Final Official Statement Dated July 11, 2017

Transcription

1 New Issues Investment Rating: S&P Global Ratings AA+/Stable Final Official Statement Dated July 11, 2017 Subject to compliance by the District with certain covenants, in the opinion of Chapman and Cutler LLP, Bond Counsel ( Bond Counsel ), under present law, interest on the Series 2017A Bonds is excludable from gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but such interest is taken into account in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. Interest on the Series 2017A Bonds is not exempt from present State of Illinois income taxes. See TAX EXEMPTION - SERIES 2017A BONDS herein for a more complete discussion. Interest on the Taxable Series 2017B Bonds is includible in gross income of the owners thereof for federal income tax purposes. Interest on the Taxable Series 2017B Bonds is not exempt from present State of Illinois income taxes. See TAX TREATMENT - TAXABLE SERIES 2017B BONDS herein for a more complete discussion. FOREST PRESERVE DISTRICT OF KANE COUNTY Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Dated Date of Delivery Book-Entry Not Bank Qualified Due Serially As Described Herein The $40,000,000 General Obligation Bonds, Series 2017A (the Series 2017A Bonds ) and the $10,000,000 Taxable General Obligation Bonds, Series 2017B (the Taxable Series 2017B Bonds and, together with the Series 2017A Bonds, the Bonds ), are being issued by the Forest Preserve District of Kane County, Kane County, Illinois (the District ). Interest on the Bonds is payable semiannually on June 15 and December 15 of each year, commencing June 15, The Bonds will be issued using a book-entry system. The Depository Trust Company ( DTC ), New York, New York, will act as securities depository for the Bonds. The ownership of one fully registered Bond for each series and maturity will be registered in the name of Cede & Co., as nominee for DTC and no physical delivery of Bonds will be made to purchasers. The Bonds will mature on December 15, in the years and amounts detailed herein. Interest is calculated based on a 360-day year of twelve 30-day months. OPTIONAL REDEMPTION The Series 2017A Bonds due December 15, , inclusive, are non-callable. The Series 2017A Bonds due December 15, , inclusive, are callable in whole or in part on any date on or after December 15, 2025, at a price of par plus accrued interest to the redemption date. If less than all the Series 2017A Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the District and within any maturity by lot. See OPTIONAL REDEMPTION Series 2017A Bonds herein. The Taxable Series 2017B Bonds are not subject to optional redemption prior to maturity. PURPOSE, LEGALITY AND SECURITY Bond proceeds will be used to finance the purchase and/or improvement of land throughout the District and pay the costs of issuance of the Bonds. See THE PROJECT herein. In the opinion of Bond Counsel, the Bonds are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. This Final Official Statement is dated July 11, 2017, and has been prepared under the authority of the District. An electronic copy of this Final Official Statement is available from the web site under Debt Auction Center/Historical Sales. Additional copies may be obtained from Mr. Kenneth Stanish, Director of Finance, Forest Preserve District of Kane County, 1996 South Kirk Road, Suite 320, Geneva, Illinois 60134, or from the Municipal Advisor to the District:

2 No dealer, broker, salesman or other person has been authorized by the District to give any information or to make any representations with respect to the Bonds other than as contained in the Official Statement or the Final Official Statement and, if given or made, such other information or representations must not be relied upon as having been authorized by the District. Certain information contained in the Official Statement and the Final Official Statement may have been obtained from sources other than records of the District and, while believed to be reliable, is not guaranteed as to completeness. THE INFORMATION AND EXPRESSIONS OF OPINION IN THE OFFICIAL STATEMENT AND THE FINAL OFFICIAL STATEMENT ARE SUBJECT TO CHANGE, AND NEITHER THE DELIVERY OF THE OFFICIAL STATEMENT OR THE FINAL OFFICIAL STATEMENT NOR ANY SALE MADE UNDER EITHER SUCH DOCUMENT SHALL CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE DISTRICT SINCE THE RESPECTIVE DATES THEREOF. References herein to laws, rules, regulations, ordinances, resolutions, agreements, reports and other documents do not purport to be comprehensive or definitive. All references to such documents are qualified in their entirety by reference to the particular document, the full text of which may contain qualifications of and exceptions to statements made herein. Where full texts have not been included as appendices to the Official Statement or the Final Official Statement they will be furnished on request. This Final Official Statement does not constitute an offer to sell, or solicitation of an offer to buy, any securities to any person in any jurisdiction where such offer or solicitation of such offer would be unlawful. (i)

3 TABLE OF CONTENTS BOND ISSUE SUMMARY... 1 SERIES 2017A BONDS... 2 TAXABLE SERIES 2017B BONDS... 3 FOREST PRESERVE DISTRICT OF KANE COUNTY... 4 DESCRIPTION OF THE BONDS... 4 RISK FACTORS... 5 Finances of the State of Illinois... 5 Local Economy... 5 Declining Equalized Assessed Valuations... 5 Loss or Change of Bond Rating... 6 Secondary Market for the Bonds... 6 Continuing Disclosure... 6 Suitability of Investment... 6 Future Changes in Laws... 6 Bankruptcy... 6 THE DISTRICT... 7 General Information... 7 Government... 7 Forest Preserve Facilities... 7 Education... 9 Transportation... 9 SOCIOECONOMIC INFORMATION...10 Housing...11 Income...12 THE PROJECT...13 DEFAULT RECORD...13 SHORT-TERM BORROWING...13 DEBT INFORMATION...14 PROPERTY ASSESSMENT AND TAX INFORMATION...15 REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES...17 Tax Levy and Collection Procedures...17 Exemptions...17 Property Tax Extension Limitation Law...18 Truth in Taxation Law...19 FINANCIAL INFORMATION...19 Budgeting...19 Investment Policy...20 Financial Reports...20 Summary Financial Information...20 No Consent or Updated Information Requested of the Auditor...20 EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS...24 REGISTRATION, TRANSFER AND EXCHANGE...24 TAX EXEMPTION SERIES 2017A BONDS...25 TAX TREATMENT - TAXABLE SERIES 2017B BONDS...27 CONTINUING DISCLOSURE...28 THE UNDERTAKING...28 Annual Financial Information Disclosure...28 Reportable Events Disclosure...29 Consequences of Failure of the District to Provide Information...29 Amendment; Waiver...30 Termination of Undertaking...30 Additional Information...30 Dissemination of Information; Dissemination Agent...30 OPTIONAL REDEMPTION...31 Series 2017A Bonds...31 Taxable Series 2017B Bonds...31 LITIGATION...31 FINAL OFFICIAL STATEMENT AUTHORIZATION...31 INVESTMENT RATING...32 CERTAIN LEGAL MATTERS...32 UNDERWRITING...32 Series 2017A Bonds...32 Taxable Series 2017B Bonds...32 MUNICIPAL ADVISOR...33 CERTIFICATION...33 APPENDIX A - FISCAL YEAR 2016 AUDITED FINANCIAL STATEMENTS APPENDIX B - DESCRIBING BOOK-ENTRY-ONLY ISSUANCE APPENDIX C - PROPOSED FORMS OF OPINIONS OF BOND COUNSEL APPENDIX D - EXCERPTS OF FISCAL YEAR 2016 AUDITED FINANCIAL STATEMENTS RELATING TO THE DISTRICT S PENSION PLANS AND OTHER POSTEMPLOYMENT BENEFITS (ii)

4 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B BOND ISSUE SUMMARY This Bond Issue Summary is expressly qualified by the entire Final Official Statement, which is provided for the convenience of potential investors and which should be reviewed in its entirety by potential investors. The following descriptions apply equally to the Series 2017A Bonds and the Taxable Series 2017B Bonds. Other terms specific to each series are provided separately herein. Issuer: Forest Preserve District of Kane County, Kane County, Illinois. Dated Date: Date of delivery, expected to be on or about July 26, Authorization: By referendum passed on April 4, Security: Not Bank Qualified: Investment Rating: Purpose: In the opinion of Bond Counsel, the Bonds are valid and legally binding upon the District and are payable from any funds of the District legally available for such purpose, and all taxable property in the District is subject to the levy of taxes to pay the same without limitation as to rate or amount, except that the rights of the owners of the Bonds and the enforceability of the Bonds may be limited by bankruptcy, insolvency, reorganization, moratorium and other similar laws affecting creditors rights and by equitable principles, whether considered at law or in equity, including the exercise of judicial discretion. See DESCRIPTION OF THE BONDS herein. The Bonds are not qualified tax-exempt obligations under Section 265(b)(3) of the Internal Revenue Code of 1986, as amended. The Bonds has been rated AA+/Stable by S&P Global Ratings, New York, New York. See INVESTMENT RATING herein. Bond proceeds will be used to finance the purchase and/or improvement of land throughout the District and pay the costs of issuance of the Bonds. See THE PROJECT herein. Bond Registrar/Paying Agent: The Bank of New York Mellon Trust Company, National Association, Chicago, Illinois. Delivery: The Bonds are expected to be delivered on or about July 26, Book-Entry Form: Denomination: Municipal Advisor: The Bonds will be registered in the name of Cede & Co. as nominee for The Depository Trust Company ( DTC ), New York, New York. DTC will act as securities depository of the Bonds. See APPENDIX B herein. $5,000 or integral multiples thereof. Speer Financial, Inc., Chicago, Illinois. 1

