positive Final Positive Budget Actual (Negative) Budget Actual (Negative) Total Revenues: Taxes: Property $ - $ - $ - $ 2,737,417 $ 2,684,620 $ (52,797) $ 2,649,928 Sales 5,323,024 5,968,157 645,133 5,425,276 Intergovernmental 7,132,914 8,374,868 1,241,954 7,587,478 Charges for services 1,260,085 1,228,888 (31,197) 1,268,154 Fines forfeits 22,390 22,356 (34) 19,946 Interest 440 440 175,280 320,107 144,827 203,179 Miscellaneous 484,070 (484,070) 553,310 149,472 (403,838) 529,128

Total Revenues 484,070 440 (483,630) 17,204,420 18,748,468 1,544,048 17,683,089

Expenditures: Current: General government 503,701 60,440 443,261 2,332,345 1,742,972 589,373 1,817,947 Health & welfare 998,625 854,975 143,650 857,645 Public safety 3,823,596 3,434,227 389,369 2,587,722 Highways & streets 805,674 385,694 419,980 352,126 Culture & recreation 2,481,869 1,714,234 767,635 1,751,306 Capital outlay 7,226,744 3,864,742 3,362,002 2,041,448 Debt service: - - - Principal payment - - - Interest and fiscal charges 16,200 16,200 10,584 Total Expenditures 503,701 60,440 443,261 17,685,053 12,013,044 5,672,009 9,418,778

Excess (Deficiency) of Revenues Over Expenditures (19,631) (60,000) (40,369) (480,633) 6,735,424 7,216,057 8,264,311 Other Financing Sources (Uses): Transfers in 400 400 1,143,960 1,144,360 400 797,068 Transfers out (5,695,331) (4,518,877) 1,176,454 (5,791,847) Total Other Financing Sources (Uses) 400 400 (4,551,371) (3,374,517) 1,176,854 (4,994,779)

Net change in fund balances (19,631) (59,600) (39,969) (5,032,004) 3,360,907 8,392,911 3,269,532

Fund Balances - Beginning 59,600 59,600 18,051,262 18,051,262 - 16,508,083

GASB 54 Adjustment - - (1,726,353)

Fund balance-Beginning Restated 59,600 59,600 18,051,262 18,051,262 14,781,730

Fund Balances Ending 39,969$ $ - $ (39,969) $ 13,019,258 $ 21,412,169 $ 8,392,911 $ 18,051,262

Continued

104 NON-MAJOR DEBT SERVICE FUNDS

Debt Service Funds. Account for the accumulation of resources for, and the retirement of, general long-term debt principal and interest. Debt service funds are combined under four major categories: Special Assessment Improvement Bonds (major fund, information is provided with major funds), General Obligation Bonds, Sales Tax Revenue Bonds, and Current Year Projects. Additional information is provided below for the funds in these categories.

General Obligation Bonds:

2006 “B” GO Public Building Bonds A $1,465,000 bond issue to finance the costs of improvements made to various public buildings, including North Columbia Road Fire Hall, a remodel of the Police Building, and municipal court in the new Grand Forks County Jail. Principal payments range from $30,000 to $115,000 with a final payment due December 1, 2025.

2007 “A” GO Public Building Bonds A $3,490,000 bond issue to finance the costs of constructing a multi-department public safety building. Interest ranges from 4.25 percent to 4.625 percent. Principal payments range from $65,000 to $260,000 with a final payment due December 1, 2026.

2008 “B” GO Dike Refunding Bonds A $5,685,000 bond issue to refund the 1999 “A” GO Dike Bonds to finance the City’s share of costs associated with the construction of a new dike along the Red River. Interest ranges from 3.5 percent to 4.0 percent. Principal payments range from $500,000 to $650,000 with a final payment due December 1, 2019.

2011 “E” GO Dike Refunding Bonds A $2,260,000 bond issue to refund the 2002 “G” GO Dike Bonds to finance the City’s share of costs associated with the construction of a new dike along the Red River. Interest ranges from 2.0 percent to 3.0 percent. Principal payments range from $205,000 to $250,000 with a final payment due December 1, 2022.

Financing is provided by a general property tax levy. The City has pledged 5.51 mills for the repayment of this debt.

Sales Tax Revenue Bonds:

2007 “C” Sales Tax Reserve Revenue Refunding Bonds A $2,445,000 bond to refinance the 1996-A sales tax revenue bonds. The bonds are issued for the acquisition and construction of a facility to be leased to Cirrus Industries, Inc. Interest ranges from 3.94 percent to 4.2 percent. Principal payments range from $180,000 to $300,000 with a final payment due November 1, 2017. Financing is provided from a portion of the collection of City’s sales tax for economic development and from the collection of lease rental for the use and occupancy of the facility by Cirrus Industries, Inc.

2011 “A” Sales Tax Reserve Revenue Refunding Bonds A $3,860,000 bond issue to refinance the 2002-H Sales Tax Reserve Revenue Dike Bonds to finance a portion of the permanent flood protection project and to fund a reserve for further security of the bonds. Interest ranges from 2.0% to 3.0%. Principal payments range from

105 $350,000 to $430,000 with a final payment due December 1, 2021. Financing is provided from a dedicated sales tax amount from the City’s sales and use tax.

2011 “F” Sales Tax Reserve Revenue Refunding Bonds A $6,830,000 bond issue to refinance the 2001-D Sales Tax Reserve Revenue Dike Bonds to finance a portion of the permanent flood protection project. Interest ranges from 3.0 to 5.0 percent. Principal payments range from $515,000 to $760,000 with a final payment due September 1, 2021. Financing is provided from a dedicated sales tax amount from the City’s sales and use tax.

Current Year Projects To accumulate funds for the payment of sidewalk warrants sold to pay the costs of various street and sidewalk improvements deemed to benefit the properties against which special assessments are levied.

106 CITY OF GRAND FORKS, NORTH DAKOTA C-1 COMBINING BALANCE SHEET NON-MAJOR DEBT SERVICE FUNDS

DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

General Sales Tax Current Obligation Revenue Year 2012 2011 Bonds Bonds Projects Total Total

ASSETS Cash and cash equivalents $ 397,269 $ 440,642 $ 489,676 $ 1,327,587 $ 2,507,677 Investments 1,000,000 1,000,000 2,493,989 Accounts receivable Taxes receivable: Property 18,580 18,580 9,135 Special assessments 5,690 5,690 18,837 Deferred special assessments 45,029 45,029 86,781

Total Assets $ 415,849 $ 1,440,642 $ 540,395 $ 2,396,886 $ 5,116,419

LIABILITIES AND FUND BALANCES Liabilities: Advance from other funds $ 9,901 $ 9,901 $ 9,901 Deferred revenue: Delinquent property taxes 13,448 13,448 2,845 Special assessments $ 50,719 50,719 105,618

Total Liabilities 23,349 50,719 74,068 118,364

Fund Balances: Restricted 392,500 1,440,642 489,676 2,322,818 4,998,055

Total Fund Balances 392,500 $ 1,440,642 489,676 2,322,818 4,998,055

Total Liabilities and Fund Balances $ 415,849 $ 1,440,642 $ 540,395 $ 2,396,886 $ 5,116,419

107 CITY OF GRAND FORKS, NORTH DAKOTA C-2 COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR DEBT SERVICE FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

General Sales Tax Current Obligaton Revenue Year 2012 2011 Bonds Bonds Projects Total Total

REVENUES Property taxes $ 813,235 $ - $ - $ 813,235 $ 809,416 Hotel Motel Tax Special assessments 91,619 91,619 134,556 Intergovernmental 18,312 18,312 17,294 Interest 18,549 22,805 8,375 49,729 76,866 Miscellaneous

Total Revenues 850,096 22,805 99,994 972,895 1,038,132

EXPENDITURES Contractual services 10,760 1,750 469 12,979 64,310 Debt Services: Issuance costs 141,332 Defeasance costs Advanced Refunding Escrow 37,810 Interest & fiscal charges 543,332 899,805 1,443,137 1,381,640 Principal retirement 910,000 1,510,000 2,420,000 2,810,040

Total Expenditures 1,464,092 2,411,555 469 3,876,116 4,435,132

Excess (Deficiency) of Revenues Over Expenditures (613,996) (2,388,750) 99,525 (2,903,221) (3,397,000)

OTHER FINANCING SOURCES (USES) Issuance of bonds 12,950,000 Bond (discount) premium 929,133 Redemption of refunded bonds (2,390,000) (2,390,000) (11,570,604) Transfers in 895,113 2,483,841 3,378,954 2,803,572 Transfers out (298,553) (462,417) (760,970) (432,792)

Total Other Financing Sources (Uses) (1,793,440) 2,021,424 227,984 4,679,309

Net change in fund balances (2,407,436) (367,326) 99,525 (2,675,237) 1,282,309

Fund Balances at Beginning of Year 2,799,936 1,807,968 390,151 4,998,055 3,715,746

Fund Balances at End of Year $ 392,500 $ 1,440,642 $ 489,676 $ 2,322,818 $ 4,998,055

108 NON-MAJOR CAPITAL PROJECTS FUNDS

Capital Projects Funds. Account for financial resources to be used for the acquisition or construction of major capital facilities (other than those financed by proprietary or trust funds). Additional information is provided below for the funds in this category.

Flood Control To account for the construction of flood control structures. Financing is being provided by the proceeds of general obligation bonds.

Bikeway Project To account for the cost of constructing a circular bikeway system that will skirt the City. Financing is provided by grants from Federal Highway Administration’s Transportation Enhancement program and city sales tax revenue.

Permanent Flood Protection Project To account for resources accumulated for construction of the local flood protection (dike) project. Project cost share is 50% federal and 50% local. Financing for local share is being provided by the proceeds of general obligation bonds, sales tax revenue bonds, and special assessment bonds. The State of North Dakota is covering 45% or $52 million of the local share.

Underpass/Bridge Construction Fund To account for the construction of future underpass and bridge repair and rehab projects. A reserve is set aside annually to allow for the build up of funds that will cover the estimated City share of the Washington Street Underpass, the Sorlie Bridge and/or the Kennedy Bridge projects. Funding comes from City Sales Tax revenue through the Infrastructure Fund.

Greenway Project To account for the costs relating to Greenway planning and administration, restoration activities, development of the Downtown Community Green, Red River Bridge (downtown), low level levee in Riverside Park, shore bank fishing, and boat ramps. The project will be paid by reallocating some of the existing property tax, sales tax, use tax revenue, and a city wide special assessment.

Public Safety Remodeling Project To account for the costs of making improvements to various public building projects, including improvements to the North Columbia Road Fire Hall, a remodel of the Police Building, and municipal court safety projects. Financing is being provided by General Obligation Public Building Bonds.

Nuisance Abatements To account for the costs of clean up projects within the city limits, i.e. long grass and weed cutting and snow removal on private property in case the owner fails to comply with City Ordinance. Such costs are recovered by special assessing the charges against those properties.

Public Safety Answering Point Expansion To account for an addition to the police building to house the Public Safety Answering Point offices. This project was financed through a loan from the Water Fund and will be paid back over seven years.

Capital Replacement Fund To set aside cash per the vehicle/equipment repair/replacement schedule for various General Fund departments.

Current Year Projects To account for various infrastructure projects to be financed through refunding bonds. These projects are subsequently special assessed to benefitting properties.

109 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING BALANCE SHEET NON-MAJOR CAPITAL PROJECT FUNDS

DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Permanent Flood Flood Public Safety Control Protection Greenway Bikeway Answering Projects Project Project Project Point Expansion

ASSETS Cash and cash equivalents $ 450,392 $ 60,126 $ 58,104 424,753$ $ - Investments Accounts receivable Special assessments receivable Deferred special assessments Due from other funds Intergovernmental

Total Assets $ 450,392 $ 60,126 $ 58,104 424,753$ $ -

LIABILITIES AND FUND BALANCES Liabilities: Accounts payable $ - $ - Contracts payable $ 130 $ 2,574 (including retainage) Due to other funds Deferred revenue

Total Liabilities 130 2,574

Fund Balances: Nonspendable Restricted 450,262 60,126 58,104 Committed 422,179 Assigned Unassigned

Total Fund Balances 450,262 60,126 58,104 422,179

Total Liabilities and Fund Balances $ 450,392 $ 60,126 $ 58,104 424,753$ $ -

110 D-1

Public Underpass/ Capital Current Safety Bridge Replacement Year Nuisance 2012 2011 Remodeling Construction Fund Projects Abatements Total Total

$ - $ 224,298 $ 520,160 $ 1,108,504 $ 78,495 $ 2,924,832 $ 3,577,132 1,000,000 1,000,000 2,000,000 1,500,000 50,863 3,326 3,326 1,532 2,592 2,592 9,493 - 100,000

$ - $ 1,224,298 $ 1,520,160 $ 1,108,504 $ 84,413 $ 4,930,750 $ 5,239,020

$ - $ 22,231 $ 22,231 $ 172,611 55,599 58,303 126,677 - - 100,000 $ 5,918 5,918 11,024

77,830 5,918 86,452 410,312

1,030,674 78,495 1,677,661 3,511,203 $ 1,224,298 $ 1,520,160 3,166,637 1,413,300

(95,795)

1,224,298 1,520,160 1,030,674 78,495 4,844,298 4,828,708

$ - $ 1,224,298 $ 1,520,160 $ 1,108,504 $ 84,413 $ 4,930,750 $ 5,239,020

111 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR CAPITAL PROJECTS FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Flood Permanent Public Safety Control Flood Protection Greenway Bikeway Answering Projects Project Project Projects Point Expansion

REVENUES: Special assessments $ - $ - $ - $ - $ - Intergovernmental Sales Tax Interest 10,091 2,337 961 7,103 Miscellaneous

Total Revenues 10,091 2,337 961 7,103

EXPENDITURES Capital outlay: Public works (4,793) 58,671 61,094

Total Expenditures (4,793) 58,671 61,094

Excess (Deficiency) of Revenues Over Expenditures 14,884 2,337 961 (51,568) (61,094)

OTHER FINANCING SOURCES (USES): Bonds issued Bonds (discount) premium Issuance of Bonds Issuance of Note Sale of property 3,584 Transfers in 150,000 150,000 49,163 Transfers out (150,000)

Total Other Financing Sources (Uses) (150,000) 153,584 150,000 49,163

Net change in fund balance (135,116) 155,921 961 98,432 (11,931)

Fund Balances at Beginning of Year 585,378 (95,795) 57,143 323,747 11,931

Fund Balances at End of Year $ 450,262 $ 60,126 $ 58,104 $422,179 $ -

112 D-2

Underpass/ Capital Current Public Safety Bridge Replacement Year Nuisance 2012 2011 Remodeling Construction Fund Projects Abatements Total Total

$ - $ - $ - $ - $ 12,654 $ 12,654 $ 17,635 9,579 9,579 267,091

89 21,676 2,621 36,891 1,349 83,118 44,518

89 21,676 2,621 46,470 14,003 105,351 329,244

23,716 5,886,803 2,019 6,027,510 7,141,036

(23,627) 21,676 2,621 (5,840,333) 11,984 (5,922,159) (6,811,792)

3,169,834 3,169,834 5,695,000 301,211 301,211 95,767

3,584 125,000 1,517,539 703,981 2,695,683 1,822,990 (24,479) (58,084) (232,563) (367,015)

(24,479) 125,000 1,517,539 4,116,942 5,937,749 7,246,742

(48,106) 146,676 1,520,160 (1,723,391) 11,984 15,590 434,950

48,106 1,077,622 2,754,065 66,511 4,828,708 4,393,758

$ - $ 1,224,298 $ 1,520,160 $ 1,030,674 $ 78,495 $ 4,844,298 $ 4,828,708

113 NON-MAJOR ENTERPRISE FUNDS

Enterprise Funds – are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises – where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenue earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes.

Public Transit This is a fund used to account for the providing of public transportation (bus) services to the residents of the city. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operation, maintenance, and collection and depositing of fares.

Dial-A-Ride This is a fund used to account for the providing of public transportation (dial-a-ride) services to the handicapped residents of the city. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operation, maintenance, and collection and depositing of fares.

Downtown Parking This is a fund used to account for the providing of parking services to the residents of the city. All activities necessary to provide such services are accounted for in this fund including, but not limited to, administration, operation, maintenance, and collection of fees.

Mosquito Control This is a fund to account for the administration, operation and maintenance of the mosquito control program. The purpose of the mosquito control program is to reduce the number of mosquitoes, which reduces the risk of diseases transmitted by mosquitoes (i.e. West Nile Virus), and also reduces nuisance mosquitoes to a tolerable level. This program also improves the quality of outdoor activities in the City of Grand Forks by providing relief from mosquitoes.