5 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B SERIES 2017A BONDS Issue: $40,000,000 General Obligation Bonds, Series 2017A. Interest Due: Each June 15 and December 15, commencing June 15, Principal Due: Optional Redemption: Tax Exemption: Serially each December 15, commencing December 15, 2022 through 2037, as detailed below. The Series 2017A Bonds maturing on or after December 15, 2026, are callable at the option of the District on any date on or after December 15, 2025, at a price of par plus accrued interest to the redemption date. See OPTIONAL REDEMPTION - Series 2017A Bonds herein. Chapman and Cutler LLP, Chicago, Illinois, will provide an opinion as to the tax exemption of the interest on the Series 2017A Bonds as discussed under TAX EXEMPTION - SERIES 2017A BONDS in this Final Official Statement. AMOUNTS, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS (1) Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount Dec. 15 Rate Price Number(1) Amount Dec. 15 Rate Price Number(1) $ 510, % 1.720% MW5 $2,710, % 3.125% NE4 1,810, % 1.910% MX3 2,780, % 3.190% NF1 1,570, % 2.080% MY1 2,905, % 3.250% NG9 1,255, % 2.350% MZ8 3,015, % 3.375% NH7 2,495, * 3.000% 2.600% NA2 3,110, % 3.500% NJ3 2,520, * 3.000% 2.700% NB0 3,235, % 3.600% NK0 2,570, * 3.000% 2.850% NC8 3,365, % 3.650% NL8 2,640, % 3.000% ND6 3,510, % 3.700% NM6 *These maturities have been priced to the call date. (1) CUSIP numbers appearing in this Final Official Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw Hill Financial Inc. The District is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as set forth on page 2 of this Final Official Statement. 2

6 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B TAXABLE SERIES 2017B BONDS Issue: $10,000,000 Taxable General Obligation Bonds, Series 2017B. Interest Due: Each June 15 and December 15, commencing June 15, Principal Due: No Optional Redemption: No Tax Exemption: Serially each December 15, commencing December 15, 2018 through 2023, as detailed below. The Taxable Series 2017B Bonds are not subject to optional redemption prior to maturity. Interest on the Taxable Series 2017B Bonds is includible in gross income of the owners thereof for federal income tax purposes. See TAX TREATMENT - TAXABLE SERIES 2017B BONDS herein. Interest on the Taxable Series 2017B Bonds is not exempt from present State of Illinois income taxes. AMOUNTS, MATURITIES, INTEREST RATES, PRICES OR YIELDS AND CUSIP NUMBERS (1) Principal Due Interest Yield or CUSIP Principal Due Interest Yield or CUSIP Amount Dec. 15 Rate Price Number(1) Amount Dec. 15 Rate Price Number(1) $1,120, % 1.600% NN4 $2,480, % 2.150% NR5 1,880, % 1.750% NP9 1,690, % 2.350% NS3 2,730, % 1.875% NQ7 100, % 2.550% NT1 (1) CUSIP numbers appearing in this Final Official Statement have been provided by the CUSIP Service Bureau, which is managed on behalf of the American Bankers Association by S&P Capital IQ, a part of McGraw Hill Financial Inc. The District is not responsible for the selection of CUSIP numbers and makes no representation as to their correctness on the Bonds or as set forth on page 3 of this Final Official Statement. 3

7 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B FOREST PRESERVE DISTRICT OF KANE COUNTY Kane County, Illinois Board of Commissioners Michael Kenyon President Philip Lewis Secretary Mark Davoust President Pro Tem/Treasurer Deborah Allan John J. Hoscheit Douglas Scheflow Maggie Auger Don Ishmael Monica Silva Theresa Barreiro Kurt Kojzarek Thomas (T.R.) Smith Brian W. Dahl Chris Lauzen Susan Starrett Drew Frasz Bill Lenert Angela Clay Thomas Rebecca Gillam John Martin Penny Wegman Barbara Hernandez Myrna Molina Barbara Wojnicki Jarett Sanchez Officials Kenneth Stanish Director of Finance Monica A. Meyers Executive Director Patrick M. Kinnally, Esq. Counsel for the District DESCRIPTION OF THE BONDS The Bonds are being issued pursuant to a referendum passed by voters in the District on April 4, The Bonds are issuable pursuant to a bond ordinance adopted by the Board of Commissioners of the District on the 11 th day of July, 2017 (the Bond Ordinance ). The Bonds constitute valid and legally binding full faith and credit general obligations of the District, payable from ad valorem taxes levied on all taxable property in the District, without limitation as to rate or amount. The Bond Ordinance provides for the levy of ad valorem taxes, unlimited as to rate or amount, upon all taxable property within the District in amounts sufficient to pay, as and when due, all principal of and interest on the corresponding series of Bonds. The Bond Ordinance will be filed with the County Clerk of Kane County, Illinois (the County Clerk ) and will serve as authorization to the County Clerk to extend and collect the property taxes as set forth in the Bond Ordinance. 4

8 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B RISK FACTORS The purchase of the Bonds involves certain investment risks. Accordingly, each prospective purchaser of the Bonds should make an independent evaluation of the entirety of the information presented in this Final Official Statement and its appendices in order to make an informed investment decision. Certain of the investment risks are described below. The following statements, however, should not be considered a complete description of all risks to be considered in the decision to purchase the Bonds, nor should the order of the presentation of such risks be construed to reflect the relative importance of the various risks. There can be no assurance that other risk factors are not material or will not become material in the future. Finances of the State of Illinois The State of Illinois (the State ) has experienced adverse fiscal conditions resulting in significant shortfalls between the State s general fund revenues and spending demands. In addition, the underfunding of the State s pension systems has contributed to the State s poor financial health. The State has also been operating since July 1, 2015, without a fully enacted budget for the fiscal year ending ( Fiscal Year 2016 ), and has not enacted a budget for the fiscal year ending June 30, 2017 ( Fiscal Year 2017 ). Certain Fiscal Year 2016 appropriations, however, were enacted, including the approval of spending for elementary and secondary education, and other certain Fiscal Year 2016 spending occurred through statutory transfers, statutory continuing appropriations, court orders and consent decrees. As described below, Fiscal Year 2017 spending for elementary and secondary education has been approved for the entire fiscal year and includes an increase of $361 million over Fiscal Year 2016 levels. As for Fiscal Year 2017 spending for all other purposes, the General Assembly approved a stopgap six-month budget, which authorized spending through December 31, Nonetheless, even with this partial-year budget, there will continue to be delays in payments of bills and the State s backlog of unpaid bills will continue to grow. The State s general fiscal condition, the underfunding of the State s pension systems and the State s continuing budget impasse have materially adversely affected the State s financial condition and may result in decreased or delayed State appropriations to the District. The District cannot predict the effect the State s ongoing financial problems may have on the District s future finances. Local Economy The financial health of the District is in part dependent on the strength of the local economy. Many factors affect the local economy, including rates of employment and economic growth and the level of residential and commercial development. It is not possible to predict to what extent any changes in economic conditions, demographic characteristics, population or commercial and industrial activity will occur and what impact such changes would have on the finances of the District. Declining Equalized Assessed Valuations The amount of property taxes extended for the District is determined by applying the various operating tax rates and the bond and interest tax rate levied by the District to the District s Equalized Assessed Valuation ( EAV ). The District s EAV could decrease for a number of reasons including, but not limited to, a decline in property values or large taxpayers moving out of the District. As detailed below, the District s EAV has declined in three of the most recent five years. Declining EAVs and increasing tax rates (certain of which may reach their rate ceilings) could reduce the amount of taxes the District is able to receive. 5