115 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF NET POSITION NON MAJOR PROPRIETARY FUNDS DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Public Transit Dial-a-Ride ASSETS Current Assets: Cash and cash equivalents $ 437,081 $ 395,059 Investments Restricted cash, cash equivalents, and investments: Construction account Revenue bond current debt service account Receivables (net of allowances for uncollectible accounts) 88,076 294 Taxes - property 1,911 394 Due from other funds Intergovernmental: Federal government 310,643 51,222 State of North Dakota 113,711 15,391 Inventories 95,880 Prepaid items 1,152 Total Current Assets 1,048,454 462,360 Noncurrent Assets: Restricted cash, cash equivalents, and investments: Revenue bond reserve account Total restricted cash, cash equivalents and investments - - Deferred Charges Capital Assets: Land 27,199 Buildings 2,515,376 Improvements other than buildings 504,611 Machinery and equipment 5,509,491 118,060 Construction in progress 30,680 Less accumulated depreciation (3,944,140) (29,768) Total Capital Assets (net of accumulated depreciation) 4,643,217 88,292 Total Noncurrent Assets 4,643,217 88,292

Total Assets $ 5,691,671 $ 550,652

LIABILITIES Current Liabilities: Accounts payable $ 55,160 $ 38,552 Due to other funds Compensated absences payable-current 9,250 Accrued interest payable Bonds payable-current Capital leases payable-current Total Current Liabilities 64,410 38,552 Noncurrent Liabilities: Compensated absences payable 201,983 Revenue bonds payable Total Noncurrent Liabilities 201,983 Total Liabilities 266,393 38,552

NET POSITION Net investments in capital assets 4,643,217 88,292 Net position-restricted for: Debt Service Capital Net position-unrestricted 782,061 423,808

Total Net Position $ 5,425,278 $ 512,100

116 E - 1

2012 Total 2011 Total Mosquito Downtown Non Major Non Major Control Parking Enterprise Funds Enterprise Funds

$ 254,426 $ 352,282 $ 1,438,848 $ 832,875 500,000 500,000

69 69 69 36,869 36,869 37,719 77,441 93,024 258,835 250,282 2,305 9,620 - 100,000

361,865 705,137 14,794 143,896 176,980 95,880 95,658 20,838 2,749 24,739 26,084 404,437 948,055 2,863,306 2,234,424

110,500 110,500 113,156 110,500 - 110,500 - 113,156 8,785 8,785 9,428

333,627 360,826 360,826 1,198,877 3,714,253 3,714,253 77,499 602,084 1,184,194 1,184,194 647,661 125,624 6,400,836 6,099,224 30,680 20,681 (489,537) (563,303) (5,026,748) (4,462,862) 1,434,500 498,032 6,664,041 6,916,316 1,553,785 498,032 6,783,326 7,038,900

$ 1,958,222 $ 1,446,087 $ 9,646,632 $ 9,273,324

$ 5,132 $ 13,569 $ 112,413 $ 109,490 - 100,000 $ 1,862 11,112 8,357 16,869 16,869 17,719 60,000 60,000 60,000

83,863 13,569 200,394 295,566

42,052 244,035 230,438 1,045,000 1,045,000 1,105,000 1,087,052 1,289,035 1,335,438 1,170,915 13,569 1,489,429 1,631,004

358,807 498,032 5,588,348 5,782,681

147,369 147,369 150,875 69 69 69 281,062 934,486 2,421,417 1,708,695

$ 787,307 $ 1,432,518 $ 8,157,203 $ 7,642,320

117 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NON MAJOR PROPRIETARY FUNDS

YEAR ENDED DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Mosquito Public Transit Dial-A-Ride Control Operating Revenues: Charges for sales and services: Utility fees $ 525,639 $ 2,633 $ 812,942 Operating assessment Miscellaneous 874

Total Operating Revenues 526,513 2,633 812,942

Operating Expenses: Salaries and wages 882,056 125,746 184,627 Supplies 32,625 165 208,853 Contractual services 152,892 3,416 53,343 Maintenance - structures and equipment 511,286 61,004 25,955 Sundry expenses 13,863 (11,990) Utilities - heat and lights 38,175 9,050 Pension and social security 169,332 16,502 22,448 Administrative and general 240,863 514,198 25,663 Total Operating Expenses 2,041,092 721,031 517,949

Net Income (Loss) from Operations before Depreciation (1,514,579) (718,398) 294,993 Less - Depreciation 509,386 8,911 83,918 Net Operating Income (Loss) (2,023,965) (727,309) 211,075

Nonoperating Revenues (Expenses): Interest 6,490 7,511 5,137 Federal grants 1,132,904 222,180 State grants 145,041 125,425 15,000 General property taxes 691,898 144,149 Personal property replacements 15,830 3,299 Gain (loss) on capital assets 2,913 5,496 Miscellaneous 4,560 Interest expense (54,887) Total Nonoperating Revenues (Expenses) 1,999,636 502,564 (29,254)

Income (Loss) Before Capital Contributions and Transfers (24,329) (224,745) 181,821

Capital Contributions and Transfers: Capital Contributions 52,110 Transfers in 73,700 Transfers out (73,700) Total Capital Contributions and Transfers (21,590) 73,700

Change in Net Position (45,919) (151,045) 181,821

Total Net Position-Beginning 5,471,197 663,145 605,486 Total Net Position-Ending $ 5,425,278 $ 512,100 $ 787,307

118 E-2

Downtown Total Total Parking 2012 2011

$ 1,341,214 $ 1,297,289 $ 483,983 483,983 322,565 874 4,135

483,983 1,826,071 1,623,989

9,197 1,201,626 1,191,556 610 242,253 336,713 100,655 310,306 235,100 168,426 766,671 594,900 785 2,658 24,465 33,272 80,497 90,770 1,225 209,507 190,708 11,722 792,446 823,631 325,892 3,605,964 3,487,843

158,091 (1,779,893) (1,863,854) 18,434 620,649 611,175 139,657 (2,400,542) (2,475,029)

9,769 28,907 20,401 1,355,084 1,116,966 285,466 249,481 836,047 811,463 19,129 17,825 8,409 (8,197) 4,560 (54,887) (57,383) 9,769 2,482,715 2,150,556

149,426 82,173 (324,473)

52,110 317,420 380,600 454,300 292,797 (73,700) (180,797) 380,600 432,710 429,420

530,026 514,883 104,947

902,492 7,642,320 7,537,373 $ 1,432,518 $ 8,157,203 $ 7,642,320

119 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF CASH FLOWS NON MAJOR PROPRIETARY FUNDS Year Ended December 31, 2012 With Comparative Totals for December 31, 2011 Public Transit Dial A Ride Fund Fund Cash Flows from Operating Activities: Receipts from customers $ 560,447 $ 2,440 Payments to suppliers (1,145,439) (604,842) Payments to employees (867,274) (125,674) Payments for interfund services used (100,000) 100,000 Net cash provided (used) by operating activities (1,552,266) (628,076)

Cash Flows from Non-Capital Financing Activities: Repayment of advances Transfers from other funds 73,700 Transfers to other funds (73,700) Operating subsidies from federal grants 1,378,842 319,514 Operating subsidies from state grants 149,326 169,018 Operating subsidies from Taxes 713,772 148,719 Net cash provided (used) by non-capital financing activities 2,168,240 710,951

Cash Flows from Capital & Related Financing Activities Proceeds of Bonds/Notes Capital contributions 52,110 Purchases of capital assets (321,142) (9,580) Principal paid on capital debt Interest paid Net cash provided (used) by capital & related financing activities (269,032) (9,580)

Cash Flows from Investing Activities: Proceeds from sales and maturities of investments Purchase of investments Interest and dividends 6,490 7,511 Net cash provided by investing activities 6,490 7,511

Net increase (decrease) in cash and cash equivalents 353,432 80,806

Cash and cash equivalents - beginning of the year 83,649 314,253

Cash and cash equivalents - end of the year $ 437,081 $ 395,059

Reconciliation of operating income to net cash provided (used) by operating activities:

Operating Income (loss) $ (2,023,965) $ (727,309)

Adjustments to reconcile operating income to net cash provided (used) by operating activities:

Depreciation Expense 509,386 8,911 (Increase) decrease in accounts receivable 33,934 (193) (Increase) Decrease in inventories (222) (Increase) in prepaid items (33) Increase (decrease) in accounts payable 13,294 (9,485) Increase (decrease) in compensated absences payable 15,340 (Increase) decrease in due from other funds 100,000 Increase (decrease) in due to other funds (100,000)

Total Adjustments 471,699 99,233 Net cash provided by operating activities $ (1,552,266) $ (628,076)

Noncash Investing, Capital and Financing Activities: Net (decrease) in fair value of investments $ 1,786 $ 3,028 120 E - 3

2012 2011 Total Non-Major Total Non-Major Mosquito Control Downtown Enterprise Enterprise Fund Parking Funds Funds

$ 817,782 $ 436,849 $ 1,817,518 $ 1,563,610 (333,258) (317,565) (2,401,104) (2,307,916) (183,732) (9,197) (1,185,877) (1,179,407)

300,792 110,087 (1,769,463) (1,923,713)

380,600 454,300 292,797 (73,700) (180,797) 1,698,356 1,048,635 206 318,550 247,226 862,491 849,909 206 380,600 3,259,997 2,257,770

52,110 317,420 (24,684) (355,406) (527,531) (60,000) (60,000) (55,000) (53,679) (53,679) (56,104)

(138,363) (416,975) (321,215)

113,156 113,156 111,161 (110,500) (500,000) (610,500) (113,156) 5,137 9,770 28,908 22,396 7,793 (490,230) (468,436) 20,401

170,428 457 605,123 33,243

120,936 351,825 870,663 837,420

$ 291,364 $ 352,282 $ 1,475,786 $ 870,663

$ 211,075 $ 139,657 $ (2,400,542) $ (2,475,029)

83,918 18,434 620,649 611,175 4,840 (47,134) (8,553) (60,379) (222) (10,696) 30 (67) (70) (513) (83) (803) 2,923 5,085 1,012 16,352 6,644 100,000 (100,000) (100,000) 100,000

89,717 (29,570) 631,079 551,316 $ 300,792 $ 110,087 $ (1,769,463) $ (1,923,713)

$ 1,253 $ 4,807 10,874 $ (1,995) 121 INTERNAL SERVICE FUNDS

Internal Service Funds. Account for the financing of goods or services provided by one fund, department, or agency to other funds, departments or agencies of the financial reporting entity, or to other governments, on a cost-reimbursement basis.

Computer Service This is a fund used to account for the costs of maintaining computer equipment used by the city departments. Departments are billed a monthly maintenance charge to accumulate funds to maintain the equipment.

Central Garage This is a fund used to account for the costs of operating the central fueling facilities and central vehicle maintenance garage for equipment used by various city departments and other governmental units. Such costs are billed to the using entity or department.

Central Purchasing This is a fund used to account for the cost of centrally purchasing office supplies used by other city departments. Such costs are billed to the other departments at actual cost plus five percent.

Public Works Facility This is a fund used to account for the cost of operating and maintaining the City’s combined Public Works facility. These expenses are apportioned among the departments utilizing the facility in the form of rental charges.

123 CITY OF GRAND FORKS, NORTH DAKOTA F-1 COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS

DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Computer Service Central Central Public Works 2012 2011 Fund Garage Purchasing Facility Total Total ASSETS Current assets: Cash and cash equivalents $ 311,694 $ 1,533 $ 5,930 $ 106,766 $ 425,923 $ 238,667 Investments - - Receivables, net - - Prepaid items 2,097 2,097 3,815 Inventories 93,561 22,068 115,629 116,201 Due from other funds 90,000 90,000 90,000

Total current assets 311,694 95,094 27,998 198,863 633,649 448,683 Capital assets: Building and equipment, net of accumulated deprec. 91,254 93,215 5,752,699 5,937,168 6,160,611 Total assets 402,948 188,309 27,998 5,951,562 6,570,817 6,609,294

LIABILITIES Current liabilities: Accounts payable 501 1,457 966 1,786 4,710 6,108 Contracts payable - 32,093 Due to other funds 90,000 - 90,000 90,000 Advances from other funds 19,000 19,000 19,000 Compensated absences 33,349 3,464 36,813 33,310 Total current liabilities 501 124,806 19,966 5,250 150,523 180,511

Total liabilities 501 124,806 19,966 5,250 150,523 180,511

NET POSITION Net investments in capital assets 91,254 93,215 5,752,699 5,937,168 6,160,611 Net position-unrestricted 311,193 (29,712) 8,032 193,613 483,126 268,172 Total net position $ 402,447 $ 63,503 $ 8,032 $ 5,946,312 $ 6,420,294 $ 6,428,783

124 CITY OF GRAND FORKS, NORTH DAKOTA F-2 COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS

For the Fiscal Year Ended December 31, 2012 With Comparative Totals for December 31, 2011

Computer Service Central Central Public Works 2012 2011 Fund Garage Purchasing Facility Total Total Operating Revenues: Charges for services - internal $ 273,800 $ 895,172 $ 18,186 $ 309,011 $ 1,496,169 $ 1,499,123 Charges for services - external - - Total operating revenues 273,800 895,172 18,186 309,011 1,496,169 1,499,123

Operating expenses: Personal services 247,421 26,670 274,091 249,271 Supplies 3,557 406,634 19,018 4,915 434,124 460,946 Contractual services 62,369 1,758 64,127 84,395 Maintenance- structures & equip. 132,327 24,666 57,566 214,559 382,188 Sundry 2,110 2,110 3,433 Utilities 110,521 110,521 135,359 Pension and social security 57,687 2,968 60,655 64,307 Administrative and general (18,268) 56,599 459 20,146 58,936 55,591 Depreciation 39,481 9,171 260,375 309,027 292,760

Total operating expenses 157,097 866,657 19,477 484,919 1,528,150 1,728,250

Operating income (loss) 116,703 28,515 (1,291) (175,908) (31,981) (229,127)

Nonoperating revenues (expense) Earnings on investments 4,348 29 1,936 6,313 5,011 Gain (loss) on disposal of 17,679 17,679 capital assets - Total nonoperating revenues - (expenses) 4,348 17,679 29 1,936 23,992 5,011

Income (loss) before contributions and transfers 121,051 46,194 (1,262) (173,972) (7,989) (224,116)

Transfers in (out) (500) - (500) 64,000 Change in net position 120,551 46,194 (1,262) (173,972) (8,489) (160,116)

Total net position - beginning 281,896 17,309 9,294 6,120,284 6,428,783 6,588,899 Total net position - ending $ 402,447 $ 63,503 $ 8,032 $ 5,946,312 $ 6,420,294 $ 6,428,783

125 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS

Year Ended December 31, 2012 With Comparative Totals for December 31, 2011

Computer Central Service Fund Garage Fund Cash Flows from Operating Activities: Receipts from customers $ 273,800 $ 895,172 Payments to suppliers (118,295) (613,693) Payments to employees (244,135) Internal activity-payments to/from other funds

Net cash provided (used) by operating activities 155,505 37,344

Cash Flows from Non-Capital Financing Activities: Transfers to other funds (500) Transfers from other funds Net cash provided (used) by non-capital financing activities (500)

Cash Flows from Capital & Related Financing Activities: Purchases of capital assets (32,254) (38,208) Interest paid on capital debt Net cash provided (used) by capital & related financing activities (32,254) (38,208)

Cash Flows from Investing Activities: Interest and dividends 4,348

Net cash provided by investing activities 4,348

Net increase (decrease) in cash and cash equivalents 127,099 (864)

Cash & cash equivalents - beginning of the year 184,595 2,397

Cash & cash equivalents - end of the year $ 311,694 $ 1,533

Reconcilliation of operating income to net cash provided (used) by operating activities:

Operating Income (loss) $ 116,703 $ 28,515

Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation Expense 39,481 9,171 (Increase) decrease in accounts receivable (Increase) decrease in due from other funds (Increase) decrease in iventories (2,152) (Increase) decrease in prepaid items Increase (decrease) in accounts payable (679) (1,476) Increase (decrease) in compensated absences payable 3,286 Increase (decrease) in due to other funds

Total Adjustments 38,802 8,829

Net cash provided (used) by operating activities $ 155,505 $ 37,344

126 F-3

Central Purchasing Public Works Total Total Fund Facility Fund 2012 2011

$ 18,186 $ 309,011 $ 1,496,169 $ 1,499,123 (14,361) (197,791) (944,140) (1,214,411) (26,453) (270,588) (250,401) -

3,825 84,767 281,441 34,311

(500) 64,000 (500) 64,000

(29,536) (99,998) (588,233)

29 1,936 6,313 5,011

3,854 57,167 187,256 (484,911)

2,076 49,599 238,667 723,578

$ 5,930 $ 106,766 $ 425,923 $ 238,667

$ (1,291) $ (175,908) $ (31,981) $ (229,127)

260,375 309,027 292,760

(19,000) 2,724 572 (10,815) 1,755 (37) 1,718 (1,950) 637 120 (1,398) (15,427) 217 3,503 (1,130) 19,000

5,116 260,675 313,422 263,438

$ 3,825 $ 84,767 $ 281,441 $ 34,311

127 FIDUCIARY FUNDS

Trust and Agency Funds

To account for assets held by a governmental unit in a trustee capacity or as an agent for individuals, private organizations, other governmental units, and/or other funds. These include (a) pension trust funds, and (b) agency funds.

Trust Funds

Pension Trust

This is a fund to account for the receipt and disbursement of employee and employer contributions for the City Employees Pension Fund.

Agency Funds

Convention and Visitor’s Bureau Agency Fund

This is a fund used to account for the receipt of a two percent room tax and the disbursement of these funds to the Convention and Visitor’s Bureau for its use.

Animal Control

This is a fund used to account for the receipt of a .5 mill levy and the disbursement of these funds to the Humane Society.