9 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Loss or Change of Bond Rating A credit rating for the Bonds has been requested from S&P Global Ratings, New York, New York ( S&P ). The rating can be changed or withdrawn at any time for reasons both under and outside the District s control. Any change, withdrawal or combination thereof could adversely affect the ability of investors to sell the Bonds or may affect the price at which they can be sold. Secondary Market for the Bonds No assurance can be given that a secondary market will develop for the purchase and sale of the Bonds or, if a secondary market exists, that such Bonds can be sold for any particular price. The Underwriter is not obligated to engage in secondary market trading or to repurchase any of the Bonds at the request of the owners thereof. Prices of the Bonds as traded in the secondary market are subject to adjustment upward and downward in response to changes in the credit markets and other prevailing circumstances. No guarantee exists as to the future market value of the Bonds. Such market value could be substantially different from the original purchase price. Continuing Disclosure A failure by the District to comply with the Undertaking for continuing disclosure (see CONTINUING DISCLOSURE and THE UNDERTAKING herein) will not constitute an event of default on the Bonds. Any such failure must be reported in accordance with Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of 1934, as amended (the Exchange Act ), and may adversely affect the transferability and liquidity of the Bonds and their market price. Suitability of Investment The interest rate borne by the Bonds is intended to compensate the investor for assuming the risk of investing in the Bonds. Each prospective investor should carefully examine this Final Official Statement and its own financial condition to make a judgment as to its ability to bear the economic risk of such an investment, and whether or not the Bonds are an appropriate investment for such investor. Future Changes in Laws Various state and federal laws, regulations and constitutional provisions apply to the District and to the Bonds. The District can give no assurance that there will not be a change in, interpretation of, or addition to such applicable laws, provisions and regulations which would have a material effect, either directly or indirectly, on the District, or the taxing authority of the District. For example, many elements of local government finance, including the issuance of debt and the levy of property taxes, are controlled by state government. Future actions of the State may affect the overall financial conditions of the District, the taxable value of property within the District, and the ability of the District to levy property taxes or collect revenues for its ongoing operations. Bankruptcy The rights and remedies of the Bondholders may be limited by and are subject to the provisions of federal bankruptcy laws, to other laws or equitable principles that may affect the enforcement of creditors rights, to the exercise of judicial discretion in appropriate cases and to limitations on legal remedies against local governments. The various opinions of counsel to be delivered with respect to the Bonds will be similarly qualified. 6

10 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B THE DISTRICT General Information Organized in 1925 by public referendum, the District owns and operates 98 properties consisting of more than 20,000 acres. The District is located approximately 40 miles due west of Chicago s Loop business district, shares the same legal boundaries and tax base with Kane County, Illinois (the County ), and encompasses an area of approximately 600 square miles. Neighboring counties include McHenry County to the north, Cook and DuPage Counties to the east, Kendall County to the south and DeKalb County to the west. According to the 2010 U.S. Census, the District s population is 515,269. This is a 27.50% increase over the 2000 Census of 404,119, and a 62.30% increase over the 1990 Census of 317,471. Aurora and Elgin are the two largest cities within the District with 2010 Census populations of 197,899 and 108,188, respectively. Both cities extend into neighboring counties. Government Kane County Board members act as Commissioners of the Board of Commissioners (the Board ) of the District. The President of the Board is elected every two years by the Board and the President in turn appoints members, with the Board s approval, to serve on the Executive Committee. The Board and the Executive Committee handle the District business of preparing policies and acquiring open space for the citizens of the District. The District employs 73 full-time, 28 year-round and 56 seasonal personnel. Forest Preserve Facilities Since its inception, the District has conducted an extensive land acquisition program designed to preserve existing natural areas, to restore areas to natural condition, to create continuous bands of open space along major waterways and flood-prone areas, and to provide open space buffers between communities. The District holds properties at 92 different sites throughout the County, which include more than 20,000 acres of forests, streams, bike trails, a minor league class A baseball stadium, and recreational areas. In the preserved areas, there are recreational opportunities for picnicking, boating, fishing, snowmobiling, skiing, horseback riding, camping and bicycling. Settlers Hill Golf Course is a unique 18-hole golf course built partially on a landfill; Hughes Creek Golf Course is an 18-hole course; and Deer Valley Golf Course has 9 holes. In addition, the District is the owner of the Fox Valley Ice Arena. The District recognizes the important responsibility to preserve and protect the natural heritage of the County. To that end, the Board adopted an ordinance that designates unique areas in the District as Natural Areas. These designated Natural Areas are places where the native plant community survived through farming use and represent the original nature of the County. 7

11 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B 8

12 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B The 1843 Durant-Peterson House is a brick farmstead built in a simple Greek Revival style. The house has been restored as a living history museum representing the lifestyle and furnishings of the 1840 s. As costumed guides, Preservation Partners of the Fox Valley, a volunteer organization, welcomes the public throughout the year. Pioneer Sholes School is an authentically restored and furnished one room country school, used regularly as a classroom by students and teachers who want to relive a school day as it was 100 years ago. A collection of 19 th and 20 th century school texts, early official County education records and oral histories of one room schools are a few of the school s features. Colonel George and Nelle Fabyan came to the Fox River Valley in the early 1900 s. They developed a small farmhouse into an estate of nearly 600 acres called Riverbank, which became a showplace in Illinois. The Fabyan Villa Museum, a 1907 Frank Lloyd Wright redesign, contains Fabyan memorabilia and historical photographs. The 68-foot Fabyan Dutch Windmill is listed on the National Register of Historic Places and is on the west side of Route 25 in Geneva. The Fabyan Japanese Garden was built by Colonel and Mrs. Fabyan in 1914 and designed by Taro Otuska, a Japanese landscape architect. The garden was restored in 1971 and Education Unit School District Number 46 serves the City of Elgin, the Village of South Elgin and the Village of Wayne; Unit School District Number 101 serves the City of Batavia; Unit School District Numbers 129, 131, and 204 serve the City of Aurora, the Village of Montgomery and the Village of North Aurora; Unit School District Number 302 serves the Village of Sugar Grove; Unit School District Number 303 serves the City of St. Charles; and Unit School District Number 304 serves the City of Geneva. Their combined enrollment is approximately 82,600, providing education to grades K-12. Elgin Community College District Number 509 and Waubonsee Community College District Number 516 provide continuing education, college transfer courses and associate degrees to area residents. Their combined enrollment is approximately 28,000. Four-year colleges and universities include Aurora University, Judson College in Elgin, North Central College in Naperville and Wheaton College. In addition, there are many opportunities for higher education throughout the Chicago metropolitan area. Transportation The District is served by several transportation facilities. Interstate 90 (the Northwest Tollway) serves Elgin and the northern part of the County. Interstate 88 (the East-West Tollway) serves the City of Aurora and the southern part of the County. Other main highways include U.S. Routes 20 and 30 and Illinois Routes 25, 31, 38, 47, 56, 64 and 72. The Union Pacific, Burlington Northern and the Milwaukee Road Railroads provide commuter train service to Chicago and rail freight service. 9

13 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B SOCIOECONOMIC INFORMATION The following statistics pertain to Kane County (the County ) with additional comparisons to the State of Illinois (the State ). Following is a list of major employers located in the County. Major County Employers(1) Approximate Location Name Product/Service Employment Elgin... School District U Public School District... 4,170 Geneva... Peacock Foods, LLC... Food Packaging... 3,000 Elgin... Chase... Credit Card Processing... 2,500 Aurora... Caterpillar Inc.... Construction Machinery... 2,300 Elgin... Advocate Sherman Hospital... General Hospital... 2,200 Aurora... Rush-Copley Medical Center... Hospital & Medical Center... 2,000 Batavia... Fermi Research Alliance... High Energy Physics Research Laboratory... 1,700 Aurora... School District Number School System... 1,650 Geneva... Delnor-Community Hospital... General Hospital... 1,650 Sugar Grove... Waubonsee Community College... Comprehensive Community College... 1,460 Aurora... School District Number School System... 1,320 Geneva... Kane County... County Government... 1,316 Elgin... Elgin Mental Health Center... State Hospital... 1,300 Aurora... Presence Mercy Medical Center... Medical & Psychiatric Hospital... 1,300 Elgin... Presence St. Joseph Hospital... General Hospital... 1,300 Aurora... City of Aurora... City Government... 1,280 Aurora... Dreyer Medical Clinic... Medical Services... 1,200 Elgin... Elgin Riverboat Resort... Gaming... 1,200 Elgin... Sanfilippo & Son... Snack Foods Corporate Headquarters... 1,200 Note: (1) Source: 2017 Illinois Manufacturers Directory, 2017 Illinois Services Directory and a selective telephone survey. The following tables show employment by industry and by occupation for the County and the State as reported by the U.S. Bureau of the Census, American Community Survey, 2011 to 2015 Estimates ( ACS ). Employment By Industry(1) The County The State Classification Number Percent Number Percent Agriculture, Forestry, Fishing and Hunting, and Mining... 1, % 64, % Construction... 15, % 313, % Manufacturing... 42, % 765, % Wholesale Trade... 10, % 184, % Retail Trade... 28, % 668, % Transportation and Warehousing, and Utilities... 12, % 358, % Information... 5, % 123, % Finance and Insurance, and Real Estate and Rental and Leasing... 17, % 446, % Professional, Scientific, and Management and Administrative and Waste Management Services... 33, % 695, % Educational Services and Health Care and Social Assistance... 48, % 1,396, % Arts, Entertainment and Recreation and Accommodation and Food Services... 21, % 551, % Other Services, Except Public Administration... 10, % 288, % Public Administration... 6, % 230, % Total , % 6,086, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. 10