128

CITY OF GRAND FORKS, NORTH DAKOTA G-1 COMBINING STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS

DECEMBER 31, 2012 With Comparative Totals for December 31, 2011

Agency Funds Totals

Convention & Visitors Animal Bureau Control 2012 2011

ASSETS Cash and cash equivalents $ 94,147 $ 2,578 $ 96,725 $ 183,154 Investments Accounts receivable Taxes Receivable: Hotel/Motel 79,763 - 79,763 76,986 Property - 1,681 1,681 833

Total Assets $ 173,910 $ 4,259 $ 178,169 $ 260,973

LIABILITIES Liabilities: Accounts payable $116,104 $ 3,042 $ 119,146 $ 99,369 Due to other agencies 57,806 1,217 59,023 161,604

Total Liabilities $ 173,910 $ 4,259 $ 178,169 $ 260,973

129 CITY OF GRAND FORKS, NORTH DAKOTA COMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES AGENCY FUNDS

Year Ended December 31, 2012

ASSETS

Cash and Cash Taxes Other Total Equivalents Receivable Assets Assets

Convention-Visitor's Bureau January 1, 2012 $ 179,542 $ 76,986 $ - $ 256,528 Additions 1,098,052 80,770 1,178,822 Deletions (1,183,447) (77,993) (1,261,440)

December 31, 2012 $ 94,147 $ 79,763 $ - $ 173,910

Animal Control January 1, 2012 $ 3,612 $ 833 $ - $ 4,445 Additions 149,253 76,900 226,153 Deletions (150,287) (76,052) (226,339)

December 31, 2012 $ 2,578 $ 1,681 $ - $ 4,259

TOTALS January 1, 2012 $ 183,154 $ 77,819 $ - $ 260,973 Additions 1,247,305 157,670 1,404,975 Deletions (1,333,734) (154,045) (1,487,779)

December 31, 2012 $ 96,725 $ 81,444 $ $ 178,169

130 G-2

LIABILITIES

Accounts Due To Total Payable Other Agencies Liabilities

$ 99,369 $ 157,159 $ 256,528 1,287,549 1,100,830 2,388,379 (1,270,814) (1,200,183) (2,470,997)

$ 116,104 $ 57,806 $ 173,910

$ - $ 4,445 $ 4,445 112,960 113,303 226,263 (112,960) (113,489) (226,449)

$ - $ 4,259 $ 4,259

$ 99,369 $ 161,604 $ 260,973 1,400,509 1,214,133 2,614,642 (1,383,774) (1,313,672) (2,697,446)

$ 116,104 $ 62,065 $ 178,169

131 CITY OF GRAND FORKS, NORTH DAKOTA G-3 STATEMENT OF CHANGES IN NET POSITION PENSION TRUST FUND

Year Ended December 31, 2012 With Comparative Totals for December 31, 2011

Pension Trust Pension Trust Fund Fund 2012 2011 Additions: Contributions: Employer contributions $ 3,410,332 $ 3,261,913 Employee contributions 574,384 608,336

Total contributions 3,984,716 3,870,249

Investment Earnings: Net appreciation (depreciation) in fair value of assets & Interest, dividends and other income 6,113,689 (436,755)

Net investment earnings 6,113,689 (436,755)

Total additions 10,098,405 3,433,494

Deductions: Benefits paid to participants 3,931,482 3,673,086 Administrative charges 209,563 219,425

Total Deductions 4,141,045 3,892,511

Change in net position 5,957,360 (459,017)

Net position - beginning 44,566,218 45,025,235

Net position - ending $ 50,523,578 $ 44,566,218

132

CAPITAL ASSETS

133 CITY OF GRAND FORKS, NORTH DAKOTA H-1 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY SOURCE

December 31, 2012

Governmental Funds Capital Assets: Land $ 37,428,254 Buildings 39,917,363 Improvements other than buildings 66,100,513 Machinery and equipment 20,248,212 Infrastructure 136,333,460 Construction in Progress 1,766,655

Total Governmental Funds Capital Assets $ 301,794,457

Investment in Governmental Funds Capital Assets by Source:

General obligation bonds and levies $ 106,302,973 Sales tax revenue bonds 19,235,000 Special Revenue Funds 33,671,980 General Fund Revenue 9,997,591 Contributions and donations from others 9,033,529 State Grants 56,657,874 Federal Grants 66,895,510

Total Governmental Funds Capital Assets $ 301,794,457

This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. The capital assets of internal service funds that are allocated to governmental functions are included in governmental activities in the statement of net position.

134 CITY OF GRAND FORKS, NORTH DAKOTA H-2 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE BY FUNCTION AND ACTIVITY

December 31, 2012 Improvements Machinery Other Than and Construction Total Land Buildings Buildings Equipment Infrastructure In Progress Function and Activity

General Government: Mayor and Council $ 99,935 $ $ $ $ 99,935 $ - $ - Attorney 6,518 6,518 Assessor 7,505 7,505 Auditor and Accounting 14,156 14,156 City Hall 4,814,413 113,525 3,927,874 773,014 Data Services 17,009 17,009 Engineer 1,053,263 1,053,263 Personnel 17,824 17,824 Planning and Zoning 18,398 18,398 Economic Development 8,475 8,475 Total General Government 6,057,496 113,525 3,927,874 2,016,097

Health and Welfare Health 740,173 34,495 705,678 Mosquito Control - Total Health and Welfare 740,173 34,495 705,678

Public Safety: Civil Preparedness - Fire 8,074,433 76,012 3,004,912 44,192 4,749,317 200,000 Municipal Court 590,647 537,540 53,107 Police 8,939,612 38,000 2,318,603 185,129 6,397,880 Public Safety Center 4,405,501 3,200,504 855,009 9,734 340,254 Public Service Answering Poin 43,659 43,659 E-911 2,420,936 2,199,563 221,373 Total Public Safety 24,474,788 114,012 11,261,122 1,084,330 11,475,070 340,254 200,000

Highways and Streets Street Department 5,601,509 39,334 544,133 1,249 5,016,793 Street System 141,533,281 6,357,115 1,103,229 71,948 132,434,334 1,566,655 Total Highways and Streets 147,134,790 6,396,449 544,133 1,104,478 5,088,741 132,434,334 1,566,655

Culture and Recreation First Night Greater Grand Fork - Historic Preservation 3,363 3,363 Public Library 270,537 270,537 Total Culture & Recreation 273,900 273,900

Cirrus Parking Lot 163,450 163,450 Landscape Department 327,580 327,580 Parking Facilities 2,613,461 2,592,314 20,000 1,147 Public buildings 27,967,579 7,653,333 19,974,483 117,297 222,466 Senior Citizens 693,862 683,250 10,612 Greenway 3,430,025 1,975,801 4,236 1,449,988 Permanent Flood Protection 87,917,353 20,558,621 3,472,006 61,655,157 122,685 2,108,884

Total Capital Assets $ 301,794,457 $ 37,428,254 $ 39,917,363 $ 66,100,513 $ 20,248,212 $ 136,333,460 $ 1,766,655

This schedule presents only the capital assets related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. The capital assets of internal service that are allocated to governmental functions are included as governmental activities in the statement of net position. Land on this schedule includes $6,086,551 of Right-of-Way costs included as infrastructure in the Statement of Net Assets.

135 CITY OF GRAND FORKS, NORTH DAKOTA H-3 CAPITAL ASSETS USED IN THE OPERATION OF GOVERNMENTAL FUNDS SCHEDULE OF CHANGES BY FUNCTION AND ACTIVITY

December 31, 2012 Governmental Governmental Funds Capital Funds Capital Assets 1/1/12 Additions Deletions Assets 12/31/12 Function and Activity

General Government: Mayor and Council $ 112,635 $ - $ 12,700 $ 99,935 Attorney 6,518 - 6,518 Assessor 7,505 - 7,505 Finance & Admin Services 11,106 3,050 - 14,156 City Hall 4,674,963 139,450 - 4,814,413 Information Services 22,445 - 5,436 17,009 Engineering 1,021,649 73,619 42,005 1,053,263 Human Resources 14,237 8,111 4,524 17,824 Planning and Zoning 21,959 3,561 18,398 Economic Development 8,475 - 8,475 Total General Government 5,901,492 224,230 68,226 6,057,496

Health and Welfare Health 758,770 27,709 46,306 740,173 Mosquito Control Total Health and Welfare 758,770 27,709 46,306 740,173

Public Safety: Civil Preparedness 136,533 136,533 Fire 7,626,438 456,769 8,774 8,074,433 Municipal Court 587,667 2,980 590,647 Police 9,254,369 286,330 601,087 8,939,612 Public Safety Center 4,402,661 2,840 - 4,405,501 Public Service Answering Point 47,176 3,517 43,659 E-911 2,397,548 88,866 65,478 2,420,936 Total Public Safety 24,452,392 837,785 815,389 24,474,788

Highways and Streets Street Department 5,674,944 356,565 430,000 5,601,509 Street System 136,169,674 7,744,848 2,381,241 141,533,281 Total Highways and Streets 141,844,618 8,101,413 2,811,241 147,134,790

Culture and Recreation First Night Greater Grand Forks 2,706 2,706 Historic Preservation 3,667 1,160 1,464 3,363 Public Library 253,130 17,407 270,537 Total Culture & Recreation 259,503 18,567 4,170 273,900

Cirrus Parking Lot 163,450 163,450 Landscape Department 305,531 136,700 114,651 327,580 Parking Facilities 2,613,461 2,613,461 Public buildings 28,008,538 233,789 274,748 27,967,579 Senior Citizens 693,862 693,862 Greenway 3,430,025 3,430,025 Permanent Flood Protection 87,921,966 4,613 87,917,353

Total Capital Assets $ 296,353,608 $ 9,580,193 $ 4,139,344 $ 301,794,457

This schedule presents only the capital asset balances related to governmental funds. Accordingly, the capital assets reported in internal service funds are excluded from the above amounts. The capital assets of internal service funds that are allocated to governmental functions are included as governmental activities in the statement of net position.

136 J-1

CITY OF GRAND FORKS, NORTH DAKOTA SCHEDULE OF CASH EQUIVALENTS AND INVESTMENTS (1) BY FINANCIAL INSTITUTION December 31, 2012 Date of Balance Description Maturity December 31, 2012 Yield Wells Fargo Bank, Grand Forks: Surety Account $ 71,911 0.100% Business Savings Account 15,998,084 0.100% Grand Forks Growth Fund - EDA 311,172 0.100% Bremer Bank Money Market: Accounts: 2,250,000 0.150% Choice Financial, Grand Forks: Business Savings/Checking 6,434,235 0.175%

Total Financial Institution Accounts $ 25,065,401 US Bank: Various Banks - CD's Jan-13 150,000 2.150% Various Banks - CD's Feb-13 592,000 1.745% Various Banks - CD's Mar-13 736,000 2.956% Various Banks - CD's Jun-13 496,000 0.575% Various Banks - CD's Jul-13 992,000 1.463% Various Banks - CD's Aug-13 744,000 1.365% Various Banks - CD's Sep-13 994,000 1.973% Various Banks - CD's Oct-13 248,000 1.300% Choice Financial - CDARS 63 8/8/13 5,000,000 0.900% Choice Financial - CD 65 9/4/13 2,010,027 0.450% Wells Fargo Bank - CD 49 11/30/13 2,000,000 0.600% Various Banks - CD's Nov-13 150,000 1.000% Federal Home Loan Bank 5143 12/13/13 1,541,850 3.010% Frandsen Bank - CD 48 12/29/13 235,000 0.700% Various Banks - CD's Jan-14 542,000 2.265% Various Banks - CD's Feb-14 542,000 2.681% Various Banks - CD's Mar-14 196,000 3.325% Various Banks - CD's Apr-14 444,000 1.825% Various Banks - CD's Jun-14 493,000 1.052% Various Banks - CD's Jul-14 741,000 1.108% Various Banks - CD's Aug-14 147,000 1.150% Various Banks - CD's Sep-14 394,000 1.737% USBank - CD 47 9/29/14 250,000 0.770% Alerus Financial - CD 46 9/29/14 250,000 0.700% Various Banks - CD's Oct-14 650,000 1.343% Fed Natl Mtg Assn Pool 27 1/1/15 2,046,800 3.325% Fed Natl Mtg Assn Pool 5170 1/1/15 2,046,800 2.026% Various Banks - CD's Jan-15 248,000 1.250% Various Banks - CD's Feb-15 745,000 0.750% Various Banks - CD's May-15 248,000 0.700% Freddie Mac 5173 6/30/15 1,007,100 0.902% Various Banks - CD's Jun-15 248,000 0.650% Various Banks - CD's Jul-15 744,000 1.217% Various Banks - CD's Sep-15 248,000 1.350% Federal National Mortgage 28 11/1/15 548,073 1.467% Federal National Mortgage 29 11/1/15 938,392 1.466% Freddie Mac 5163 1/19/16 1,131,700 2.260% Various Banks - CD's Mar-16 149,000 2.400% Fed Natl Mtg Assn Pool 17 4/1/16 2,056,373 2.758% Fed Natl Mtg Assn Pool 25 5/1/16 2,748,040 2.258% Various Banks - CD's Aug-16 397,000 1.257% Fed Natl Mtg Assn Pool 56 1/1/17 1,031,125 1.514% Federal National Mortgage 54 1/1/17 2,030,400 1.676% Freddie Mac 5178 1/13/17 959,215 1.125% Freddie Mac 5175 1/23/17 2,247,600 1.572% Fed Natl Mtg Assn Pool 58 6/1/17 1,696,586 1.399% Fed Natl Mtg Assn Pool 59 6/25/17 1,986,017 0.782% Freddie Mac 67 11/25/17 2,251,913 1.106% Fed Natl Mtg Assn Pool 62 7/25/19 1,468,267 0.988% Fed Natl Mtg Assn Pool 64 9/1/22 2,014,103 1.345% Federal National Mortgage 66 10/1/22 2,115,360 1.264% Total Investments US Bank $ 5 3,888,742 Investments in Common Stock 100,000

Total Investments $ 53,988,742

Cash on Hand and In Checking $ 2,113,586 0.10% Alerus Center Cash $ 2,972,281

TOTAL CASH AND INVESTMENTS $ 84,140,010 (1) Does not include $50,323,578 cash in Employee's Retirement System 138 J-2 CITY OF GRAND FORKS, NORTH DAKOTA

SUMMARY OF DEBT STATISTICS

DECEMBER 31, 2012

Market Value of Taxable Property - 2012 $ 3,190,006,180

Assessed Valuation - 2012 $ 1,595,003,090

Direct Debt $ 11,347,908

Overlapping Debt $ 43,013,718

Total Direct and Overlapping Debt $ 54,361,626

CITY OF GRAND FORKS, NORTH DAKOTA

Debt Statistics

Percent of Percent of Per Capita Market Assessed Amount (1) Value Value

Direct Debt $ 11,347,908 $ 208.76 0.36% 0.71%

Overlapping Debt 43,013,718 791 1.35% 2.70%

Totals $ 54,361,626 $ 1,000 1.70% 3.41%

NOTES: (1) 2012 census population 54,358

139 J-3

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT STATEMENT

December 31, 2012

Sinking Outstanding Funds Net Liability

General Obligation Bonds:

2006 "B" GO Public Builidng Bonds 1,140,000 187 1,139,813 2007 "A" GO Public Builidng Bonds 2,855,000 5,997 2,849,003 2008 "B" GO Refunding Bonds - Dike 4,185,000 149,732 4,035,268 2011 "E" GO Refunding Bonds - Dike* 2,260,000 11,971 2,248,029

Net Liability General Obligation Bonds 10,440,000 167,887 10,272,113

Revenue Bonds:

1997 "B" SRL WWTP - phase 1 4,840,000 1,192,801 3,647,199 1997 "D" SRL Southend Drainway - phase 1 1,395,000 363,398 1,031,602 1998 SRL Southend Drainway - phase 2 850,000 220,480 629,520 2000 "A" SRL Clearwell 5,240,000 1,025,165 4,214,835 2000 "C" Storm Sewer Revenue Bond 280,000 124,833 155,167 2001 "D" SRL WWTP - phase 2 7,050,000 1,203,668 5,846,332 2002 "C" SRL WWTP - phase 3 3,526,560 594,019 2,932,541 2004 "B" Water Reserve Revenue Refunding Bonds 500,000 254,529 245,471 2005 "E" SRL BioSolids Mgmt Project 3,170,000 395,732 2,774,268 2007 "B" Mosquito Control Reserve Revenue Bonds 1,105,000 147,369 957,631 2008 "C" Sewer Reserve Revenue Refunding Bonds 300,000 129,034 170,966 2009 "A" Sanitation Reserve Revenue Bond (BAB) 8,390,000 770,948 7,619,052 2009 "B" Sewer Reserve Revenue and Refunding Bond 3,080,000 447,613 2,632,387 2009 "D" Water Reserve Revenue Refunding Bond 4,620,000 650,807 3,969,193 2010 "A" Sanitation Reserve Revenue Refunding Bond 2,165,000 402,673 1,762,327 2011 "D" Sewer Reserve Revenue Bond 2,520,000 249,743 2,270,257 2012 "B" Water Reserve Revenue Bond 3,880,000 560,989 3,319,011

Net Liability Revenue Bonds 52,911,560 8,733,800 44,177,760

Sales Tax Revenue Bonds:

2005 "A" Sales Tax Reserve Revenue Bond 53,095,000 4,551,303 48,543,697 2007 "C" Sales Tax Reserve Revenue Refunding Bond-Cirrus 1,315,000 298,140 1,016,860 2011 "A" Sales Tax Reserve Revenue Refunding Bond - Dike** 3,510,000 440,586 3,069,414 2011 "F" Sales Tax Reserve Revenue Refunding Bond - Dike*** 6,315,000 10,615 6,304,385

Net Liability Sales Tax Revenue Bonds 64,235,000 5,300,645 58,934,355

*2011E is Crossover Refunding of 2002G **2011A is Current Refunding of 2002H ***2011F is Full Advance Refunding of 2001D

140 J-3

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT STATEMENT

December 31, 2012

Sinking Outstanding Funds Net Liability

Refunding Improvement Bonds:

Refunding Improvement Ref. "A" 12-1-98 $ 530,000 $ 385,222 $ 144,778 2002 "A" SRL Water Reclamation Phase 1 844,000 3,245 840,755 2002 "B" SRL Water Reclamation Phase 2 1,110,000 5,374 1,104,626 2004 "A" Refunding Improvement 1,330,000 601,076 728,924 2005 "B" Refunding Improvement Bond 1,345,000 409,765 935,235 2006 "A" Refunding Improvement Refunding Bond 185,000 761,332 (576,332) 2006 "C" Refunding Improvement Bond 5,085,000 1,203,846 3,881,154 2007 "D" Refunding Improvement Bond 4,630,000 1,526,295 3,103,705 2008 "A" Refunding Improvement Refunding Bond 1,355,000 824,563 530,437 2008 "D" Refunding Improvement Bond 2,585,000 122,359 2,462,641 2009 "C" Refunding Improvement Refunding Bond* 5,790,000 2,637,657 3,152,343 2009 "E" Refunding Improvement Bond 1,925,000 (82,380) 2,007,380 2010 "B" Refunding Improvement Bond - Dike 2,785,000 173,126 2,611,874 2010 "C" Refunding Improvement Bond 4,485,000 80,139 4,404,861 2011 "B" Refunding Improvement Refunding Bond* 2,830,000 62,240 2,767,760 2011 "C" Refunding Improvement Bond 5,695,000 191,551 5,503,449 2012 "A" Refunding Improvement Refunding Bond** 5,290,000 336,680 4,953,320

Net Liability Refunding Improvement Bonds 47,799,000 9,242,092 38,556,908

Industrial Development Revenue Notes:

Corporate Center Project, Series 1999 2,234,020 56 2,233,964 Bremer Bank - Cirrus 2,914,851 - 2,914,851 Bremer Bank - LM Glassfiber 741,045 - 741,045

Net Liability Industrial Development Revenue Notes 5,889,916 56 5,889,860

Net Liability All Funds $ 181,275,476 $ 23,444,480 $ 157,830,996

*2011B Crossover Refunding of 2003A **2012A Refunding Improvement Bond & Refunding of 2002F & 2003B

141 J-4 CITY OF GRAND FORKS, NORTH DAKOTA

SUMMARY OF DEBT SERVICE REQUIREMENTS TO MATURITY

As of December 31, 2012

General Sales Tax Refunding Industrial Obligation Revenue Revenue Improvement Development Total Year & Tax Incr. Bonds Bonds Bonds Revenue Notes Requirement

2013 1,363,655 6,354,942 6,299,394 6,418,843 1,846,668 22,283,502 2014 1,369,905 6,500,286 6,297,071 6,119,912 1,405,192 21,692,366 2015 1,359,616 6,350,693 6,288,529 5,584,035 1,088,446 20,671,318 2016 1,353,542 5,979,482 6,262,050 5,191,287 1,079,322 19,865,683 2017 1,349,686 5,968,851 6,134,430 4,883,825 936,163 19,272,955 2018 1,344,510 5,972,161 5,873,500 4,620,144 524,953 18,335,268 2019 1,327,918 4,693,633 5,883,125 4,314,663 234,659 16,453,998 2020 652,912 4,395,290 5,883,750 3,857,147 178,072 14,967,170 2021 657,857 2,798,166 5,767,700 3,439,001 - 12,662,724 2022 651,794 1,466,176 4,608,400 2,600,338 - 9,326,707 2023 394,819 1,471,403 4,608,650 2,281,521 - 8,756,393 2024 394,588 1,473,367 4,605,900 1,955,065 - 8,428,920 2025 393,648 1,469,399 4,604,900 1,820,759 - 8,288,706 2026 272,025 1,189,079 4,603,625 1,593,219 - 7,657,948 2027 - 1,088,708 4,604,925 1,411,195 - 7,104,828 2028 - 1,091,936 4,608,350 1,068,330 - 6,768,616 2029 - 1,093,679 4,608,450 787,501 - 6,489,630 2030 - 924,236 - 747,177 - 1,671,413 2031 - 919,193 - 547,077 - 1,466,270 2032 - 743,160 - 323,762 - 1,066,922 2033 - 502,800 - 103,000 - 605,800 2034 - 503,285 - - - 503,285 2035 - 508,205 - - - 508,205 2036 - 512,098 - - - 512,098 2037 - 515,224 - - - 515,224 2038 - 517,583 - - - 517,583 2039 - 519,175 - - - 519,175 2040 ------

$ 12,886,475 $ 65,522,208 $ 91,542,749 $ 59,667,798 $ 7,293,475 $ 236,912,705

142 J-5

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT SERVICE REQUIREMENT TO MATURITY GENERAL OBLIGATION BONDS

December 31, 2012

Total Year Principal Interest Requirement

2013 970,000 393,655 1,363,655 2014 1,010,000 359,905 1,369,905 2015 1,035,000 324,616 1,359,616 2016 1,065,000 288,542 1,353,542 2017 1,100,000 249,686 1,349,686 2018 1,135,000 209,510 1,344,510 2019 1,160,000 167,918 1,327,918 2020 530,000 122,912 652,912 2021 555,000 102,857 657,857 2022 570,000 81,794 651,794 2023 335,000 59,819 394,819 2024 350,000 44,588 394,588 2025 365,000 28,648 393,648 2026 260,000 12,025 272,025 2027 - - -

$ 10,440,000 $ 2,446,475 $ 12,886,475

143 J-6a

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT SERVICE REQUIREMENTS TO MATURITY REVENUE BONDS

December 31, 2012

Total Year Principal Interest Requirement 2013 4,876,560 1,478,382 6,354,942 2014 4,975,000 1,525,286 6,500,286 2015 5,105,000 1,245,693 6,350,693 2016 4,865,000 1,114,482 5,979,482 2017 4,980,000 988,851 5,968,851 2018 5,115,000 857,161 5,972,161 2019 3,975,000 718,633 4,693,633 2020 3,790,000 605,290 4,395,290 2021 2,300,000 498,166 2,798,166 2022 1,030,000 436,176 1,466,176 2023 1,070,000 401,403 1,471,403 2024 1,100,000 373,367 1,473,367 2025 1,130,000 339,399 1,469,399 2026 885,000 304,079 1,189,079 2027 815,000 273,708 1,088,708 2028 845,000 246,936 1,091,936 2029 875,000 218,679 1,093,679 2030 735,000 189,236 924,236 2031 755,000 164,193 919,193 2032 605,000 138,160 743,160 2033 385,000 117,800 502,800 2034 400,000 103,285 503,285 2035 420,000 88,205 508,205 2036 440,000 72,098 512,098 2037 460,000 55,224 515,224 2038 480,000 37,583 517,583 2039 500,000 19,175 519,175

$ 52,911,560 $ 12,610,650 $ 65,522,210

144 J-6b CITY OF GRAND FORKS, NORTH DAKOTA

DEBT SERVICE REQUIREMENTS TO MATURITY SALES TAX REVENUE BONDS

December 31, 2012

Governmental Activities Business-type Activities Total

Year Principal Interest Principal Interest Requirement 2013 1,285,000 406,194 2,105,000 2,503,200 6,299,394 2014 1,320,000 368,071 2,190,000 2,419,000 6,297,071 2015 1,360,000 322,129 2,275,000 2,331,400 6,288,529 2016 1,380,000 274,400 2,390,000 2,217,650 6,262,050 2017 1,295,000 228,780 2,505,000 2,105,650 6,134,430 2018 1,070,000 188,100 2,635,000 1,980,400 5,873,500 2019 1,130,000 144,475 2,760,000 1,848,650 5,883,125 2020 1,175,000 98,100 2,900,000 1,710,650 5,883,750 2021 1,125,000 32,050 3,045,000 1,565,650 5,767,700 2022 - - 3,195,000 1,413,400 4,608,400 2023 - - 3,355,000 1,253,650 4,608,650 2024 - - 3,520,000 1,085,900 4,605,900 2025 - - 3,695,000 909,900 4,604,900 2026 - - 3,860,000 743,625 4,603,625 2027 - - 4,035,000 569,925 4,604,925 2028 - - 4,220,000 388,350 4,608,350 2029 - - 4,410,000 198,450 4,608,450 2030 - - - - -

$ 11,140,000 $ 2,062,299 $ 53,095,000 $ 25,245,450 $91,542,749

145 J-7

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT SERVICE REQUIREMENTS TO MATURITY REFUNDING IMPROVEMENT BONDS

December 31, 2012

Total Year Principal Interest Requirement 2013 4,809,000 1,609,843 6,418,843 2014 4,661,000 1,458,912 6,119,912 2015 4,263,000 1,321,035 5,584,035 2016 3,996,000 1,195,287 5,191,287 2017 3,808,000 1,075,825 4,883,825 2018 3,671,000 949,144 4,620,144 2019 3,489,000 825,663 4,314,663 2020 3,157,000 700,147 3,857,147 2021 2,855,000 584,001 3,439,001 2022 2,120,000 480,338 2,600,338 2023 1,915,000 366,521 2,281,521 2024 1,620,000 335,065 1,955,065 2025 1,545,000 275,759 1,820,759 2026 1,375,000 218,219 1,593,219 2027 1,245,000 166,195 1,411,195 2028 950,000 118,330 1,068,330 2029 705,000 82,501 787,501 2030 690,000 57,177 747,177 2031 515,000 32,077 547,077 2032 310,000 13,762 323,762 2033 100,000 3,000 103,000

$ 47,799,000 $ 11,868,801 $ 59,667,801

146 J-8

CITY OF GRAND FORKS, NORTH DAKOTA

DEBT SERVICE REQUIREMENTS TO MATURITY INDUSTRIAL DEVELOPMENT REVENUE NOTES(1)

December 31, 2012

Governmental Activities Business-type Activities Total Year Principal Interest Principal Interest Requirement 2013 422,774 113,342 1,000,942 309,610 1,846,668 2014 446,844 89,271 658,324 210,753 1,405,192 2015 472,285 63,832 381,636 170,693 1,088,446 2016 499,174 36,944 397,750 145,454 1,079,322 2017 392,943 9,142 415,071 119,007 936,163 2018 - - 433,691 91,262 524,953 2019 - - 201,816 32,843 234,659 2020 - - 166,666 11,406 178,072 2021 - - - - -

$ 2,234,020 $ 312,531 3,655,896$ $ 1,091,028 $ 7,293,475

147 CITY OF GRAND FORKS, NORTH DAKOTA J-9

Summary of Individual Bonds as of December 31, 2012

General Obligation Bonds :

$1,465,000 2006 "B" GO Public Building Bonds; annual installments of $30,000 to $115,000 through December 1, 2025; interest at 4.0 percent to 4.4 percent 1,140,000

$3,490,000 2007 "A" GO Public Building Bonds; annual installments of $65,000 to $260,000 through December 1, 2026; interest at 4.25 percent to 4.625 percent 2,855,000

$5,685,000 2008 "B" GO Dike Refunding Bonds; annual installments of $500,000 to $650,000 through December 1, 2019; interest at 3.5 percent to 4.0 percent 4,185,000 $2,260,000 2011 "E" GO Dike Refunding Bonds; annual installments of $205,000 to $250,000 through December 1, 2022; interest at 2.0 percent to 3.0 percent 2,260,000

Total General Obligation Bonds $ 10,440,000

Revenue Bonds :

1997 "B" SRF Loan WWTP - Phase 1; interest and admin at 3.0 percent paid as accrued until completion of project 4,840,000

1997 "D" SRF Loan Southend Drainway - Phase 1; interest and admin at 3.0 percent paid as accrued until completion of project 1,395,000

1998 SRF Loan Southend Drainway - Phase 1; interest and admin at 3.0 percent paid as accrued until completion of project 850,000

2000 "A" SRF Loan Clearwell; interest and admin at 3.0 percent paid as accrued until completion of project 5,240,000

$1,075,000 2000 "C" Storm Sewer Reserve Revenue bond; annual installments of $55,000 to $95,000 through September 1, 2015; interest at 4.4 percent to 5.4 percent 280,000

2001 "D" SRF Loan WWTP - Phase 2 interest and admin at 3.0 percent paid as accrued until completion of project 7,050,000

2002 "C" SRF Loan WWTP - Phase 3; interest and admin at 3.0 percent paid as accrued until completion of project 3,526,560

148 J-9 (con't) $1,580,000 2004 "B" Water Reserve Revenue Refunding Bonds; annual installments of $100,000 to $175,000 through June 1, 2015; interest at 2.0 percent to 3.65 percent 500,000

2005 "E" SRF Loan BioSolids; interest and admin at 3.0 percent paid as accrued until completion of project 3,170,000

$1,360,000 2007 "B" Mosquito Control Reserve Revenue Bonds; annual installments of $35,000 to $100,000 through Sept 1, 2026; interest at 4.0 percent to 4.75 percent 1,105,000

$735,000 2008 "C"Sewer Reserve Revenue Refunding Bonds; annual installments of $70,000 to $100,000 through Dec 1, 2015; interest at 4.0 percent 300,000

$8,980,000 2009 "A" Taxable Sanitation Reserve Revenue Bonds(BAB); annual installments of $185,000 to $500,000 through Sept 1, 2029; interest at 1.5 percent to 5.9 percent less a 35 percent federal interest credit 8,390,000

$3,705,000 2009 "B" Sewer Reserve Revenue and Refunding Bonds; annual installments of $110,000 to $265,000 through Sept 1, 2029; interest at 2.0 percent to 4.0 percent 3,080,000

$5,770,000 2009 "D" Water Reserve Revenue Refunding Bonds; annual installments of $105,000 to $640,000 through Sept 1, 2020; interest at 2.0 percent to 4.0 percent 4,620,000

$2,635,000 2010 "A" Water Reserve Revenue Refunding Bonds; annual installments of $225,000 to $300,000 through Sept 1, 2020; interest at 3.0 percent to 3.5 percent 2,165,000

$2,645,000 2011 "D" Sewer Reserve Revenue Bonds; annual installments of $110,000 to $170,000 through Sept 1, 2031; interest at 2.0 percent to 3.75 percent 2,520,000 $3,880,000 2012 "B" Water Reserve Revenue Bonds; annual installments of $175,000 to $240,000 through Sept 1, 2032; interest at 2.0 percent to 2.75 percent 3,880,000

Total Revenue Bonds $ 52,911,560

149 J-9 (con't) Sales Tax Revenue Bonds:

$68,295,000 2005 "A" Sales Tax Revenue Refunding Bonds; annual installments of $1,670,000 to $4,410,000 through December 15, 2029; interest at 3.0 percent to 5.0 percent 53,095,000

$2,445,000 2007 "C" Sales Tax Reserve Revenue Refunding Bonds; annual installments of $180,000 to $300,000 through November 1, 2017; interest at 3.94 percent to 4.2 percent 1,315,000

$3,860,000 2011 "A" Sales Tax Reserve Revenue Refunding Bonds; annual installments of $350,000 to $430,000 through December 1, 2021; interest at 2.0 percent to 3.0 percent 3,510,000 $6,830,000 2011 "F" Sales Tax Reserve Revenue Refunding Bonds; annual installments of $515,000 to $760,000 through September 1, 2021; interest at 3.0 percent to 5.0 percent 6,315,000

Total Sales Tax Revenue Bonds $ 64,235,000

Special Assessment Bonds:

$5,185,000 1998 "A" Refunding serial bonds; annual installments of $240,000 to $450,000 through December 1, 2014; interest at 4.0 percent to 4.125 percent 530,000

2002 "A" SRF Loan Water Reclamation - Phase 1; interest and admin at 3 percent paid as accrued until completion of the project 844,000

2002 "B" SRF Loan Water Reclamation - Phase 2; interest and admin at 3 percent paid as accrued until completion of the project 1,110,000

$2,365,000 2004 "A" Refunding Improvement bonds; annual installments of $70,000 to $160,000 through December 1, 2025; interest at 3.0 percent to 4.4 percent 1,330,000

$2,195,000 2005 "B" Refunding Improvement bonds; annual installments of $75,000 to $155,000 through December 1, 2025; interest at 4.0 percent to 4.375 percent 1,345,000

$2,075,000 2006 "A" Refunding Improvement Refunding bonds; annual installments of $185,000 to $365,000 through December 1, 2013; interest at 4.125 percent to 4.25 percent 185,000

$7,320,000 2006 "C" Refunding Improvement bonds; annual installments of $205,000 to $460,000 through December 1, 2027; interest at 3.75 percent to 4.25 percent 5,085,000

150 J-9 (con't) $6,210,000 2007 "D" Refunding Improvement bonds; annual installments of $115,000 to $400,000 through December 1, 2028; interest at 4.0 percent to 4.4 percent 4,630,000

$2,310,000 2008 "A" Refunding Improvement Refunding bonds; annual installments of $110,000 to $330,000 through December 1, 2019; interest at 3.5 percent to 4.0 percent 1,355,000

$3,410,000 2008 "D" Refunding Improvement bonds; annual installments of $95,000 to $275,000 through December 1, 2028; interest at 4.0 percent to 5.0 percent 2,585,000

$7,560,000 2009 "C" Refunding Improvement Refunding bonds; annual installments of $320,000 to $925,000 through December 1, 2021; interest at 2.0 percent to 5.0 percent 5,790,000

$2,200,000 2009 "E" Refunding Improvement bonds; annual installments of $90,000 to $140,000 through December 1, 2030; interest at 2.25 percent to 4.20 percent 1,925,000

$3,195,000 2010 "B" Refunding Improvement bonds - Dike; annual installments of $80,000 to $205,000 through December 1, 2030; interest at 0.75 percent to 3.65 percent 2,785,000

$4,805,000 2010 "C" Refunding Improvement bonds; annual installments of $195,000 to $320,000 through December 1, 2031; interest at 1.0 percent to 3.7 percent 4,485,000

$2,830,000 2011 "B" Refunding Improvement Refunding bonds; annual installments of $115,000 to $400,000 through December 1, 2023; interest at 2.0 percent to 3.125 percent 2,830,000

$5,695,000 2011 "C" Refunding Improvement bonds; annual installments of $195,000 to $410,000 through December 1, 2032; interest at 2.0 percent to 3.75 percent 5,695,000 $5,290,000 2012 "A" Refunding Improvement Refunding bonds; annual installments of $100,000 to $475,000 through December 1, 2033; interest at 2.0 percent to 3.00 percent 5,290,000

Total Special Assessment Bonds $ 47,799,000

151

CITY OF GRAND FORKS, NORTH DAKOTA

SCHEDULE OF INSURANCE IN FORCE

December 31, 2012

Policy Type of Coverage and Name of Company Number From To

Buildings and Contents State Fire and Tornado Fund 1971 06/30/12 07/01/13

Buildings and Contents-Leased Properties State Fire and Tornado Fund 2523 06/30/12 07/01/13

Boiler and Machinery Chubb Group of Insurance Co. 7641-45-41 02/07/12 02/07/13

Public Officials Error and Ommissions Auto Liability and Comp. General GL-44026 North Dakota Insurance Reserve Fund & BA22426 01/01/12 01/01/13

Equipment Floater North Dakota Insurance Reserve Fund IM059120 01/01/12 01/01/13

Public Employee Blanket Bond North Dakota Bonding Fund Bond #2634 Continuous

Workers Compensation (Minnesota) MN COMP Berkley Risk Administration WC-22-04-181440-06 2/6/2012 2/6/2013

Workers Compensation (North Dakota) 48710 1/1/2012 12/31/12

Flood Insurance Various 4/1/2012 04/01/13 Vaaler Ins./ American Banker's Insurance Company/Selective Insurance Co. of America 80 policies

Alerus Center Y630109D2650TIL12 5/16/2012 05/16/13 Traveler's / Vaaler Ins.

Employee Health Insurance NDPERS - BC/BS 12158-9 7/1/2012 06/30/13 (200014)

152

J-10

Liabilities Annual Details of Coverage Co-Insurance Limit Premium

Blanket real and personal Replacement property 90% value $ 85,379

Blanket real and personal Replacement property 90% value $ 35,443

Boiler and Machinery $75,000,000 15,350

Public Officials Errors and Omissions/Auto Fleet $2,000,000 401,147

Equipment Floater $11,531,745 34,091 Robberies inside & outside premises and safe burglary $500 - 213,000 various dept.