14 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Employment By Occupation(1) The County The State Classification Number Percent Number Percent Management, Business, Science and Arts... 86, % 2,241, % Service... 42, % 1,057, % Sales and Office... 64, % 1,493, % Natural Resources, Construction, and Maintenance... 19, % 444, % Production, Transportation, and Material Moving... 42, % 848, % Total , % 6,086, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. Annual Average Unemployment Rates(1) Calendar The The Year County State % 5.8% % 4.6% % 5.1% % 6.4% % 10.0% % 10.5% % 9.7% % 8.9% % 9.2% % 7.1% % 5.3% % 5.9% 2017(2) % 4.4% Notes: (1) Source: Illinois Department of Employment Security. (2) Preliminary rates for the month of April Housing ACS estimates that the median home value of the County s owner-occupied homes was $213,200, which compares with $173,800 for the State. The ACS estimated market value of specified owner-occupied units for the County and the State was as follows: Home Values(1) The County The State Value Number Percent Number Percent Less than $50, , % 240, % $50,000 to $99, , % 518, % $100,000 to $149, , % 533, % $150,000 to $199, , % 527, % $200,000 to $299, , % 648, % $300,000 to $499, , % 473, % $500,000 to $999, , % 188, % $1,000,000 or more % 46, % Total , % 3,177, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. 11

15 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Mortgage Status(1) The County The State Value Number Percent Number Percent Housing Units with a Mortgage... 94, % 2,104, % Housing Units without a Mortgage... 32, % 1,073, % Total , % 3,177, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. Income Per Capita Personal Income for the Highest Income Counties in the State(1) Rank 2011 to DuPage County... $39, Lake County... 39, McHenry County... 33, Monroe County... 32, Piatt County... 32, Will County... 31, McLean County... 31, Kane County... 31, Kendall County... 31, Sangamon County... 31, Cook County... 31,013 Note: (1) Source: U.S. Bureau of the Census to 2015 American Community 5-Year Estimates. The following shows a ranking of median family income for the Chicago metropolitan area from the American Community Survey. Ranking of Median Family Income(1) Family County Income Rank DuPage County... $96,751 1 Lake County... 93,668 2 Kendall County... 91,612 3 McHenry County... 89,768 4 Will County... 87,950 5 Kane County... 81,718 8 Cook County... 67, Note: (1) Source: U.S. Bureau of the Census 2011 to 2015 American Community Survey 5-Year Estimates. 12

16 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B ACS estimates that the County s median family income was $81,718. This compares to $71,546 for the State. The following table represents the estimated distribution of family incomes for the County and the State by ACS. Family Income(1) The County The State Income Number Percent Number Percent Under $10, , % 137, % $10,000 to $14, , % 83, % $15,000 to $24, , % 219, % $25,000 to $34, , % 247, % $35,000 to $49, , % 372, % $50,000 to $74, , % 572, % $75,000 to $99, , % 460, % $100,000 to $149, , % 554, % $150,000 to $199, , % 234, % $200,000 or more... 11, % 242, % Total , % 3,124, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. ACS estimates that the County s median household income was $70,696. This compares to $57,574 for the State. The following table represents the estimated distribution of household incomes for the County and the State by ACS. Household Income(1) The County The State Income Number Percent Number Percent Under $10, , % 343, % $10,000 to $14, , % 217, % $15,000 to $24, , % 477, % $25,000 to $34, , % 449, % $35,000 to $49, , % 610, % $50,000 to $74, , % 851, % $75,000 to $99, , % 609, % $100,000 to $149, , % 676, % $150,000 to $199, , % 272, % $200,000 or more... 12, % 278, % Total , % 4,786, % Note: (1) Source: American Community Survey 5-Year estimates from the U.S. Bureau of the Census. THE PROJECT Bond proceeds will be used to finance the acquisition and/or improvement of land throughout the District (the Project ) and to pay the costs of issuance of the Bonds. The Project includes acquiring and preserving forests and natural lands, protecting wildlife habitats, enhancing flood control, improving hiking and biking trails and fishing and other recreational areas, providing forest and wildlife education programs and improving forest preserves, wetlands and prairies throughout the District. DEFAULT RECORD The District has no record of default and has met its debt repayment obligations promptly. SHORT-TERM BORROWING The District has not issued tax anticipation warrants or revenue anticipation notes during the last five years to meet its short-term current year cash flow requirements. 13

17 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B DEBT INFORMATION After issuance of the Bonds, the District will have outstanding $172,205,000 principal amount of general obligation debt. The District does not intend to issue additional new money general obligation debt in the foreseeable future. The District has a statutory debt limitation equal to 2.3% of its equalized assessed valuation. Based upon a 2016 EAV of $12,938,799,331, such limitation is equal to $297,592,384. The District has $166,345,000 applicable to such limitation, resulting in an unused legal debt capacity of $131,247,384. General Obligation Bonded Debt(1) (Principal Only) Outstanding Total General General Cumulative Calendar Obligation The Obligation Principal Retired Year Debt(2) Bonds Debt Amount Percent $ 17,630,000 $ 0 $ 17,630,000 $ 17,630, % ,040,000 1,120,000 10,160,000 27,790, % ,320,000 1,880,000 11,200,000 38,990, % ,895,000 2,730,000 11,625,000 50,615, % ,630,000 2,480,000 12,110,000 62,725, % ,420,000 2,200,000 12,620,000 75,345, % ,240,000 1,910,000 13,150,000 88,495, % ,120,000 1,570,000 13,690, ,185, % ,865,000 1,255,000 14,120, ,305, % ,260,000 2,495,000 12,755, ,060, % ,435,000 2,520,000 4,955, ,015, % ,935,000 2,570,000 4,505, ,520, % ,030,000 2,640,000 4,670, ,190, % ,135,000 2,710,000 4,845, ,035, % ,250,000 2,780,000 5,030, ,065, % ,905,000 2,905, ,970, % ,015,000 3,015, ,985, % ,110,000 3,110, ,095, % ,235,000 3,235, ,330, % ,365,000 3,365, ,695, % ,510,000 3,510, ,205, % Total... $122,205,000 $50,000,000 $172,205,000 Notes: (1) Source: the District. (2) Includes the District's General Obligation Bonds, Series 2007 and Series 2011A, General Obligation Refunding Bonds, Series 2012, 2015B and 2016C; General Obligation Limited Tax Refunding Bonds, Series 2011B, Series 2015A and Series 2016A; and Taxable General Obligation Refunding Bonds (Alternate Revenue Source), Series 2016B. 14

18 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Detailed Overlapping and Underlying Bonded Debt(1) (As of November 30, 2016) Applicable Debt Kane County... $ 41,855,000 Townships... 41,395,000 Schools (Including Community Colleges)... 1,129,003,634 Cities & Villages ,358,982 Park Districts... 86,630,330 Library Districts... 21,258,932 Special Service Areas & TIF Districts ,614,568 Miscellaneous Districts... 21,130,000 Total Overlapping and Underlying Debt... $2,015,246,445 Note: (1) Source: Kane County Clerk. Statement of Bonded Indebtedness Ratio To Per Capita Amount Equalized Estimated (2010 Census Applicable Assessed Actual 515,269) District EAV of Taxable Property, $12,938,799, % 33.33% $25, Estimated Actual Value, $38,816,397, % % $75, Direct Bonded Debt... $ 172,205, % 0.44% $ Less: Self-Supporting Bonded Debt... (5,740,000) (0.04%) (0.01%) (11.14) Total Net Direct Bonded Debt... $ 166,465, % 0.43% $ Total Overlapping Bonded Debt(1)... $ 2,015,246, % 5.19% $ 3, Total Net Direct and Overlapping Bonded Debt... $ 2,181,711, % 5.62% $ 4, Note: (1) As of November 30, PROPERTY ASSESSMENT AND TAX INFORMATION For the 2016 levy year, the District s EAV was comprised of approximately 76% residential, 9% industrial, 14% commercial, and 2% farm and railroad property valuations. Equalized Assessed Valuation(1) Levy Years Property Class Residential... $ 9,464,249,918 $ 8,793,098,779 $ 8,664,023,693 $ 9,066,517,421 $ 9,789,442,804 Farm ,669, ,820, ,050, ,884, ,749,524 Commercial... 1,762,262,090 1,668,596,480 1,635,006,235 1,680,989,128 1,768,368,917 Industrial ,225, ,303, ,961,763 1,023,930,426 1,109,300,376 Railroad... 16,021,810 17,468,815 30,086,113 20,041,159 21,937,710 Total... $12,433,428,424 $11,657,287,880 $11,518,128,233 $12,032,362,347 $12,938,799,331 Percent Change + (-)... (7.98%)(2) (6.24%) (1.19%) 4.46% 7.53% Notes: (1) Source: the County. (2) Percentage change based on 2011 EAV of $13,511,734,