Blanket Public Employee $2,000,000 - 0 - Bonding

Bodily injury $750,000 3,433

Bodily Injury $250 146,725

Flood insurance $5,000/$5,378,000 149,059

Building 100% $119,234,356 87,274 Business Personal Property $6,000,000 Business Income and Extra Expense $12,908,226 Outdoor Property (Signs) $700,000

Employee Health Insurance PPO Plan $2,000,000 4,278,957 Single Deductible $400 Per Member Single Coinsurance $ 750

Family Deductible $1,200 Family Coinsurance $1,500

153

STATISTICAL SECTION

This part of the City of Grand Forks comprehensive annual financial report (CAFR) presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health.

Contents

Financial Trends

These schedules contain trend information to help the reader understand how the City’s financial performance and well-being have changed over time.

Revenue Capacity

These schedules contain information to help the reader assess the factors affecting the city’s ability to generate its property and sales taxes.

Debt Capacity

These schedules present information to help the reader assess the afford- ability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future.

Demographic and Economic Information

These schedules offer demographic and economic indicators to help the readers understand the environment within which the city’s financial activities take place and to help make comparisons over time and with other governments.

Operating Information

These schedules contain information about the city’s operations and resources to help the reader understand how the city’s financial information relates to the services the city provides and the activities it performs.

Financial Trends

Net Assets by Component, Last Ten Fiscal Years Changes in Net Assets, Last Ten Fiscal Years Program Revenue by Function, Last Ten Fiscal Years Government-wide expenses by function/program Fund Balances, Governmental Funds, Last Ten Fiscal Years Changes in Fund Balances, Governmental Funds, Last Ten Fiscal Years

Revenue Capacity

Tax Revenues by Source, Governmental Funds, Last Ten Fiscal Years Assessed and Estimated Actual Value of Taxable Property, Last Ten Fiscal Years

155

Property Tax Levies and Collections, Last Ten Fiscal Years Direct and Overlapping Property Tax Rates, Last Ten Fiscal Years Principal Property Tax Payers, Current Year and Nine Years Ago

Debt Capacity

Ratio of Outstanding Debt by Type, Last Ten Fiscal Years Ratio of General Bonded Debt Outstanding, Last Ten Fiscal Years Direct and Overlapping Governmental Activities Debt, As of December 31, 2012 Legal Debt Margin Information, Last Ten Fiscal Years Pledged Revenue Coverage, Last Ten Fiscal Years

Demographic and Economic Information

Demographic and Economic Statistics, Last Ten Fiscal Years Principal Employers, Current Year and Nine Years Ago

Operating Information

Full-time Equivalent City Employees by Function/Program, last Ten Fiscal Years Operating Indicators by Function/Program Capital Asset Statistics by Function/Program Pension Trust Fund – Analysis of Funding Progress Pension Trust Fund – Revenues by Source and Expenses by Type

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial report of the City of Grand Forks for the current and prior years.

156

CITY OF GRAND FORKS, NORTH DAKOTA Table 1 LAST TEN FISCAL YEARS NET POSITION BY COMPONENT (Accrual Basis of Accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Governmental activities Invested in capital assets, net of related debt $ 36,791,606 $ 47,092,260 $ 61,572,749 $ 60,135,251 $ 65,709,896 $ 62,759,249 $ 71,231,327 $ 86,294,637 $ 86,234,283 $ 108,829,130 Restricted 70,335,808 78,201,321 71,056,663 68,568,332 74,596,602 85,004,316 86,549,084 76,423,683 81,898,883 72,943,322 Unrestricted 12,514,929 10,133,541 6,062,895 9,446,745 8,110,352 9,146,698 10,525,243 10,055,656 11,865,191 4,256,994 Total governmental activities net position $ 119,642,343 $ 135,427,122 $ 138,692,307 $ 138,150,328 $ 148,416,850 $ 156,910,263 $ 168,305,654 $ 172,773,976 $ 179,998,357 $ 186,029,446

Business-type activities Invested in capital assets, net of related debt $ 194,418,941 $ 197,669,288 $ 204,474,833 $ 216,899,729 $ 212,643,435 $ 216,374,048 $ 216,525,513 $ 227,996,166 $ 231,694,228 $ 236,054,053 Restricted 10,919,487 11,660,420 12,752,006 15,084,436 16,723,601 17,535,097 16,495,995 12,446,640 13,540,646 13,693,995 Unrestricted 25,332,978 23,944,883 20,156,680 15,714,456 25,353,342 27,353,970 29,252,705 26,261,443 24,916,444 30,324,284 Total business-type activity net position $ 230,671,406 $ 233,274,591 $ 237,383,519 $ 247,698,621 $ 254,720,378 $ 261,263,115 $ 262,274,213 $ 266,704,249 $ 270,151,318 $ 280,072,332

Primary government Invested in capital assets, net of related debt $ 231,210,547 $ 244,761,548 $ 266,047,582 $ 277,034,980 $ 278,353,331 $ 279,133,297 $ 287,756,840 $ 314,290,803 $ 317,928,511 $ 344,883,183 Restricted 81,255,295 89,861,741 83,808,669 83,652,768 91,320,203 102,539,413 103,045,079 88,870,323 95,439,529 86,637,317 Unrestricted 37,847,907 34,078,424 26,219,575 25,161,201 33,463,694 36,500,668 39,777,948 36,317,099 36,781,635 34,581,278 Total primary government net position $ 350,313,749 $ 368,701,713 $ 376,075,826 $ 385,848,949 $ 403,137,228 $ 418,173,378 $ 430,579,867 $ 439,478,225 $ 450,149,675 $ 466,101,778 Table 2

CITY OF GRAND FORKS, NORTH DAKOTA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (Accrual Basis of Accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Expenses Governmental Activities General Government $ 12,132,232 $ 12,174,807 $ 12,885,327 $ 15,267,404 $ 14,095,473 $ 14,648,537 $ 14,418,413 $ 16,105,016 $ 15,598,096 $ 14,634,258 Health and Welfare 2,513,088 2,606,070 2,851,205 2,741,265 2,167,105 2,259,347 2,453,416 2,587,095 2,580,583 2,602,529 Public Safety 13,057,422 14,478,800 15,657,479 15,769,347 17,494,026 15,576,655 16,643,635 17,071,913 17,838,004 19,122,732 Highways and Streets 8,582,422 7,831,587 8,209,719 8,019,975 7,260,066 5,158,745 5,481,168 6,041,236 5,896,760 5,780,505 Culture and Recreation 1,288,165 1,325,431 1,438,348 1,518,031 1,641,498 1,413,794 1,422,235 1,689,190 1,771,715 1,737,105 Public Works 3,195,374 2,928,793 916,660 471,437 3,920,775 6,941,171 4,567,036 4,134,841 4,247,688 4,179,045 Interest on Long-term Debt 4,284,405 4,964,461 4,701,281 4,704,939 4,956,601 4,892,448 3,977,547 3,968,960 3,654,519 3,706,349 Total Governmental Activities Expenses $ 45,053,108 $ 46,309,949 $ 46,660,019 $ 48,492,398 $ 51,535,544 $ 50,890,697 $ 48,963,450 $ 51,598,251 $ 51,587,365 $ 51,762,523

Business-type Activities Sanitation $ 5,869,201 $ 6,736,495 $ 6,604,856 $ 7,664,285 $ 7,093,833 $ 7,516,213 $ 7,261,813 $ 6,945,529 $ 8,411,026 $ 7,792,809 Sewer 7,185,600 7,392,286 7,309,358 7,609,508 8,384,589 8,183,058 7,981,214 7,981,815 8,627,547 8,502,137 Waterworks 7,483,814 7,705,688 7,908,110 8,741,920 8,584,683 8,606,855 8,779,073 8,708,339 8,699,845 9,063,768 Stormsewer 1,525,931 1,530,633 1,616,804 1,719,512 1,850,516 2, 050,180 2,296,775 2,304,361 2,591,535 2,500,655 Mosquito Control 812,265 741,008 744,112 828,501 799,264 656,754 Public Transit 1,593,810 1,591,185 1,794,679 1,778,418 1,872,091 1,911,944 1,920,073 2,316,618 2,400,839 2,550,478 Dial-A-Ride 343,831 374,524 379,200 248,425 266,529 324,481 348,243 386,548 734,313 729,942 Alerus 10,165,165 9,933,814 8,575,005 9,099,781 8,999,842 9,809,064 9,593,781 8,988,997 9,072,787 9,226,064 Job Development Authority 2,412,568 2,500,988 2,957,299 3,966,255 4,539,298 3,241,237 2,574,871 3,952,091 3,608,692 2,211,890 Downtown Parking 235,015 253,844 274,876 324,277 294,692 512,557 297,545 223,787 237,682 344,326 Total Business-type Activities Expenses $ 36,814,935 $ 38,019,457 $ 37,420,187 $ 41,152,381 $ 42,698,338 $ 42,896,597 $ 41,797,500 $ 42,636,586 $ 45,183,530 $ 43,578,823

Total Primary Government Expenses $ 81,868,043 $ 84,329,406 $ 84,080,206 $ 89,644,779 $ 94,233,882 $ 93,787,294 $ 90,760,950 $ 94,234,837 $ 96,770,895 $ 95,341,346

Program Revenue Governmental Activities: Charges for Services: General Government $ 3,762,831 $ 3,227,607 $ 4,268,764 $ 3,958,846 $ 3,369,720 $ 5,558,420 $ 5,378,775 $ 5,451,259 $ 5,697,621 $ 6,865,735 Health and Welfare 1,309,573 1,200,257 1,203,680 1,250,300 605,494 658,370 754,806 760,074 1,745,294 747,414 Public Safety 1,830,341 1,822,170 1,863,775 1,919,394 2,018,093 1,676,203 1,602,899 1,821,123 1,843,835 1,911,542 Highways and Streets 44,036 38,773 4,150 2,078 18,451 49,035 Culture & Recreation 38,841 38,421 35,133 36,310 41,683 42,691 43,409 43,207 44,739 45,765 Public Works 3,708 175 Operating Grants and Contributions 6,405,756 6,092,602 5,608,303 6,863,425 11,347,117 7,054,415 8,480,075 9,527,390 9,041,441 9,871,690 Capital Grants and Contributions 13,441,698 24,777,026 14,043,983 9,234,517 13,135,937 12,829,077 12,423,086 6,834,487 7,625,664 5,299,838 Total Governmental Activities Program Revenue $ 26,789,040 $ 37,158,083 $ 27,071,382 $ 23,301,740 $ 30,518,044 $ 27,823,326 $ 28,685,128 $ 24,437,540 $ 26,017,045 $ 24,791,019

Business-type Activities: Charges for Services: Sanitation $ 5,954,039 $ 6,817,722 $ 7,434,599 $ 7,730,905 $ 7,249,632 $ 7,520,939 $ 7,484,082 $ 7,498,400 $ 7,910,440 $ 8,119,857 Sewer 6,444,121 6,871,161 7,343,730 7,949,497 8,481,995 7,546,960 7,139,634 7,399,876 8,083,746 8,178,056 Waterworks 6,855,947 7,502,973 7,784,794 8,229,534 8,015,941 7,663,868 7,753,898 7,770,316 8,206,674 8,783,984 Stormwater 1,028,753 1,117,851 1,066,181 1,584,824 1,546,146 1,537,398 1,582,214 1,631,539 1,785,930 2,105,626 Mosquito Control 763,178 773,780 774,300 779,311 802,039 812,942 Public Transit 334,892 307,946 347,585 368,200 395,284 420,923 408,660 431,198 498,674 526,513 Dial-A-Ride 95,014 118,757 110,568 2,100 1,346 1,688 2,994 2,521 586 2,633 Alerus Center 3,671,416 3,454,127 3,326,090 3,302,845 3,497,358 3,881,121 3,865,723 3,488,985 3,587,015 4,643,761 Table 2

CITY OF GRAND FORKS, NORTH DAKOTA CHANGES IN NET POSITION LAST TEN FISCAL YEARS (Accrual Basis of Accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Job Development Authority 3,412,487 3,230,448 3,068,278 3,368,059 3,779,187 3,612,184 3,377,461 3,095,668 2,334,700 2,298,244 Downtown Parking 223,121 193,709 230,497 212,712 214,462 205,575 230,841 314,013 322,690 483,983 Operating Grants and Contributions 792,486 838,959 962,754 1,185,746 936,518 1,013,855 1,128,241 1,370,233 1,366,447 1,873,567 Capital Grants and Contributions 3,434,191 3,591,887 2,501,703 7,128,866 3,125,355 5,064,009 1,705,571 4,549,332 2,597,326 2,451,513 Total Business-type Activities Program Revenue $ 32,246,467 $ 34,045,540 $ 34,176,779 $ 41,063,288 $ 38,006,402 $ 39,242,300 $ 35,453,619 $ 38,331,392 $ 37,496,267 $ 40,280,679

Total Primary Government Program Revenue $ 59,035,507 $ 71,203,623 $ 61,248,161 $ 64,365,028 $ 68,524,446 $ 67,065,626 $ 64,138,747 $ 62,768,932 $ 63,513,312 $ 65,071,698

Net (Expense) Revenue Governmental Activities $ (18,264,068) $ (9,151,866) $ (19,588,637) $ (25,190,658) $ (21,017,500) $ (23,067,371) $ (20,278,322) $ (27,160,711) $ (25,570,320) $ (26,971,504) Business-type activities (4,568,468) (3,973,917) (3,243,408) (89,093) (4,691,936) (3,654,297) (6,343,881) (4,305,194) (7,687,263) (3,298,144) Total Net Expense $ (22,832,536) $ (13,125,783) $ (22,832,045) $ (25,279,751) $ (25,709,436) $ (26,721,668) $ (26,622,203) $ (31,465,905) $ (33,257,583) $ (30,269,648)

General Revenues and Other Changes in Net Position Governmental Activities: Taxes: Property Taxes $ 11,388,804 $ 11,793,328 $ 12,668,511 $ 13,018,447 $ 13,818,803 $ 14,233,090 $ 14,260,184 $ 14,505,839 $ 15,360,710 $ 15,680,508 Sales Taxes 7,041,855 7,230,086 8,284,344 8,326,046 9,327,398 9,311,015 9,040,669 9,290,589 9,946,223 10,941,495 Other Taxes 727,663 811,563 553,176 476,335 407,120 357,519 347,005 411,570 462,865 496,779 State aid distribution 1,716,862 1,641,281 1,668,547 1,675,500 2,169,580 2,356,905 2,281,677 2,656,472 3,312,280 4,271,719 Franchise Taxes 1,329,608 1,436,598 1,625,840 1,722,623 1,877,211 2,083,262 1,961,045 1,981,375 2,179,168 2,112,520 Investment Earnings 663,474 966,262 967,352 2,483,050 3,077,058 2,405,061 1,421,035 995,961 831,646 999,883 Gain(loss) on disposition of capital assets (672,443) 270,302 (3,603,218) (2,546,328) ------Miscellaneous 159,331 224,629 255,826 984,361 1,025,701 944,623 1,006,383 763,132 793,701 435,595 Transfers (44,468) 572,596 433,444 (1,491,355) (418,849) (130,691) 1,355,715 1,024,095 (91,892) (1,935,906) Total Governmental Activities $ 22,310,686 $ 24,946,645 $ 22,853,822 $ 24,648,679 $ 31,284,022 $ 31,560,784 $ 31,673,713 $ 31,629,033 $ 32,794,701 $ 33,002,593 ` Business-type Activities: Property tax $ 484,498 $ 512,528 $ 553,596 $ 614,168 $ 679,375 $ 732,856 $ 769,353 $ 790,411 $ 811,463 $ 836,047 Sales tax 5,435,542 5,953,327 6,049,856 6,487,588 7,263,304 7,271,841 7,068,739 7,263,062 7,776,631 8,554,897 Other taxes 9,292 9,808 10,058 11,342 11,355 11,351 11,443 15,354 17,825 19,129 Investment Earnings 624,824 721,690 1,172,270 1,762,581 2,454,562 1,968,752 458,365 1,447,283 1,369,837 1,032,021 Gain (loss) on sale of capital assets (178,034) (47,655) - 37,161 886,248 53,542 44,946 95,332 42,227 29,893 Lawsuit Settlement 349,348 - - 275,000 Miscellaneous - - - - - 28,001 8,500 147,883 1,024,457 536,265 Transfers 44,468 (572,596) (433,444) 1,491,355 418,849 130,691 (1,355,715) (1,024,095) 91,892 1,935,906 Total Business-type Activities 6,420,590 6,577,102 7,352,336 10,404,195 11,713,693 10,197,034 7,354,979 8,735,230 11,134,332 13,219,158 Total Primary Government $ 28,731,276 $ 31,523,747 $ 30,206,158 $ 35,052,874 $ 42,997,715 $ 41,757,818 $ 39,028,692 $ 40,364,263 $ 43,929,033 $ 46,221,751

Change in Net Position Governmental Activities $ 4,046,618 $ 15,794,779 $ 3,265,185 $ (541,979) $ 10,266,522 $ 8,493,413 $ 11,395,391 $ 4,468,322 $ 7,224,381 $ 6,031,089 Business-type Activities 1,852,122 2,603,185 4,108,928 10,315,102 7,021,757 6,542,737 1,011,098 4,430,036 3,447,069 9,921,014 Total Change in Net Position Primary Government $ 5,898,740 $ 18,397,964 $ 7,374,113 $ 9,773,123 $ 17,288,279 $ 15,036,150 $ 12,406,489 $ 8,898,358 $ 10,671,450 $ 15,952,103 Table 3

CITY OF GRAND FORKS, NORTH DAKOTA

PROGRAM REVENUE BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (accrual basis of accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Function/Program Governmental activities: General government $ 7,094,110 $ 5,456,028 $ 5,787,485 $ 6,114,993 $ 10,382,771 $ 8,030,092 $ 8,549,492 $ 9,636,722 $ 8,530,658 $ 9,772,303 Health and welfare 1,993,997 2,024,902 2,102,266 2,139,677 1,534,714 1,558,083 1,806,683 1,955,832 2,843,460 1,877,437 Public safety 2,676,310 3,508,754 4,920,768 3,602,584 5,883,457 3,235,045 3,624,426 4,004,295 3,326,722 4,304,810 Highways and streets 2,170,611 2,042,255 2,246,446 2,359,498 2,469,516 2,789,724 4,243,654 3,079,215 4,562,232 4,585,273 Culture and recreation 105,203 492,486 395,261 590,824 515,500 514,423 760,109 796,423 750,520 689,615 Permanent flood protection/PW* 12,748,809 23,633,658 11,619,156 8,494,164 9,732,086 11,695,959 9,700,764 4,965,053 6,003,453 3,561,581 Subtotal governmental activities $ 26,789,040 $ 37,158,083 $ 27,071,382 $ 23,301,740 $ 30,518,044 $ 27,823,326 $ 28,685,128 $ 24,437,540 $ 26,017,045 $ 24,791,019