19 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Representative Tax Rates(1) (Per $100 EAV) Levy Years District Rates: Corporate... $ $ $ $ $ I.M.R.F Construction and Development Liability Insurance Social Security Bonds and Interest Total District Rate(2)... $ $ $ $ $ Kane County Fox River Water Reclamation District Elgin Township City of Elgin Gail Borden Library District Elgin Unit School District Number Elgin Community College District Number Total Rate(3)... $ $ $ $ $ Notes: (1) Source: Kane County Clerk. (2) Statutory tax rate limits for the District are as follows: Corporate ($0.0600) and Construction and Development ($0.0250). (3) Representative tax rates for other governmental units are from Elgin Township tax code 05, which represents approximately 7% of the 2016 EAV of the District. Tax Extensions and Collections(1) (Excludes Road and Bridge Levy) Levy Collection Taxes Total Collections(2) Year Year Extended Amount Percent $30,103,627 $29,967, % ,062,395 31,961, % ,255,222 35,143, % ,498,122 33,471, % ,422,768 35,291, % ,853,222 35,811, % ,349,595 35,308, % ,153, In Collection----- Notes: (1) Source: Kane County Treasurer. (2) Total collections include back taxes, taxpayer refunds, interest, etc. Principal District Taxpayers(1) Taxpayer Name Business/Service 2016 EAV(2) Simon/Chelsea Chicago Development, LLC... Retail... $ 57,499,545 LPFGeneva Commons, LP... Retail Outlet... 36,198,125 Liberty Illinois LP... Real Estate... 34,788,817 Toyota Motor Sales, USA Inc... Commercial... 30,633,173 Chicago Premium Outlets Expansion LLC... Retail Outlet... 17,394,928 Q Center LLC... Real Estate... 16,845,619 John B. Sanfilippo & Son Inc.... Nuts and Snacks... 16,494,085 In Retail Fund Algonquin Commons LLC... Real Estate... 16,333,921 Amli at St Charles LLC... Apartments... 16,986,705 Canterfield Apartment Owner LLC... Apartments... 13,408,927 Total... $256,583,845 Ten Largest Taxpayers as Percent of District's 2016 EAV ($12,938,799,331) % Notes: (1) Source: Kane County Assessor. (2) Every effort has been made to seek out and report the largest taxpayers. However, many of the taxpayers listed contain multiple parcels and it is possible that some parcels and their valuations have been overlooked. The 2016 EAV is the most current available for this purpose. 16

20 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B REAL PROPERTY ASSESSMENT, TAX LEVY AND COLLECTION PROCEDURES Tax Levy and Collection Procedures Local assessment officers determine the assessed valuation of taxable real property and railroad property not held or used for railroad operations. The Illinois Department of Revenue (the Department ) assesses certain other types of taxable property, including railroad property held or used for railroad operations. Local assessment officers valuation determinations are subject to review at the county level and then, in general, to equalization by the Department. Such equalization is achieved by applying to each county s assessments a multiplier determined by the Department. The purpose of equalization is to provide a common basis of assessments among counties by adjusting assessments toward the statutory standard of 33 1/3% of fair cash value. Farmland is assessed according to a statutory formula which takes into account factors such as productivity and crop mix. Taxes are extended against the assessed values after equalization. Property tax levies of each taxing body are filed in the office of the county clerk of each county in which territory of that taxing body is located. The county clerk computes the rates and amount of taxes applicable to taxable property subject to the tax levies of each taxing body and determines the dollar amount of taxes attributable to each respective parcel of taxable property. The county clerk then supplies to the appropriate collecting officials within the county the information needed to bill the taxes attributable to the various parcels therein. After the taxes have been collected, the collecting officials distribute to the various taxing bodies their respective shares of the taxes collected. Taxes levied in one calendar year are due and payable in two installments during the next calendar year. Taxes that are not paid when due, or that are not paid by mail and postmarked on or before the due date, are subject to a penalty of 1 1/2% per month until paid. Unpaid property taxes, together with penalties, interest and costs, constitute a lien against the property subject to the tax. Exemptions The Illinois Property Tax Code, as amended (the Property Tax Code ), exempts certain property from taxation. Certain property is exempt from taxation on the basis of ownership and/or use, including, but not limited to, public parks, not-for-profit schools, public schools, churches, not-for-profit hospitals and public hospitals. In addition, the Property Tax Code provides a variety of homestead exemptions, which are discussed below. An annual General Homestead Exemption provides that the EAV of certain property owned and used for residential purposes ( Residential Property ) may be reduced by the amount of any increase over the 1977 EAV, up to a maximum reduction of $6,000 for tax year 2012 and thereafter. The Homestead Improvement Exemption applies to Residential Property that has been improved and to properties that have been rebuilt in the two years following a catastrophic event, as defined in the Property Tax Code. The exemption is limited to $75,000 per year, to the extent the assessed value is attributable solely to such improvements or rebuilding. The Senior Citizens Homestead Exemption annually reduces the EAV on residences owned and occupied by senior citizens. Beginning with tax year 2013, the maximum exemption is $5,000. The Senior Citizens Assessment Freeze Homestead Exemption freezes property tax assessments for homeowners who are 65 and older, reside in their property as their principal place of residence and receive a household income not in excess of $55,000. This exemption grants to qualifying senior citizens an exemption equal to the difference between (a) the current EAV of the residence and (b) the EAV of a senior citizen s residence for the year prior to the year in which he or she first qualifies and applies for the exemption, plus the EAV of improvements since such year. 17

21 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Beginning January 1, 2015 purchasers of certain single family homes and residences of one to six units located in certain distressed communities can apply for the Community Stabilization Assessment Freeze Pilot Program. To be eligible the purchaser must meet certain requirements for rehabilitating the property, including expenditures of at least $5 per square foot, adjusted by CPI. Upon meeting the requirements, the assessed value of the improvements is reduced by (a) 90% in the first seven years, (b) 65% in the eighth year and (c) 35% in the ninth year. The program will be phased out by June 30, The Natural Disaster Homestead Exemption (the Natural Disaster Exemption ) applies to homestead properties containing a residential structure that has been rebuilt following a natural disaster occurring in taxable year 2012 or any taxable year thereafter. A natural disaster is an occurrence of widespread or severe damage or loss of property resulting from any catastrophic cause including but not limited to fire, flood, earthquake, wind, or storm. The Natural Disaster Exemption is equal to the equalized assessed value of the residence in the first taxable year for which the taxpayer applies for the exemption minus the base amount. To be eligible for the Natural Disaster Exemption, the residential structure must be rebuilt within two years after the date of the natural disaster, and the square footage of the rebuilt residential structure may not be more than 110% of the square footage of the original residential structure as it existed immediately prior to the natural disaster. The Natural Disaster Exemption remains at a constant amount until the taxable year in which the property is sold or transferred. Three exemptions are available to veterans of the United States armed forces. The Disabled Veterans Exemption exempts up to $100,000 of the Assessed Valuation of property owned and used exclusively by veterans, their spouses or unmarried surviving spouses. Qualification for this exemption requires the veteran s disability to be of such a nature that the federal government has authorized payment for purchase of specially adapted housing under the U.S. Code as certified to annually by the Illinois Department of Veterans Affairs. The Disabled Veterans Standard Homestead Exemption provides an annual homestead exemption to veterans with a service-connected disability based on the percentage of such disability. If the veteran has a (a) service-connected disability of 30% or more but less than 50%, the annual exemption is $2,500, (b) service-connected disability of 50% or more but less than 70%, the annual exemption is $5,000, and (c) service-connected disability of 70% or more, the property is exempt from taxation. The Returning Veterans Homestead Exemption is available for property owned and occupied as the principal residence of a veteran in the assessment year, or the year following the assessment year, in which the veteran returns from an armed conflict while on active duty in the United States armed forces. This provision grants a one-time homestead exemption of $5,000. Finally, the Disabled Persons Homestead Exemption provides an annual homestead exemption in the amount of $2,000 for property that is owned and occupied by certain disabled persons who meet State-mandated guidelines. Property Tax Extension Limitation Law The Property Tax Extension Limitation Law, as amended (the Limitation Law ), limits the annual growth in the amount of property taxes to be extended for certain Illinois non-home-rule units, including the District. In general, the annual growth permitted under the Limitation Law is the lesser of 5% or the percentage increase in the Consumer Price Index during the calendar year preceding the levy year. Taxes can also be increased due to new construction, referendum approval of tax rate increases, mergers and consolidations. The effect of the Limitation Law is to limit the amount of property taxes that can be extended for a taxing body. In addition, general obligation bonds, notes and installment contracts payable from ad valorem taxes unlimited as to rate and amount cannot be issued by the affected taxing bodies unless they are approved by referendum (such as the Bonds), are alternate bonds or are for certain refunding purposes. 18