Business-type activities: Sanitation $ 5,954,039 $ 6,817,722 $ 7,434,599 $ 7,730,905 $ 7,249,632 $ 7,520,939 $ 7,504,527 $ 7,498,400 $ 7,910,440 $ 8,119,857 Sewer 7,667,693 8,249,199 7,717,789 10,004,230 9,057,053 8,888,773 7,861,320 7,444,823 8,440,300 8,396,331 Water 8,238,483 8,731,303 8,349,267 10,181,914 8,367,881 7,904,884 7,758,611 7,770,316 8,589,772 8,893,827 Stormsewer 1,547,438 1,564,337 1,299,523 3,177,683 2,239,973 4,978,812 2,075,238 3,599,559 3,307,325 3,538,956 Mosquito Control 1,066,173 815,718 796,153 795,191 817,039 827,942 Public Transit 1,262,277 1,547,949 1,237,367 1,334,568 1,114,762 1,149,134 1,516,721 3,838,261 1,659,766 1,856,568 Dial-A-Ride 269,513 256,746 270,568 133,587 307,257 270,350 328,695 287,680 508,361 350,238 Alerus 3,671,416 3,454,127 3,521,090 3,584,767 3,685,628 3,895,931 4,004,052 3,515,300 3,605,874 4,687,946 Job Development Authority 3,412,487 3,230,448 4,116,079 4,702,922 4,703,581 3,612,184 3,377,461 3,267,849 2,334,700 3,125,031 Downtown parking 223,121 193,709 230,497 212,712 214,462 205,575 230,841 314,013 322,690 483,983 Subtotal business-type activities $ 32,246,467 $ 34,045,540 $ 34,176,779 $ 41,063,288 $ 38,006,402 $ 39,242,300 $ 35,453,619 $ 38,331,392 $ 37,496,267 $ 40,280,679

Total primary government $ 59,035,507 $ 71,203,623 $ 61,248,161 $ 64,365,028 $ 68,524,446 $ 67,065,626 $ 64,138,747 $ 62,768,932 $ 63,513,312 $ 65,071,698

Note: Fluctuations in program revenue of governmental activities are due to the level of construction activity/capital contribution in the permanent flood protection project. Table 4

CITY OF GRAND FORKS, NORTH DAKOTA GOVERNMENT WIDE EXPENSES BY FUNCTION LAST SIX FISCAL YEARS (accrual basis of accounting)

Function 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General Government $ 12,132,232 $ 12,174,807 $ 12,885,327 $ 15,267,404 $ 15,640,612 $ 14,648,537 $ 14,418,413 $ 16,105,016 $ 15,598,096 $ 14,634,258 Health and Welfare 2,513,088 2,606,070 2,851,205 2,741,265 2,235,820 2,259,347 2,453,416 2,587,095 2,580,583 2,602,529 Public Safety 13,057,422 14,478,800 15,657,479 15,769,347 17,494,026 15,576,655 16,643,635 17,071,913 17,838,004 19,122,732 Highways and Streets 8,582,422 7,831,587 8,209,719 8,019,975 7,260,066 5,158,745 5,481,168 6,041,236 5,896,760 5,780,505 Culture and Recreation 1,288,165 1,325,431 1,438,348 1,518,031 1,641,498 1,413,794 1,422,235 1,689,190 1,771,715 1,737,105 Public Works 3,195,374 2,928,793 916,660 471,437 2,306,921 6,941,171 4,567,036 4,134,841 4,247,688 4,179,045 Interest on Long-term Debt 4,284,405 4,964,461 4,701,281 4,704,939 4,956,601 4,892,448 3,977,547 3,968,960 3,654,519 3,706,349 Sanitation 5,869,201 6,736,495 6,604,856 7,664,285 7,093,833 7,516,213 7,261,813 6,945,529 8,411,026 7,792,809 Sewer 7,185,600 7,392,286 7,309,358 7,609,508 8,384,589 8,183,058 7,981,214 7,981,815 8,627,547 8,502,137 Waterworks 7,483,814 7,705,688 7,908,110 8,741,920 8,584,683 8,606,855 8,779,073 8,708,339 8,699,845 9,063,768 Stormsewer 1,525,931 1,530,633 1,616,804 1,719,512 1,850,516 2,050,180 2,296,775 2,304,361 2,591,535 2,500,655 Mosquito Control 812,265 741,008 744,112 828,501 799,264 656,754 Public Transit 1,593,810 1,591,185 1,794,679 1,778,418 1,872,091 1,911,944 1,920,073 2,316,618 2,400,839 2,550,478 Dial-A-Ride 343,831 374,524 379,200 248,425 266,529 324,481 348,243 386,548 734,313 729,942 Alerus Center 10,165,165 9,933,814 8,575,005 9,099,781 8,999,842 9,809,064 9,593,781 8,988,997 9,072,787 9,226,064 Job Development Authority 2,412,568 2,500,988 2,957,299 3,966,255 4,539,298 3,241,237 2,574,871 3,952,091 3,608,692 2,211,890 Downtown Parking 235,015 253,844 274,876 324,277 294,692 512,557 297,545 223,787 237,682 344,326 Total $ 81,868,043 $ 84,329,406 $ 84,080,206 $ 89,644,779 $ 94,233,882 $ 93,787,294 $ 90,760,950 $ 94,234,837 $ 96,770,895 $ 95,341,346

Table 5

CITY OF GRAND FORKS, NORTH DAKOTA FUND BALANCES OF GOVERNMENTAL FUNDS* LAST TEN FISCAL YEARS (modified accrual basis of accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

General Fund Non-spendable $ 28,901 $ 28,901 Restricted Committed 1,660,676 1,648,730 Assigned 2,216,383 1,857,439 Unassigned 7,694,117 9,088,319 Reserved $ 8,102 $ 14,879 $ 33,938 $ - $ 6,076 $ 143,486 $ 9,007 $ 5,680 Unreserved 6,597,758 8,139,920 6,460,379 7,872,785 8,162,811 7,962,152 7,840,268 7,756,476 Total General Fund $ 6,605,860 $ 8,154,799 $ 6,494,317 7,872,785 8,168,887 8,105,638 7,849,275 7,762,156 11,600,077 12,623,389

All Other Governmental Funds Non-spendable $ 299,518 $ - Restricted 48,017,485 35,040,253 Committed 1,413,300 3,166,637 Assigned 59,600 - Unassigned (95,795) - Reserved $ 33,812,275 $ 26,648,757 $ 21,280,072 $ 15,994,323 $ 18,056,585 $ 27,023,570 $ 29,501,267 $ 21,884,654 Unreserved Special Revenue Funds 7,912,574 8,386,676 10,860,723 11,041,400 12,175,320 14,118,197 16,584,326 16,910,620 Capital Projects Funds 3,790,699 3,586,479 2,114,128 4,250,301 7,009,083 3,457,998 3,617,405 4,393,758 Debt Service Funds 1,236,975 1,127,074 887,181 868,577 - - - - Total all Other Governmental Funds $ 46,752,523 $ 39,748,986 $ 35,142,104 $ 32,154,601 $ 37,240,988 $ 44,599,765 $ 49,702,998 $ 43,189,032 $ 49,694,108 $ 38,206,890

*The City implemented GASB Statement 54 in 2011, this table reflects this change starting in 2011.

Table 6

CITY OF GRAND FORKS, NORTH DAKOTA

CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS (modified accrual basis of accounting)

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Revenues Taxes $ 18,508,513 $ 19,126,374 $ 21,087,028 $ 21,344,493 $ 23,146,200 $ 23,492,441 $ 23,210,350 $ 23,705,051 $ 25,209,797 $ 26,559,528 Licenses, fees and permits 1,004,950 1,182,013 1,339,188 1,694,885 1,455,972 1,296,827 1,378,480 1,293,388 1,735,385 1,806,907 Fines and forfeitures 943,062 967,030 911,136 1,078,983 1,277,164 849,484 744,003 790,657 819,005 958,635 Charges for services 4,339,544 3,998,354 4,366,889 4,429,755 3,301,854 5,793,387 5,659,483 5,991,617 6,777,101 6,831,145 Special assessments 7,528,455 6,653,542 7,243,599 6,445,038 7,368,854 7,150,179 11,872,439 8,455,376 7,613,680 7,140,492 Intergovernmental 17,358,933 14,244,623 15,122,933 11,580,333 16,252,201 10,161,475 13,283,074 14,631,674 14,846,338 16,453,319 Investment earnings 661,997 961,732 963,279 2,478,377 3,063,072 2,391,195 1,416,436 988,246 827,756 994,534 Other revenues 2,298,321 2,502,533 4,329,292 2,970,277 6,899,108 3,937,218 3,685,608 3,213,856 2,858,221 2,561,031

Total Revenues 52,643,775 49,636,201 55,363,344 52,022,141 62,764,425 55,072,206 61,249,873 59,069,865 60,687,283 63,305,591

Expenditures General government 11,047,666 10,898,844 12,223,270 14,316,622 14,819,160 13,810,889 13,528,578 15,022,224 14,394,064 13,729,434 Health and welfare 2,443,454 2,556,151 2,763,546 2,625,618 2,168,422 2,189,851 2,387,945 2,526,438 2,539,420 2,573,432 Public safety 12,446,107 13,832,747 15,121,383 15,081,121 17,844,311 14,554,316 15,564,586 15,884,396 16,930,756 18,147,514 Highways and streets 4,872,775 4,108,664 4,295,571 4,071,305 3,981,258 3,095,384 3,372,974 3,730,301 3,736,947 3,667,125 Culture & recreation 1,246,226 1,269,829 1,420,423 1,499,189 1,625,754 1,397,267 1,409,144 1,672,647 1,751,306 1,714,234 Capital outlay 22,069,319 17,958,214 22,235,966 10,528,408 11,282,973 11,736,698 7,543,530 10,726,809 10,018,332 11,284,285 Debt Service: Interest & fiscal charges 4,342,709 4,972,574 4,812,165 4,791,707 4,953,913 4,932,423 5,032,071 4,052,335 3,840,277 3,752,767 Defeasance costs 889,055 261,787 - - Principal 8,771,301 7,493,762 8,529,950 13,847,765 18,089,790 8,680,228 8,205,043 7,900,649 7,959,040 11,931,000

Total Expenditures 67,239,557 63,090,785 71,402,274 66,761,735 74,765,581 60,397,056 57,932,926 61,777,586 61,170,142 66,799,791

Excess of revenues over (under) expenditures (14,595,782) (13,454,584) (16,038,930) (14,739,594) (12,001,156) (5,324,850) 3,316,947 (2,707,721) (482,859) (3,494,200)

Other Financing Sources ( Uses) Proceeds from borrowing 19,419,132 6,991,147 8,738,736 12,336,471 15,362,525 3,480,677 2,817,374 4,971,070 8,525,000 5,591,211 Proceeds from refunding 2,096,927 2,445,000 8,730,000 7,560,000 2,930,576 14,017,093 - Redemption of refunded bonds (8,805,945) (12,030,000) (11,570,604) (12,230,000) Capital lease 24,000 - Sale of capital assets 441,012 417,215 599,386 188,520 37,930 531,842 140,583 387,269 38,259 112,453 Insurance reimbursement Transfers in 9,600,809 11,950,463 16,229,476 14,300,020 18,632,510 13,571,129 13,730,523 18,705,644 9,582,297 10,073,716 Transfers out (9,800,879) (11,382,839) (15,796,032) (15,791,379) (19,094,321) (13,693,270) (13,912,612) (18,857,923) (9,766,189) (10,517,086)

Total other financing sources (uses) 19,660,074 7,999,986 9,771,566 13,130,559 17,383,644 12,620,378 1,529,923 (3,893,364) 10,825,856 (6,969,706)

Net change in fund balances $ 5,064,292 (5,454,598) $ (6,267,364) $ (1,609,035) $ 5,382,488 $ 7,295,528 $ 4,846,870 $ (6,601,085) $ 10,342,997 $ (10,463,906)

Debt Service as a percentage of noncapital expenditures 29.03% 27.62% 27.29% 33.09% 37.17% 24.79% 25.41% 22.15% 21.43% 27.02%

Table 7

CITY OF GRAND FORKS, NORTH DAKOTA

TAX REVENUE BY SOURCE LAST TEN FISCAL YEARS

Levy Collection Sales Tax Restaurant/Lodging General Sales Use Total Sales & Use Taxable Real Property Year Year Alerus Center (3/4%) Sales Tax (1/4%) Tax (1%) Tax Tax Collections(1) Sales & Purchases Tax Levy

2002 2003 $ 5,149,764 $ 285,778 $ 6,462,973 $ 578,883 $ 12,477,398 $ 772,407,060 $ 11,654,107 2003 2004 5,657,286 296,041 6,638,453 591,633 13,183,413 816,000,000 12,114,530 2004 2005 5,710,944 338,912 7,606,134 678,210 14,334,200 830,000,000 13,030,727 2005 2006 6,152,636 334,952 7,644,519 681,527 14,813,634 857,521,263 13,357,267 2006 2007 6,894,164 369,140 8,562,551 764,847 16,590,702 933,798,844 13,746,005 2007 2008 6,882,054 389,786 8,547,512 763,503 16,582,855 973,717,114 14,419,126 2008 2009 6,682,234 386,505 8,301,693 738,977 16,109,409 961,679,434 14,735,265 2009 2010 6,866,957 396,105 8,531,184 759,405 16,553,651 998,806,463 15,225,260 2010 2011 7,351,556 425,075 9,133,227 812,996 17,722,854 1,078,995,179 15,631,594 2011 2012 8,087,192 467,705 10,047,147 894,348 19,496,392 1,179,498,604 16,240,360

$18,000,000 TAX REVENUE BY SOURCE

$16,000,000

$14,000,000

$12,000,000

$10,000,000 Amount $8,000,000

$6,000,000

$4,000,000

$2,000,000

$- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Fiscal Year

Real Property Tax General Sales Tax Alerus Sales Tax Restaurant/Lodging Sales Tax Use Tax

164 Table 8

CITY OF GRAND FORKS, NORTH DAKOTA

ASSESSED AND ESTIMATED MARKET VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS

Ratio of Effective Tax Effective Tax Fiscal Assessed Estimated Assessed to Taxable Rate - Rate - Year Value Market Value Market Value Value Residential * Commercial * 2003 $ 918,553,920 $ 1,837,107,840 50.0% $ 86,407,752 2.21% 2.46% 2004 973,382,820 1,946,765,640 50.0% 91,556,946 2.22% 2.46% 2005 1,052,789,410 2,105,578,820 50.0% 98,981,780 2.19% 2.44% 2006 1,171,293,984 2,342,587,968 50.0% 109,889,541 2.10% 2.34% 2007 1,290,898,900 2,581,797,800 50.0% 121,056,846 2.07% 2.30% 2008 1,387,122,180 2,774,244,360 50.0% 130,066,082 2.07% 2.30% 2009 1,455,060,580 2,910,121,160 50.0% 136,538,777 2.02% 2.25% 2010 1,505,275,380 3,010,550,760 50.0% 141,794,647 1.71% 1.90% 2011 1,545,638,480 3,091,276,960 50.0% 145,045,875 1.73% 1.92% 2012 1,595,003,090 3,190,006,180 50.0% 148,898,501 1.84% 2.04%

TAXABLE VALUE COMPARED TO MARKET VALUE

$3,500,000,000

$3,000,000,000

$2,500,000,000

$2,000,000,000

Amount $1,500,000,000

$1,000,000,000

$500,000,000

$- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Fiscal Year

Market Value Taxable Value

* Reflects all taxing entities

166 Table 8

Property Value

Public Total Estimated Year Commercial Residential Agricultural Utilities Tax Increments Market Value 2003 $ 761,907,300 $ 1,051,684,600 426,000 $ 42,110,340 $ (19,020,400) $ 1,837,107,840 2004 804,375,600 1,117,826,900 415,600 42,200,340 (18,052,800) 1,946,765,640 2005 858,607,300 1,220,057,400 405,000 43,786,380 (17,277,260) 2,105,578,820 2006 920,492,200 1,391,632,700 515,000 46,522,768 (16,574,700) 2,342,587,968 2007 998,055,800 1,549,388,100 608,700 48,864,900 (15,119,700) 2,581,797,800 2008 1,080,766,500 1,660,856,100 544,500 43,377,860 (11,300,600) 2,774,244,360 2009 1,145,375,800 1,723,110,000 396,500 42,201,940 (963,080) 2,910,121,160 2010 1,216,245,500 1,747,180,400 386,300 47,653,240 (914,680) 3,010,550,760 2011 1,264,463,420 1,776,316,800 474,400 50,937,020 (914,680) 3,091,276,960 2012 1,309,554,800 1,837,601,500 501,800 42,881,880 (533,800) 3,190,006,180

167 Table 9 (con't)

CITY OF GRAND FORKS, NORTH DAKOTA

PROPERTY TAX LEVY AND COLLECTION LAST TEN FISCAL YEARS

Percent Total Current Tax of Levy Levy Year(1) Tax Levy Discounts Collected Collected 2002 $ 11,654,107 502,490 $ 10,923,120 98.0% 2003 12,114,530 523,623 11,397,586 98.3% 2004 13,030,727 569,585 12,265,362 98.4% 2005 13,357,267 582,274 12,541,915 98.2% 2006 14,109,134 614,097 13,312,402 98.6% 2007 14,673,296 635,578 13,759,450 98.0% 2008 14,753,885 640,503 13,880,477 98.3% 2009 15,248,758 650,477 14,222,599 97.4% 2010 15,641,405 674,546 14,748,741 98.5% 2011 16,240,661 705,201 15,315,816 98.6%

(1) Collection year is one year later (i.e., Levy Year 2011 Collection Year 2012)