22 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B The District has the authority to levy taxes for many different purposes. See the table entitled Representative Tax Rates under PROPERTY ASSESSMENT AND TAX INFORMATION herein. The ceiling at any particular time on the rate at which these taxes may be extended for the District is either (i) unlimited (as provided by statute), (ii) initially set by statute but permitted to be increased by referendum, (iii) capped by statute, or (iv) limited to the rate approved by referendum. Public Act , effective June 30, 2006, provides that the only ceiling on a particular tax rate is the ceiling set by statute above, at which the rate is not permitted to be further increased by referendum or otherwise. Therefore, taxing districts (such as the District) will have increased flexibility to levy taxes for the purposes for which they most need the money. The total aggregate tax rate for the various purposes subject to the Limitation Law, however, will not be allowed to exceed the District s limiting rate computed in accordance with the provisions of the Limitation Law. Local governments, including the District, can issue limited tax bonds in lieu of general obligation bonds that have otherwise been authorized by applicable law. Truth in Taxation Law Legislation known as the Truth in Taxation Law (the Law ) limits the aggregate amount of certain taxes which can be levied by, and extended for, a taxing district to 105% of the amount of taxes extended in the preceding year unless specified notice, hearing and certification requirements are met by the taxing body. The express purpose of the Law is to require published disclosure of, and hearing upon, an intention to adopt a levy in excess of the specified levels. Budgeting FINANCIAL INFORMATION The District s budget is prepared on the modified accrual basis of accounting. The District follows these procedures in establishing the budgetary data reflected in the financial statements: (1) The Director submits to the Board a proposed budget for the upcoming year. (2) Budget hearings are conducted. (3) The budget is legally enacted through the passage of an appropriations ordinance. The appropriations ordinance establishes the District s legal spending limit, and appropriations lapse at year end. The ordinance was not modified during the year. Encumbrance accounting is not in use. 19

23 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Investment Policy Statutes authorize the District to invest funds in obligations of the United States Treasury or its agencies or instrumentalities, obligations of any bank or savings and loan association insured by the Federal Deposit Insurance Corporation, and obligations of any credit union chartered by the State of Illinois or the United States whose principal office is located within the State of Illinois. In addition, the District is authorized to invest funds in a Public Treasurers Investment Pool. Financial Reports The District s financial statements are audited annually by certified public accountants. The District s financial statements are completed on a modified accrual basis of accounting consistent with generally accepted accounting principles applicable to governmental entities. See APPENDIX A for more detail. Summary Financial Information The following tables are summaries and do not purport to be the complete audits, copies of which are available upon request. See APPENDIX A for the District s 2016 fiscal year audit. The District expects that its General Fund fund balance for the fiscal year ended June 30, 2017 will increase by approximately $600,000 over such fund balance for the 2016 fiscal year. The District has historically operated under a balanced budget. The District has passed a balanced budget for its 2018 fiscal year. No Consent or Updated Information Requested of the Auditor The tables contained in this FINANCIAL INFORMATION section (the Excerpted Financial Information ) are from the audited financial statements of the District, including the audited financial statements for the fiscal year ended (the 2016 Audit ). The 2016 Audit was prepared by Lauterbach & Amen, LLP, Warrenville, Illinois (the Auditor ), approved by formal action of the Board of Commissioners and is attached to this Final Official Statement as APPENDIX A. The District has not requested the Auditor to update information contained in the Excerpted Financial Information or the 2016 Audit; nor has the District requested that the Auditor consent to the use of the Excerpted Financial Information or the 2016 Audit in this Final Official Statement. Other than as expressly set forth in this Final Official Statement, the financial information contained in the Excerpted Financial Information and 2016 Audit has not been updated since the date of the 2016 Audit. The inclusion of the Excerpted Financial Information and 2016 Audit in this Final Official Statement in and of itself is not intended to demonstrate the fiscal condition of the District since the date of the 2016 Audit. Questions or inquiries relating to financial information of the District since the date of the 2016 Audit should be directed to the District. 20

24 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Statement of Net Positon Governmental Activities Audited as of June ASSETS: Cash and Cash Equivalents... $ 46,600,277 $ 44,126,005 $ 42,786,710 $ 40,407,431 $ 40,660,558 Receivables: Property Taxes... 17,786,152 16,922,708 17,634,737 17,876,659 17,729,470 Intergovernmental , , ,800 0 Service Concessions ,207, , , ,988 Accounts ,327,102 1,187,088 Interest ,081 Other , , ,239 0 Due From Other Governments ,107,944 1,097,266 Prepaid Expenses... 6,500 6,500 6,500 6,500 5,959 Unamortized Bond Issuance Costs , Capital Assets Not Being Depreciated ,139, ,128, ,863, ,716, ,671,010 Capital Assets Being Depreciated (Net of Accumulated Depreciation)... 28,477,006 23,933,916 27,723,961 26,795,526 25,732,802 Total Assets... $466,580,052 $465,049,319 $468,876,676 $470,840,793 $471,391,222 DEFERRED OUTFLOWS OF RESOURCES: Deferred Item-IMRF... $ 0 $ 0 $ 0 $ 660,823 $ 1,330,147 Loss on Refunding ,824 Total Deferred Inflows of Resources... $ 0 $ 0 $ 0 $ 660,823 $ 1,914,971 Total Assets and Deferred Outflows of Resources... $466,580,052 $465,049,319 $468,876,676 $471,501,616 $473,306,193 LIABILITIES: Accounts Payable... $ 1,140,947 $ 837,225 $ 1,086,543 $ 131,314 $ 514,887 Accrued Payroll , , , , ,481 Accrued Interest , , , , ,724 Deferred Revenue... 35,440, , Escrow Funds Payable... 1,473 1, Other Payables , ,918 Retainage Payable ,000 Other Liabilities ,718 52,374 Current Portion of Long-Term Liabilities ,964,060 22,509,565 Noncurrent Liabilities: Compensated Absences , ,259 Net Pension Liability ,377 2,172,275 Net Other Post-Employment Benefits Obligation Payable , ,171 Due Within One Year... 18,068,403 18,162,424 21,183, Due In More Than One Year ,626, ,965, ,154, ,968, ,426,834 Total Liabilities... $274,873,479 $217,415,539 $198,278,745 $176,913,208 $155,453,114 DEFERRED INFLOWS OF RESOURCES: Unavailable Property Taxes... $ 0 $ 33,696,456 $ 35,422,768 $ 36,009,124 $ 35,417,741 Unavailable Service Concessions Revenues ,207, , , ,988 Unamortized Gain on Refunding ,600,457 2,880,366 2,160,274 1,440,183 Total Deferred Inflows of Resources... $ 0 $ 38,504,865 $ 39,209,098 $ 38,772,874 $ 37,159,912 Total Liabilities and Deferred Inflows of Resources... $274,873,479 $255,920,404 $237,487,843 $215,686,082 $192,613,026 NET POSITION: Invested in Capital Assets - Net of Related Debt... $173,717,878 $193,658,072 $207,920,495 $238,279,636 $258,666,619 Restricted For: Construction and Development... 4,754, Capital Projects ,000,000 1,918,992 Fox River Trust , ,915 2,520, , ,645 Debt Service ,096 1,053,237 3,265,936 3,891,081 4,325,602 IMRF... 48,909 53,964 70, , ,487 Liability Insurance , , , , ,530 Social Security , , , , ,014 Unrestricted... 10,700,112 12,645,143 16,747,031 10,424,655 14,654,278 Total Net Position... $191,706,573 $209,128,915 $231,388,833 $255,815,534 $280,693,167 21