CURRENT TAX COLLECTED COMPARED TO TAX LEVY

$18,000,000

$16,000,000

$14,000,000

$12,000,000

$10,000,000

$8,000,000 Amount

$6,000,000

$4,000,000

$2,000,000

$- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year

Tax Levy Current Collections

168 Table 9 (con't)

Collection Outstanding Delinquent as Percent of Outstanding Delinquent Taxes Levy Tax Total Current Delinquent as Percent of Year Collection Collection Levy Taxes Current Levy 2002 $ 216,347 $ 11,139,467 95.6% $ 337,474 3.03% 2003 189,958 11,587,544 95.6% 333,909 2.88% 2004 231,601 12,496,963 95.9% 233,433 1.87% 2005 169,182 12,711,097 95.2% 268,735 2.10% 2006 238,192 13,550,594 96.0% 197,633 1.46% 2007 248,087 14,007,537 95.5% 439,469 3.13% 2008 266,509 14,146,986 95.9% 414,658 2.94% 2009 331,794 14,554,393 95.4% 475,046 3.25% 2010 404,584 15,153,325 96.9% 169,913 1.14% 2011 213,786 15,529,602 95.6% 349,828 2.25%

DELINQUENT TAXES COMPARED TO TAX LEVY

$18,000,000

$16,000,000

$14,000,000

$12,000,000

$10,000,000

$8,000,000 Amount

$6,000,000

$4,000,000

$2,000,000

$- 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Fiscal Year

Tax Levy Delinquent Taxes

169 Table 10

CITY OF GRAND FORKS, NORTH DAKOTA

PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS LAST TEN FISCAL YEARS (In Mills)

CITY OF GRAND FORKS Debt Total Fiscal Gen. Sp Rev Svc Public G.F. G.F. G.F. Regional Year Fund Funds Funds Trans City Parks Schools State County Airport Total 2003 81.44 22.28 15.01 5.78 124.51 42.14 241.03 2.00 102.61 4.67 516.96 2004 80.46 22.28 14.00 5.78 122.52 45.65 240.82 2.00 102.59 4.67 518.25 2005 81.44 21.28 14.00 5.78 122.50 45.61 237.12 2.00 101.16 4.67 513.06 2006 76.66 19.50 11.49 5.78 113.43 43.59 230.11 2.00 98.40 4.30 491.83 2007 72.48 19.50 11.49 5.78 109.25 42.36 224.11 2.00 101.45 4.30 483.47 2008 70.29 18.95 11.52 5.79 106.55 41.50 218.66 2.00 111.71 4.31 484.73 2009 73.34 18.96 5.52 5.79 103.61 39.02 213.69 2.00 110.09 4.31 472.72 2010 73.26 18.95 5.51 5.79 103.51 37.94 139.35 2.00 113.49 4.31 400.60 2011 73.22 18.94 5.51 5.79 103.46 37.88 139.35 2.00 117.83 4.31 404.83 2012 74.43 18.99 5.53 5.80 104.75 39.98 139.32 2.00 117.44 4.32 407.81

SHARE OF MILL LEVY 2012

Regional Airport 1.1%

Total G.F. City County 25.7% 28.8%

State 0.5% G.F. Parks 9.8%

G.F. Schools 34.2%

170 Table 11

CITY OF GRAND FORKS, NORTH DAKOTA PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO

2011 Values (2012 collections) 2002 values (2003 collections) Percentage of Percentage of Taxable Total Taxable Taxable Total Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value IRET Properties 2,022,965 1 1.36% 1,386,570 3 1.51% Northern States Power Company $ 1,852,849 2 1.24% $ 1,860,996 1 2.03% Mikkelson Consolidated Limited Partnership 1,816,370 3 1.22% 1,098,455 4 1.20% Altru Health System(1) 1,590,815 4 1.04% 746,670 6 0.82% Columbia Grand Forks, LLC 1,547,785 5 0.84% INREIT Properties, LLLP 1,247,115 6 0.65% Aurora Medical Park No. 2 LLC 968,080 7 0.63% Terrace Pointe LLC ET AL 938,200 8 0.63% Menard Inc. 752,970 9 0.51% 562,885 8 0.61% Aurora Medical Park LLC 738,740 10 0.50% Metropolitan Life Insurance Co. 1,498,495 2 1.64% Walmart Stores, Inc 612,695 5 0.67% J. R. Simplot 597,270 7 0.65% Target Corporation 511,645 9 0.56% Dayton Hudson Corp. 411,860 10 0.45% $ 13,475,889 8.61% $ 9,287,541 10.14%

2011 Total Taxable Value $ 148,898,501 2002 Total Taxable Value $ 91,556,946

Source: City of Grand Forks Assessing Department

(1) This has previously been reported as United Hospital with only a value for the property owned by the former United Hospital. United Hospital and Grand Forks Clinic integrated to become Altru Heath System in 1997. Beginning in 2012, we have changed the name to Altru Health System and will be showing the full value of all property held by Altru Health System. Comparative information is for United Hospital only value.

171 Table 11A

CITY OF GRAND FORKS, NORTH DAKOTA CONSTRUCTION VALUE LAST TEN CALENDAR YEARS

Commercial Residential Construction Construction Number Number Year of Permits Value (1) of Units Value(1) 2003 18 7,181,148 498 44,224,706 2004 23 20,661,228 451 42,530,055 2005 24 22,548,007 470 46,490,061 2006 21 45,075,018 423 59,497,671 2007 21 30,054,857 240 28,242,941 2008 16 19,550,807 274 34,123,530 2009 9 9,000,586 263 36,682,942 2010 11 22,754,318 128 21,008,757 2011 13 17,467,243 326 42,319,630 2012 12 27,780,374 424 53,710,209

(1) Estimated Actual Value. Source - City Inspection Department (2) Total Estimated Market Value differs from Total Estimated Market Value listed on Table 5 due to Value of Tax Exempt Property

CONSTRUCTION PERMITS CONSTRUCTION PERMITS NUMBER OF UNITS VALUE

$90,000,000 $85,000,000 600 $80,000,000 $75,000,000 $70,000,000 500 $65,000,000 $60,000,000

400 $55,000,000 $50,000,000 $45,000,000 300 $40,000,000 $35,000,000 $30,000,000 Quantity 200 $25,000,000

Dollar Amount Dollar $20,000,000 100 $15,000,000 $10,000,000 $5,000,000 0 $-

Year Year Commercial Residential Commercial Residential CITY OF GRAND FORKS, NORTH DAKOTA Table 12 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS

Total Percentage Primary of Personal Per GOVERNMENTAL ACTIVITIES BUSINESS-TYPE ACTIVITIES Government Income Capita Fiscal General Special Sales Tax Industrial Sales Tax Year Obligation Assessment Revenue Development Revenue Revenue SRF Bonds Bonds Bonds Bonds Notes Leases Bonds Bonds Loans Leases Notes

2003 17,965,000 59,911,457 22,070,000 4,919,217 20,815,000 65,865,000 42,815,505 1,784,039 199,490 236,344,708 8.76% 4,645.87 2004 16,740,000 60,128,488 21,110,000 4,706,533 1,686,040 16,000 19,490,000 64,650,000 41,394,117 1,580,772 166,547 231,668,497 8.39% 4,471.67 2005 14,825,000 62,159,448 19,705,000 4,477,338 3,445,502 8,000 18,090,000 60,875,815 40,784,600 1,886,508 131,767 226,388,978 7.85% 4,253.03 2006 14,865,000 62,165,322 18,795,000 4,230,350 5,210,097 - 16,595,000 64,295,000 42,126,804 1,471,973 9,793,539 239,548,085 7.81% 4,429.27 2007 17,000,000 64,477,000 17,715,000 3,964,188 1,891,019 - 16,395,000 62,575,000 39,912,851 314,231 9,286,366 233,530,655 7.08% 4,279.00 2008 21,445,000 65,690,000 16,685,000 3,677,362 1,043,804 - 14,840,000 60,805,000 37,230,264 264,972 8,347,693 230,029,095 6.39% 4,172.03 2009 13,595,000 67,492,000 15,630,000 3,368,270 421,853 - 29,610,000 58,975,000 34,470,544 85,512 7,136,527 230,784,706 6.64% 4,144.02 2010 12,545,000 58,484,000 14,535,000 3,012,474 - - 23,515,000 57,080,000 31,741,561 58,105 6,244,555 207,215,695 5.68% 3,921.72 2011 13,740,000 61,860,000 12,250,000 2,634,020 - - 24,650,000 55,125,000 28,951,561 807,895 4,523,212 204,541,688 5.30% 3,871.11 2012 10,440,000 47,799,000 11,140,000 2,234,020 - - 26,840,000 53,095,000 26,071,560 595,123 3,655,896 181,870,599 not available 3,345.79

Note: Details regarding the City's debt can be found in the notes to the financial statements.

Population 54,358 Table 13

CITY OF GRAND FORKS, NORTH DAKOTA

RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND NET BONDED DEBT PER CAPITA LAST TEN FISCAL YEARS

Ratio of Assessed Net Value Bonded Gross Less Debt Net to Debt Assessed Bonded Service Bonded Net Bonded Per Year Census(1) Value Debt (2) Funds Debt Debt Capita 2003 50,872 918,553,920 21,025,942 2,594,925 18,431,017 49.84 362.30 2004 51,808 973,382,820 19,298,451 2,589,150 16,709,301 58.25 322.52 2005 53,230 1,052,789,410 17,269,431 2,170,008 15,099,423 69.72 283.66 2006 54,083 1,171,293,984 17,468,098 2,253,452 15,214,646 76.98 281.32 2007 54,576 1,290,898,900 19,386,555 2,784,442 16,602,113 77.76 304.20 2008 55,136 1,387,122,180 23,729,491 8,946,867 14,782,624 93.83 268.11 2009 55,691 1,455,060,580 15,702,343 1,121,472 14,580,871 99.79 261.82 2010 52,838 1,505,275,380 14,464,296 768,833 13,695,463 109.91 259.20 2011 52,838 1,545,638,480 15,670,893 2,815,748 12,855,145 120.24 243.29 2012 54,358 1,595,003,090 12,283,622 337,984 11,347,908 140.55 208.76

Notes: (1) 2001-2009, 2012 are estimated population provided by GF/EGF Metropolitan Planning Organization. 2010 source is US Census. (2) Includes city share/spec. assessments and spec. assessments/city property.

RATIO OF NET GENERAL BONDED DEBT TO ASSESSED VALUE

160

140 140.55

120 120.24

100 109.91 99.79 93.83 80

Ratio 76.98 77.76 60 69.72 58.25

40 49.84

0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Fiscal Year

174 Table 14

CITY OF GRAND FORKS, NORTH DAKOTA

COMPUTATION OF DIRECT AND OVERLAPPING DEBT

December 31, 2012

Applicable Net Bonded to this Governmental Unit Debt Outstanding Govt'l Unit Share of Debt

Direct Debt: City of Grand Forks $ 11,347,908 100.0% $ 11,347,908

Total Direct Debt 11,347,908

Overlapping Debt: Grand Forks School District $ 20,005,887 94% 18,899,053

Grand Forks County $ 19,575,000 75% 14,674,664

Grand Forks Park District $ 9,440,000 100.0% 9,440,000

Total Overlapping Debt 43,013,718

Total Direct and Overlapping Debt $ 54,361,626

Sources: Taxable value data used to estimate applicable percentages provided by Grand Forks County. Debt outstanding data provided by individual governmental units.

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the city of Grand Forks. This process recognizes that, when considering the government's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt of each overlapping governments.

(1) The percentage of overlapping debt applicable is estimated using taxable property values. Applicable percentagees are estimated by determining the portion of the county's taxable value that is within the city's boundaries and dividing it by the county's total taxable valuation.

175 Table 15

CITY OF GRAND FORKS, NORTH DAKOTA LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS

FISCAL YEAR

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Debt limit $ 48,700,503 $ 52,530,181 $ 52,639,471 $ 58,564,699 $ 64,544,945 $ 69,356,109 $ 72,753,029 $ 75,263,769 $ 77,281,924 $ 79,750,155

Total net debt applicable to limit 18,431,017 16,709,301 15,099,423 15,214,646 16,602,113 14,782,624 14,580,871 13,695,463 12,855,145 11,347,908

Legal debt margin $ 30,269,486 $ 35,820,880 $ 37,540,048 $ 43,350,053 $ 47,942,832 $ 54,573,485 $ 58,172,158 $ 61,568,306 $ 64,426,779 $ 68,402,247

Total net debt applicable to the limit as a percentage of debt limit 37.85% 31.81% 28.68% 25.98% 25.72% 21.31% 20.04% 18.20% 16.63% 14.23%

Note: Under State law, the City's outstanding general obligation debt should not exceed 5% of 50% of the total estimated market value of the property. By law, the general obligation debt subject to the limitation may be offset by amounts set aside for repaying general obligation bonds.

Computation of the legal debt margin for the current fiscal year is shown in Table 15-A Table 15-A

CITY OF GRAND FORKS, NORTH DAKOTA

COMPUTATION OF LEGAL DEBT MARGIN

December 31, 2012

Market Value $ 3,190,006,180

Debt Limit - 5% of 50% of Market Value $ 79,750,155

Amount of Debt Applicable to Debt Limit:

General Obligation Bonds $ 10,440,000 Unamortized Premium/Discount/Deferred Amount on Refunding (597,730) City Share of Special Assessments 269,765 Special Assessment on City Owned General Government Property 1,573,857

Gross Bonded Debt $ 11,685,892 *

Less:

Cash in Debt Service Funds (1) 337,984

Net Bonded Debt 11,347,908

Legal Debt Margin $ 68,402,247

(1) Sinking Funds

* In accordance with State of North Dakota Constitution Article X, Section 15, special assessment debt is not included in this calculation

177 Table 16

CITY OF GRAND FORKS, NORTH DAKOTA

REVENUE BOND COVERAGE WATER BONDS LAST TEN FISCAL YEARS (In Thousands of Dollars)

Debt Service Requirements Net Revenue Direct Available Interest & Gross Operating for Debt Fiscal Year Revenue(1) Expenses(2) Service Principal Charges(3) Total Coverage 2003 7,534 4,703 2,831 1,170 866 2,036 1.39 2004 (4) 7,965 4,680 3,285 1,220 880 2,100 1.56 2005 8,384 4,782 3,602 1,270 773 2,043 1.76 2006 8,936 5,142 3,794 1,350 732 2,082 1.82 2007 8,824 5,589 3,235 1,390 698 2,088 1.55 2008 8,348 5,608 2,740 1,365 638 2,003 1.37 2009 (4) 8,417 5,814 2,603 1,140 620 1,760 1.48 2010 (4) 8,191 5,656 2,535 1,182 617 1,799 1.41 2011 8,512 5,909 2,603 1,220 358 1,578 1.65 2012 9,001 6,272 2,730 1,255 333 1,588 1.72

Notes: (1) Gross revenue includes operating revenue, nonoperating revenue, and transfers in. (2) Total operating expenses exclusive of depreciation. (3) Includes interest on notes payable. (4) Eliminated amount that was refinanced.

178 Table 17

CITY OF GRAND FORKS, NORTH DAKOTA

REVENUE BOND COVERAGE SEWER BONDS LAST TEN FISCAL YEARS (In Thousands of Dollars)

Debt Service Requirements Net Revenue Direct Available Interest & Gross Operating for Debt Fiscal (1) (2) (3) Year Revenue Expenses Service Principal Charges Total Coverage 2003 7,074 3,263 3,811 2,082 1,145 3,227 1.18 2004 7,177 3,438 3,739 1,944 1,131 3,075 1.22 2005 7,778 3,312 4,466 1,984 1,057 3,041 1.47 2006 8,522 3,356 5,166 2,216 1,190 3,406 1.52 2007 9,156 3,975 5,181 2,279 1,184 3,463 1.50 (4) 2008 7,967 3,912 4,055 2,336 1,035 3,371 1.20 (4) 2009 7,452 3,766 3,686 2,056 956 3,012 1.22 (4) 2010 7,591 3,769 3,822 2,096 891 2,987 1.28 2011 8,185 4,361 3,824 2,205 781 2,986 1.28 2012 8,248 4,384 3,864 2,395 802 3,197 1.21

Notes: (1) Gross revenue includes operating revenue, nonoperating revenue, and transfers in. (2) Total operating expenses exclusive of depreciation. (3) Includes interest on capital leases. (4) Eliminated amount that was refinanced.

179 Table 18

CITY OF GRAND FORKS, NORTH DAKOTA

PLEDGED REVENUE BOND COVERAGE SPECIAL ASSESSMENT BONDS LAST TEN FISCAL YEARS (In Thousands of Dollars)

Debt Service Requirements Special Interest & Assessment Fiscal Year Collections Principal Charges Total Coverage 2003(1) 6,123 5,961 1,884 7,845 0.78 2004(2) 6,940 5,742 3,656 9,398 0.74 2005 7,267 4,177 2,532 6,709 1.08 2006(3) 10,114 10,802 2,750 13,552 0.75 2007 9,041 8,914 2,622 11,536 0.78 2008 8,886 5,255 2,676 7,931 1.12 2009 12,310 4,839 2,731 7,570 1.63 2010 9,955 4,872 2,725 7,597 1.31 2011 8,270 5,149 2,139 7,288 1.13 2012(4) 7,634 9,511 2,293 11,804 0.65

(1) Several bonds were paid in full in 2003 with cash balances. (2) Partially defeased 1994B with cash balance. (3) Partial redemption of 1995G with cash balance; 1996B & 1997C refinanced by 2006A, partial debt service paid down with cash balance. (4) SRL Bond (2001C) paid in full with cash balances in 2012

180 Table 19

CITY OF GRAND FORKS, NORTH DAKOTA

DEMOGRAPHIC STATISTICS LAST TEN FISCAL YEARS

Personal Fiscal Income Per Capita School University of ND Unemployment (1) (2) (2) (3) (4) (5) Year Population (thousands of dollars) Income Enrollment Enrollment Rate 2003 50,872 2,698,038 28,027 7,853 13,034 3.50% 2004 51,808 2,760,299 28,119 7,507 13,187 2.80% 2005 53,230 2,885,144 29,507 8,015 12,954 3.00% 2006 54,083 3,066,123 31,202 7,600 12,834 2.90% 2007 54,576 3,297,303 33,782 7,100 12,559 2.70% 2008 55,136 3,599,838 36,699 7,000 12,748 2.80% 2009 55,691 3,475,761 35,488 7,000 13,172 3.60% 2010 52,838 3,646,202 36,988 7,200 14,194 3.30% 2011 53,502 3,861,602 39,382 7,200 14,697 3.60% 2012 54,358 Not Available Not Available 7,200 15,250 3.40%

Data Sources:

(1) 2003-2009 and 2011-2012 are estimated population provided by GF/EGF Metropolitan Planning Organization. 2010 source is US Census. (2) Bureau of Economic Analysis, US Department of Commerce, Update published November 26, 2012 which provides new estimates for 2011. (3) Grand Forks Public School District. (4) University of North Dakota

181 Table 20

CITY OF GRAND FORKS, NORTH DAKOTA PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS AGO

Percentage Percentage 2012 of Total City 2003 of Total City Employer Employees Rank Employment Employees Rank Employment Altru Health System 4,069 1 13.51% 3,400 3 11.76% Grand Forks Air Force Base 3,741 2 12.42% 4,029 2 13.94% University of North Dakota 1 2,850 3 9.46% 5,472 1 18.93% Grand Forks School District2 1,500 4 4.98% 1,150 4 3.98% Valley Memorial Home 714 5 2.37% 571 5 1.98% Alerus Financial2 559 6 1.86% City of Grand Forks 525 7 1.74% 522 6 1.81% Amazon.com 450 8 1.49% Hugo's (4 locations)2 443 9 1.47% 409 8 1.42% J.R. Simplot 400 10 1.33% 430 7 1.49% Grand Forks County 270 9 0.93% Grand Forks Herald 170 10 0.59%

15,251 50.63% 16,423 56.83%

1) Total does not include temporary employees for 2012 data. Historical 2003 data was employment of all personnel. 2) Includes full-time and part-time employees.