25 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Statement of Activities Governmental Activities Audited Fiscal Year Ending June Governmental Activities: General Government... $ (6,318,803) $ (4,820,188) $ (5,714,454) $ (6,053,530) $ (6,151,380) Land Acquisition and Development... (2,041,452) (867,037) 79,070 (1,029,470) (1,134,856) Interest and Fiscal Charges... (10,361,418) (10,838,579) (6,429,436) (5,700,119) (4,780,538) Total Governmental Activities... $(18,721,673) $(16,525,804) $(12,064,820) $(12,783,119) $(12,066,774) General Revenues: Taxes: Property... $ 31,960,723 $ 35,119,989 $ 33,472,270 $ 35,273,065 $ 35,811,192 Replacement Taxes , , , , ,749 Investment Income... 49, , , , ,809 Miscellaneous ,682 92, ,101 1,486, ,657 Transfers In (Out) ,176, Total General Revenues... $ 32,454,643 $ 37,803,119 $ 34,324,741 $ 37,180,193 $ 36,944,407 CHANGE IN NET POSITION... $ 13,732,970 $ 21,277,315 $ 22,259,921 $ 24,397,074 $ 24,877,633 NET POSITION - JULY 1... $177,973,603 $187,851,600(1) $209,128,912 $231,418,460 $255,815,534 NET POSITION - JUNE $191,706,573 $209,128,915 $231,388,833 $255,815,534 $280,693,167 Note: (1) As restated. General Fund Balance Sheet Audited as of June ASSETS: Cash and Investments... $ 7,698,954 $ 9,256,768 $10,617,170 $10,135,982 $ 9,148,372 Receivables: Taxes... 2,547,961 2,632,865 2,674,680 2,667,232 2,676,882 Accounts , ,833 Interest ,285 Other Governmental Units , , , Prepaid Items... 6,500 6,500 6,500 6,500 5,959 Total Assets... $10,378,645 $12,086,233 $13,416,589 $13,297,688 $12,303,331 LIABILITIES: Accounts Payable... $ 120,397 $ 265,561 $ 935,518 $ 100,614 $ 343,524 Accrued Payroll , , , , ,481 Other Payables , ,238 Deposits Payable ,000 Deferred Revenue... 5,235, , , Total Liabilities... $ 5,596,193 $ 1,365,115 $ 1,461,757 $ 660,581 $ 1,030,243 DEFERRED INFLOWS OF RESOURCES: Unavailable Property Taxes... $ 0 $ 5,242,555 $ 5,372,611 $ 5,372,631 $ 5,347,543 Total Deferred Inflows of Resources... $ 0 $ 5,242,555 $ 5,372,611 $ 5,372,631 $ 5,347,543 FUND BALANCES: Nonspendable For Prepaid Items... $ 6,500 $ 6,500 $ 6,500 $ 6,500 $ 5,959 Unassigned Fund Balance... 4,775,952 5,472,063 6,575,721 7,257,976 5,919,586 Total Fund Balances... $ 4,782,452 $ 5,478,563 $ 6,582,221 $ 7,264,476 $ 5,925,545 Total Liabilities, Deferred Inflows of Resources, and Fund Balances... $10,378,645 $12,086,233 $13,416,589 $13,297,688 $12,303,331 22

26 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B General Fund Revenues and Expenditures Audited Fiscal Year Ending June REVENUES: Property Taxes... $5,021,615 $5,088,544 $5,390,724 $5,646,087 $ 5,581,071 Intergovernmental , ,540 Investment Income... 7,145 16,848 29,559 30,910 48,149 Charges for Services... 1,457,352 1,811,660 1,937,671 2,146,354 2,165,258 Licenses and Permits... 19,727 15,243 19,146 14,360 10,000 Fines and Forfeitures ,579 11,741 14,121 Miscellaneous , , , , ,157 Total Revenues... $6,638,138 $7,061,499 $7,604,924 $7,979,299 $ 7,996,296 EXPENDITURES: Personal Services... $3,743,203 $3,768,688 $3,943,362 $4,095,111 $ 4,152,416 Contractual Services... 1,208,287 1,206,348 1,297,369 1,545,669 1,574,659 Commodities , ,735 1,047,772 1,049,066 1,038,754 Capital Outlay , , , , ,936 Other... 73,929 84,276 70, , ,462 Total Expenditures... $6,045,802 $6,367,693 $6,561,527 $7,197,044 $ 7,135,227 Excess (Deficiency) of Revenues Over (Under) Expenditures... $ 592,336 $ 693,806 $1,043,397 $ 782,255 $ 861,069 OTHER FINANCING SOURCES (USES): Operating Transfers In... $ 0 $ 0 $ 0 $ 0 $ 0 Operating Transfers Out (100,000) (2,200,000)(1) Proceeds From Sale of Capital Assets ,305 60, Total Other Financing Sources (Uses)... $ 748 $ 2,305 $ 60,263 $ (100,000) $(2,200,000) Excess (Deficiency) of Revenues and Other Financing Sources Over (Under) Expenditures and Other Uses... $ 593,084 $ 696,111 $1,103,660 $ 682,255 $(1,338,931) Beginning Fund Balance... $4,189,368 $4,782,452 $5,478,561 $6,582,221 $ 7,264,476 Ending Fund Balance... $4,782,452 $5,478,563 $6,582,221 $7,264,476 $ 5,925,545 Note: (1) Planned transfer to the Construction and Development Fund to fund future construction and development projects. 23

27 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B EMPLOYEE RETIREMENT AND OTHER POSTEMPLOYMENT BENEFITS OBLIGATIONS See APPENDIX D herein for a discussion of the District s employee retirement and other postemployment benefits obligations. REGISTRATION, TRANSFER AND EXCHANGE See also APPENDIX B for information on registration, transfer and exchange of book-entry bonds. The Bonds will be initially issued as book-entry bonds. The District shall cause books for the registration and for the transfer of the Bonds to be kept at the principal corporate trust office of the Bond Registrar in Chicago, Illinois. The District will authorize to be prepared, and the Bond Registrar shall keep custody of, multiple bond blanks executed by the District for use in the transfer and exchange of Bonds. Any Bond may be transferred or exchanged, but only in the manner, subject to the limitations, and upon payment of the charges as set forth in the Bond Ordinance. Upon surrender for transfer or exchange of any Bond at the principal corporate trust office of the Bond Registrar, duly endorsed by, or accompanied by a written instrument or instruments of transfer in form satisfactory to the Bond Registrar and duly executed by the registered owner or such owner s attorney duly authorized in writing, the District shall execute and the Bond Registrar shall authenticate, date and deliver in the name of the registered owner, transferee or transferees (as the case may be) a new fully registered Bond or Bonds of the same series and maturity of authorized denominations, for a like aggregate principal amount. The execution by the District of any fully registered Bond shall constitute full and due authorization of such Bond, and the Bond Registrar shall thereby be authorized to authenticate, date and deliver such Bond, provided, however, the principal amount of outstanding Bonds of each series and maturity authenticated by the Bond Registrar shall not exceed the authorized principal amount of Bonds for such series and maturity less Bonds previously paid. The Bond Registrar shall not be required to transfer or exchange any Bond during the period beginning at the close of business on the 1 st day of the month of any interest payment date on such Bond and ending at the opening of business on such interest payment date, nor to transfer or exchange any Series 2017A Bond after notice calling such Series 2017A Bond for redemption has been mailed, nor during a period of fifteen (15) days next preceding mailing of a notice of redemption of any Series 2017A Bonds. The person in whose name any Bond shall be registered shall be deemed and regarded as the absolute owner thereof for all purposes, and payment of the principal of or interest on any Bonds shall be made only to or upon the order of the registered owner thereof or such owner s legal representative. All such payments shall be valid and effectual to satisfy and discharge the liability upon such Bond to the extent of the sum or sums so paid. No service charge shall be made for any transfer or exchange of Bonds, but the District or the Bond Registrar may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any transfer or exchange of Bonds except in the case of the issuance of a Series 2017A Bond or Series 2017A Bonds for the unredeemed portion of a Series 2017A Bond surrendered for redemption. 24