Source: Annual employer survey conducted by Springsted

182 Table 21

CITY OF GRAND FORKS, NORTH DAKOTA FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION/PROGRAM LAST SEVEN FISCAL YEARS

2005 2006 2007 2008 2009 2010 2011 2012 Function

General government 96.30 95.30 97.20 98.15 97.15 97.15 95.85 94.85 Economic Development 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Community Development 7.95 8.35 8.45 8.45 7.75 4.58 5.30 5.35 Housing Authority 16.30 16.50 15.50 12.00 12.75 8.50 8.20 6.60

Public Health 33.18 33.85 34.65 33.65 33.15 32.65 33.35 33.35

Public Safety Police Officers 78.00 78.00 79.00 79.00 79.00 82.00 82.00 82.00 Civilians 14.00 15.00 15.00 15.00 15.00 16.00 15.00 15.00 Fire Firefighters and officers 63.00 63.00 63.00 63.00 63.00 63.00 63.00 63.00 Civilians 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 PSAP 16.00 16.00 16.00 16.00 16.00 16.00 16.00 16.00 Municipal Court 4.20 4.20 4.20 4.30 4.30 4.30 4.30 4.30

Highways and streets 36.05 36.20 36.20 36.20 36.20 36.20 35.85 35.85

Culture and recreation 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00

Permanent flood protection 6.25 5.75 4.75 1.50 0.50 0.00 0.00 0.00

Sanitation 41.69 42.83 41.31 37.81 37.81 37.81 37.58 37.58 Wastewater 25.24 24.81 24.94 23.21 23.21 24.21 23.48 23.48 Waterworks 31.19 29.96 30.56 30.06 30.21 30.21 30.03 30.03 Stormwater 3.28 3.67 3.12 4.62 5.62 5.62 5.66 5.66 Public Transit 22.80 21.80 20.80 21.80 21.80 22.00 22.00 22.00 Dial-A-Ride 0.60 0.60 0.60 0.60 0.60 0.60 0.60 2.60 Alerus 18 Job Development Authority 4.90 4.85 4.50 4.60 4.20 3.60 3.30 3.15 Downtown Parking 0.25 0.25 0.25 0.00 0.00 0.25 0.20 0.20

Total Authorized Positions 505.18 504.92 504.03 493.95 492.25 488.68 485.70 503.00

Source: City's Human Resources Department

183 Table 22

CITY OF GRAND FORKS, NORTH DAKOTA OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS(1)

Function 2003 2004 2005 2006 General Government Building permits issued 1,450 1,515 1,465 1,329 Value of Permits issued $ 92,455,214 $ 106,193,093 $ 119,495,163 $ 156,559,059 Number of Business License Issued 1,102 1,127 1,247 1,438

Police Priority 1 Calls Average Response Time 3 min. 37 sec. 3 min. 19 sec. 3 min. 16 sec. 3 min. 21 sec. Number of 911 Calls 18,335 17,951 Incidents Requiring 911 Assistance 62,357 63,593 64,643 68,901

Fire Emergency responses 2,755 3,043 3,224 3,270 Average response time in minutes 3.55 3.85 3.6 3.45

Health GFPHD 2-year olds who are age-appropriately immunized (2) 66.7% 68.0% 76.0% 91.0% Percent of Nuisance Complaints resolved within 30 days 97.50% 97.75% 95.25% 98.10% Number of times sprayed 9 14 22 0

Cuture and Recreation Alerus Center Attendance 361,760 344,866 309,006 277,024 Alerus Center Number of Events 543 503 515 576

Waterworks Number of customers 12,857 13,091 13,431 13,558 New connections 224 304 232 250 Watermain breaks 35 24 15 38 Average daily consumption(MGD) 7.6 7.9 8.4 Peak daily consumption (MGD) 11.1 11.1 12.8 13.4

Sanitation Number of customers 12,418 12,587 12,796 12,140 Landfill (tons) 115,685.16 129,287.03 120,874.84 120,241.42 Recycled Materials (tons) 1,430.69 1,519.54 1,613.05 1,999.30

Wastwater Number of customers 12,673 12,889 13,198 13,287 Average daily sewage treatment (MGD)(3) 7.89 7.00

Public Transit Ridership - City Bus 214,867 195,717 227,153 211,649 Ridership - Dial-A-Ride 43,390 47,861 44,516 35,283 Ridership - Senior Rider(4) 8,863

Job Development Authority Businesses Assisted 4 8 8 7 New Jobs Projected in 2 years 16 24 458 472

Sources: Various City Departments (1)Information is provided for years available. This schedule will ultimately contain information for the last ten years. Several City departments have implemented new software programs to better track information that will be provided for this table. (2)The Grand Forks Public Health Department's goal is to achieve and maintain this statistic at 90%. The drop in 2007 is attributable to a change in reporting methodology as well as the addition of several new required vaccines. 2012 data is dependent on CDC information which will not be available until later this year. (3)2005 is the first full year of operation for the City's mechanical wastewater treatment plant. (4) 2005 is the first year that the Senior Rider ridership number has been tracked separately from Dial-A-Ride. (5) This number breaks into: Inert Waste - 26,867 total (6,061 City of Grand Forsk generated, 20,806 tons private haulers in the region; Municpal Solid Waste - 59,687 tons (35,736 City of Grand Forks generated, 23,951 from regional customers)

184 Table 22

Fiscal Year

2007 2008 2009 2010 2011 2012

1,360 1,282 1,524 1,682 1,480 1,506 $ 94,157,731 $ 81,594,739 $ 80,847,912 $ 82,175,820 $ 144,053,797 $ 127,729,350 1,570 1,504 1,520 1,506 1,473 1,674

3 Min. 6 Sec. 3 Min. 12 sec. 3 Min.3 sec. 2 Min. 55 Sec. 3 Min. 12 Sec. 2Min. 57 Sec. 19,191 19,885 21,929 22,366 24,595 41,332 67,451 65,263 64,210 64,447 67,517 75,917

3,480 3443 3,481 3,590 3,688 4,087 4.46 4.3 4.0 3.86 4.01 3.61 Min.

73.0% 78.0% 93.0% 73.0% 66.1% N/A

97.00% 99.1% 97.68% 97.65% 97.35% 97.50% 13 13 7 18 9 0

263,372 289,441 248,465 204,753 224,687 289,441 523 577 518 538 637 613

13,656 13,740 13,849 13,966 14,055 14,200 245 62 74 97 110 151 37 44 46 26 34 36 8.4 8.0 8.0 7.8 7.9 7.4 13.0 11.0 10.6 11.1 11.0 12.0

12,224 12,339 12,457 12,584 12,687 12,804 104,409.41 95,921.77 88,049.63 87,162.00 96,372.00 86,554(5) 2,147.27 2,205.03 2,318.87 2,397.00 2,470.00 2,672.00

13,417 13,496 13,608 13,713 13,807 13,937 7.00 7.00 7.00 7.00 7.00 6.80

231,596 257,816 271,451 282,627 328,880 371,242 36,557 39,725 38,502 40,241 39,122 35,358 13,202 20,328 23,128 24,999 22,296 19,854

7 5 2 3 4 5 123 66 32 47 159 118

185 Table 23

CITY OF GRAND FORKS, NORTH DAKOTA CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS(1)

Fiscal Year Function/Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 General Government Buildings & Structures 10 10 10 10 11 11 11 11 11 11 Cars (All Gen Fund) 79 79 79 79 79 79 79 79 79 79 Area in Sq. Miles 19.55 20.02 20.36 20.42 20.42 20.42 20.42 20.49 20.51 26.01

Police Stations 2 2 2 2 2 2 2 2 2 2 Patrol Units 20 20 20 20 20 20 20 20 22 22

Fire Stations 3 3 3 3 3 4 4 4 4 4 Training Stations (including 4 mobile units) 2 2 3 3 3 3 5 5 5 5 Aerial Trucks 2 2 2 2 2 2 2 2 2 2 Pumpers 6 6 6 6 6 6 6 6 6 6 Rescue Truck 1 1 1 1 1 1 1 1 1 1 Boat 3 3 3 3 3 3 3 3 3 3 Hazmat Regional Response Vehicle 1 1 1 Mobile Command Post 1 1 1 1 1 1 1 1 1 1 Special Operations Trailers 1 2 3 3 4 4 4 4 4 4 Fire Prevention Vehicle ------1

Highways and Streets 180.84 182.55 184.24 189.17 190.35 235.33 235.62 235.96 236.45 249.00 Paved Streets (miles) 4.437 4.621 4.66 4.74 4.74 4.74 4.74 4.74 4.74 4.74 Paved Alleys (miles) 4000 4000 4100 4100 4150 4150 4150 4200 4200 4200 Street lights 58 60 61 61 60 60 60 60 60 60 Traffic Signals 26 24 25 25 25 25 25 25 25 25 School Crossing Signals 4 4 4 4 4 4 4 4 4 4 Street Sweepers 4 4 4 4 4 4 4 4 4 4 Snow Plows 5 5 7 7 7 7 7 7 7(7) 7(7) Motor graders 5 5 5 5 5 5 5 5 6(8) 6(8) Payloaders

Culture and Recreation 1 1 1 1 1 1 1 1 1 1 Library 1 1 1 1 1 1 1 1 1 1 Events Center 120 120 416 416 800 800 800 800 800 800 Greenway (developed acres) 1 1 3 3 2 2 2 2 2 2 Boat Ramps 26.15 26.15 31.51 40.9 41 41 41 41 41 41 Bikepaths (miles) Table 23

Fiscal Year Function/Program 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sanitation 7 7 7 7 7 7 7 6 6 6 Collection Trucks-Side Load 6 6 6 6 6 6 6 6 6 6 Collection Trucks-Front Load 3 3 3 3 3 3 3 3 3 3 Collection Trucks-Rear Load 4 4 4 4 4 4 4 4 5 5 Collection Trucks-Roll Off

Water 228.7 227.72 229.46 233.69 233.86 329.64 331.67 331.67 236.5(5) 241 Water mains (miles) 2245 n/a 2408 2479 2523 2514 2518 2528 2952(6) 2958 Fire Hydrants (2) 4 5 6 6 7 7 7 7 7 7 Water Storage Facilities 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 18.5 Storage Capacity (MG) 16.5 24 24 24 24 24 24 24 24 24 Intake Capacity (MGD)

Wastewater 121.86 123.31 154 155.32 155.9 156.45 156.16 156.16 173 176 Sanitary Sewers (miles) 10.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 Treatment Capacity ( Million Gallons Day)(3) 43 43 43 43 42 42 43 43 42 42 Sewage Lift Stations

Stormwater 99.1 98.11 99.46 102.39 102.4 187.92 187.92 187.92 195 198 Storm sewers (miles) 11 11 11 11 12 12 12 12 12 12 Lift Stations 7 7 7 7 12 12 12 12 12 12 Flood Stations

Public Transit 0 0 0 0 0 0 0 2 2 2 35' Bus - Diesel/Electric Hybrid 4 4 4 4 4 4 4 3 3 3 35' Bus - Diesel 1 2 2 2 2 2 2 2 2 2 29' Bus 3 4 4 4 4 4 4 3 3 3 People Mover 0 1 1 1 1 1 1 1 1 1 Trolley 3 5 5 5 5 5 9 9 Senior Rider/Dial-A-Ride Vehicles(4)

Job Development 8 8 8 6 6 6 6 6 6 6 Buildings and Structures

Municipal Parking Structures 2 2 2 2 2 2 2 2 2 2 Buildings & Structures (1) Information is provided for the years available. This schedule will ultimately contain information for the last ten years. (2) This information is now being tracked through our GIS system, which is constantly reviewed for quality control and can result in numbers fluctuating from year to year. Information for prior years is not available. (3) 2005 is the first full year of operation for the City's wastewater mechanical treatment plant. Information will be shown prospectively. (4) In 2005, the Dial-A-Ride/Senior Rider Program merged and the City purchased the first vehicle. This statistic was previously listed as Entervan, but the title has been changed for 2011 to better reflect the use of these vehicles. (5) In 2011, a change was made to the tracking and the transmission lines to the clearwell and airport were removed from this statistic. (6) In 2011, this statistic was changed to include City (2,556) and private (396) hydrants. Future years will report a total which includes both types. (7) The City has a total of 7 units for use. Of those, 2 are owned, 2 are leased and 3 are rented only for winter months. (8) The City has a total of 6 units. Of those, 4 are owned and the remaining 2 are leased for winter months. Table 24

CITY OF GRAND FORKS, NORTH DAKOTA PENSION TRUST FUND ANALYSIS OF FUNDING PROGRESS LAST TEN FISCAL YEARS

Unfunded Unfunded (Assets (Assets in In Excess of) Excess of Pension Net Assets Pension Pension Annual Benefit Obligation) Fiscal Available Benefit Percentage Benefit Covered as a Percentage Year For Benefits Obligation Funded Obligation) Payroll of Covered Payroll 2003 37,566,359 49,611,951 75.7% 12,045,592 10,915,360 110.4% 2004 38,019,924 52,478,905 72.4% 14,458,981 10,948,717 132.1% 2005 38,368,885 54,082,932 70.9% 15,714,047 11,690,288 134.4% 2006 40,322,732 57,495,728 70.1% 17,172,996 11,552,635 148.7% 2007 44,066,555 60,847,825 72.4% 16,781,270 11,325,611 148.2% 2008 44,191,838 67,174,457 65.8% 22,982,619 10,976,703 209.4% 2009 44,501,471 70,546,309 63.1% 26,044,838 10,651,863 244.5% 2010 46,067,810 73,399,014 62.8% 27,331,204 10,227,256 267.2% 2011 47,254,745 76,066,272 62.1% 28,811,527 9,659,818 298.3% 2012 11 48,807,617 78,984,260 61.8% 30,176,643 9,248,169 326.3% 11 Analysis of the dollar amount of net assets available for benefits, pension benefit obligation, and unfunded benefit obligation can be misleading. Expressing the net assets available for benefits as a percentage of the pension benefit obligation provides one indication of the pension plan's funding status on a going concern basis. Analysis of this percentage over time indicates whether the system is becoming financially stronger or weaker. Generally, the greater this percentage, the stronger the plan. Trends in unfunded pension benefit obligation and annual covered payroll approximately adjusts for the affects of inflation and aids analysis of the plan's progress made in accumulating sufficient assets to pay benefits when due. Generally, the smaller this percentage, the stronger the plan.

ANALYSIS OF FUNDING PROGRESS PENSION TRUST FUND

350.0% 326.3%

300.0% 298.3% 250.0% 209.4% 244.5% 267.2%

200.0% 134.4% 148.7% 148.2% 150.0% 110.4% 132.1%

100.0% 65.8% 63.1% 62.8% 62.1% 61.8% 75.7% 50.0% 72.4% 72.4% 70.9% 70.1% 0.0% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year

Percentage Funded Unfunded (Assets in Excess) Pension benefit Obligation

188 Table 25

CITY OF GRAND FORKS, NORTH DAKOTA

PENSION TRUST FUND REVENUES BY SOURCE AND EXPENSE BY TYPE

Revenues by Source Employer Contribution as Percentage Fiscal Employee Employer of Covered Investment Year Contribution Contribution Payroll Income Total 2003 739,564 1,216,896 11.10% 5,604,308 7,560,768 2004 725,214 1,929,278 11.15% 2,700,903 5,355,395 2005 715,230 2,087,098 17.63% 2,272,760 5,075,088 2006 700,696 2,344,327 17.85% 3,130,560 6,175,583 2007 700,553 2,571,289 20.30% 3,075,659 6,347,501 2008 686,382 2,526,168 22.70% (10,273,601) (7,061,051) 2009 659,519 3,000,210 23.00% 6,005,554 9,665,283 2010 636,275 3,233,210 28.20% 5,919,467 9,788,952 2011 608,336 3,261,913 31.60% (436,755) 3,433,494 2012 574,384 3,410,332 36.90% 6,113,689 10,098,405

Expenses by Type Fiscal Administrative Year Benefits Expenses Refunds Total 2003 2,154,127 363,018 2,517,145 2004 2,273,897 357,628 2,631,525 2005 2,617,373 379,784 2,997,157 2006 2,771,609 404,935 3,176,544 2007 2,979,649 432,932 3,412,581 2008 3,256,403 327,321 3,583,724 2009 3,350,006 302,383 3,652,389 2010 3,518,843 206,879 3,725,722 2011 3,673,086 219,425 3,892,511 2012 3,931,482 209,563 4,141,045 Contributions were made in accordance with city statutes PENSION TRUST FUND REVENUES AND EXPENDITURES

2012 2011 2010

2009 2008 2007 2006 FISCAL YEAR 2005 2004 2003

(8,000,000) (6,000,000) (4,000,000) (2,000,000) - 2,000,000 4,000,000 6,000,000 8,000,000 10,000,000 12,000,000

Revenues Expenses

189