28 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B TAX EXEMPTION SERIES 2017A BONDS Federal tax law contains a number of requirements and restrictions which apply to the Series 2017A Bonds, including investment restrictions, periodic payments of arbitrage profits to the United States, requirements regarding the proper use of bond proceeds and the facilities financed therewith, and certain other matters. The District has covenanted to comply with all requirements that must be satisfied in order for the interest on the Series 2017A Bonds to be excludable from gross income for federal income tax purposes. Failure to comply with certain of such covenants could cause interest on the Series 2017A Bonds to become includable in gross income for federal income tax purposes retroactively to the date of issuance of the Series 2017A Bonds. Subject to the District s compliance with the above-referenced covenants, under present law, in the opinion of Bond Counsel, interest on the Series 2017A Bonds is excludable from the gross income of the owners thereof for federal income tax purposes and is not included as an item of tax preference in computing the federal alternative minimum tax for individuals and corporations, but interest on the Series 2017A Bonds is taken into account, however, in computing an adjustment used in determining the federal alternative minimum tax for certain corporations. In rendering its opinion, Bond Counsel will rely upon certifications of the District with respect to certain material facts within the District s knowledge. Bond Counsel s opinion represents its legal judgment based upon its review of the law and the facts that it deems relevant to render such opinion and is not a guarantee of a result. The Internal Revenue Code of 1986, as amended (the Code ), includes provisions for an alternative minimum tax ( AMT ) for corporations in addition to the regular corporate tax in certain cases. The AMT, if any, depends upon the corporation s alternative minimum taxable income ( AMTI ), which is the corporation s taxable income with certain adjustments. One of the adjustment items used in computing the AMTI of a corporation (with certain exceptions) is an amount equal to 75% of the excess of such corporation s adjusted current earnings over an amount equal to its AMTI (before such adjustment item and the alternative tax net operating loss deduction). Adjusted current earnings would include certain tax-exempt interest, including interest on the Series 2017A Bonds. Ownership of the Series 2017A Bonds may result in collateral federal income tax consequences to certain taxpayers, including, without limitation, corporations subject to the branch profits tax, financial institutions, certain insurance companies, certain S corporations, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. Prospective purchasers of the Series 2017A Bonds should consult their tax advisors as to applicability of any such collateral consequences. The issue price (the Issue Price ) for each maturity of the Series 2017A Bonds is the price at which a substantial amount of such maturity of the Series 2017A Bonds is first sold to the public. The Issue Price of a maturity of the Series 2017A Bonds may be different from the price set forth, or the price corresponding to the yield set forth, on page 2 of this Final Official Statement. If the Issue Price of a maturity of the Series 2017A Bonds is less than the principal amount payable at maturity, the difference between the Issue Price of each such maturity, if any, of the Series 2017A Bonds (the Series 2017A OID Bonds ) and the principal amount payable at maturity is original issue discount. 25

29 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B For an investor who purchases a Series 2017A OID Bond in the initial public offering at the Issue Price for such maturity and who holds such Series 2017A OID Bond to its stated maturity, subject to the condition that the District complies with the covenants discussed above, (a) the full amount of original issue discount with respect to such Series 2017A OID Bond constitutes interest which is excludable from the gross income of the owner thereof for federal income tax purposes; (b) such owner will not realize taxable capital gain or market discount upon payment of such Series 2017A OID Bond at its stated maturity; (c) such original issue discount is not included as an item of tax preference in computing the alternative minimum tax for individuals and corporations under the Code, but is taken into account in computing an adjustment used in determining the alternative minimum tax for certain corporations under the Code, as described above; and (d) the accretion of original issue discount in each year may result in an alternative minimum tax liability for corporations or certain other collateral federal income tax consequences in each year even though a corresponding cash payment may not be received until a later year. Based upon the stated position of the Illinois Department of Revenue, under Illinois income tax law, accreted original issue discount on such Series 2017A OID Bonds is subject to taxation as it accretes, even though there may not be a corresponding cash payment until a later year. Owners of Series 2017A OID Bonds should consult their own tax advisors with respect to the state and local tax consequences of original issue discount on such Series 2017A OID Bonds. Owners of Series 2017A Bonds who dispose of Series 2017A Bonds prior to the stated maturity (whether by sale, redemption or otherwise), purchase Series 2017A Bonds in the initial public offering, but at a price different from the Issue Price or purchase Series 2017A Bonds subsequent to the initial public offering should consult their own tax advisors. If a Series 2017A Bond is purchased at any time for a price that is less than the Series 2017A Bond s stated redemption price at maturity or, in the case of a Series 2017A OID Bond, its Issue Price plus accreted original issue discount (the Revised Issue Price ), the purchaser will be treated as having purchased a Series 2017A Bond with market discount subject to the market discount rules of the Code (unless a statutory de minimis rule applies). Accrued market discount is treated as taxable ordinary income and is recognized when a Series 2017A Bond is disposed of (to the extent such accrued discount does not exceed gain realized) or, at the purchaser s election, as it accrues. Such treatment would apply to any purchaser who purchases a Series 2017A OID Bond for a price that is less than its Revised Issue Price. The applicability of the market discount rules may adversely affect the liquidity or secondary market price of such Series 2017A Bond. Purchasers should consult their own tax advisors regarding the potential implications of market discount with respect to the Series 2017A Bonds. An investor may purchase a Series 2017A Bond at a price in excess of its stated principal amount. Such excess is characterized for federal income tax purposes as bond premium and must be amortized by an investor on a constant yield basis over the remaining term of the Series 2017A Bond in a manner that takes into account potential call dates and call prices. An investor cannot deduct amortized bond premium relating to a tax-exempt bond. The amortized bond premium is treated as a reduction in the tax-exempt interest received. As bond premium is amortized, it reduces the investor s basis in the Series 2017A Bond. Investors who purchase a Series 2017A Bond at a premium should consult their own tax advisors regarding the amortization of bond premium and its effect on the Series 2017A Bond s basis for purposes of computing gain or loss in connection with the sale, exchange, redemption or early retirement of the Series 2017A Bond. There are or may be pending in the Congress of the United States legislative proposals, including some that carry retroactive effective dates, that, if enacted, could alter or amend the federal tax matters referred to above or affect the market value of the Series 2017A Bonds. It cannot be predicted whether or in what form any such proposal might be enacted or whether, if enacted, it would apply to bonds issued prior to enactment. Prospective purchasers of the Series 2017A Bonds should consult their own tax advisors regarding any pending or proposed federal tax legislation. Bond Counsel expresses no opinion regarding any pending or proposed federal tax legislation. 26

30 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B The Internal Revenue Service (the Service ) has an ongoing program of auditing tax-exempt obligations to determine whether, in the view of the Service, interest on such tax-exempt obligations is includable in the gross income of the owners thereof for federal income tax purposes. It cannot be predicted whether or not the Service will commence an audit of the Series 2017A Bonds. If an audit is commenced, under current procedures the Service may treat the District as a taxpayer and the Series 2017A Bondholders may have no right to participate in such procedure. The commencement of an audit could adversely affect the market value and liquidity of the Series 2017A Bonds until the audit is concluded, regardless of the ultimate outcome. Payments of interest on, and proceeds of the sale, redemption or maturity of, tax-exempt obligations, including the Series 2017A Bonds, are in certain cases required to be reported to the Service. Additionally, backup withholding may apply to any such payments to any Series 2017A Bond owner who fails to provide an accurate Form W-9 Request for Taxpayer Identification Number and Certification, or a substantially identical form, or to any Series 2017A Bond owner who is notified by the Service of a failure to report any interest or dividends required to be shown on federal income tax returns. The reporting and backup withholding requirements do not affect the excludability of such interest from gross income for federal tax purposes. Interest on the Series 2017A Bonds is not exempt from present State of Illinois income taxes. Ownership of the Series 2017A Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Series 2017A Bonds. Prospective purchasers of the Series 2017A Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. See APPENDIX C for the proposed form of Bond Counsel opinion for the Series 2017A Bonds. TAX TREATMENT - TAXABLE SERIES 2017B BONDS Interest on the Taxable Series 2017B Bonds is includible in gross income of the owners thereof for federal income tax purposes. Ownership of the Taxable Series 2017B Bonds may result in other federal income tax consequences to certain taxpayers. Taxable Series 2017B Bondholders should consult their tax advisors with respect to the inclusion of interest on the Taxable Series 2017B Bonds in gross income for federal income tax purposes and any collateral tax consequences. Interest on the Taxable Series 2017B Bonds is not exempt from present State of Illinois income taxes. Ownership of the Taxable Series 2017B Bonds may result in other state and local tax consequences to certain taxpayers. Bond Counsel expresses no opinion regarding any such collateral consequences arising with respect to the Taxable Series 2017B Bonds. Prospective purchasers of the Taxable Series 2017B Bonds should consult their tax advisors regarding the applicability of any such state and local taxes. See APPENDIX C for the proposed form of Bond Counsel opinion for the Taxable Series 2017B Bonds. 27

31 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B CONTINUING DISCLOSURE The District will enter into a Continuing Disclosure Undertaking (the Undertaking ) for the benefit of the beneficial owners of the Bonds to send certain information annually and to provide notice of certain events to the Municipal Securities Rulemaking Board (the MSRB ) pursuant to the requirements of Section (b)(5) of Rule 15c2-12 (the Rule ) adopted by the Securities and Exchange Commission (the Commission ) under the Securities Exchange Act of No person, other than the District, has undertaken, or is otherwise expected, to provide continuing disclosure with respect to the Bonds. The information to be provided on an annual basis, the events which will be noticed on an occurrence basis and a summary of other terms of the Undertaking, including termination, amendment and remedies, are set forth below under THE UNDERTAKING. There have been no instances in the previous five years in which the District failed to comply, in all material respects, with any undertaking previously entered into by it pursuant to the Rule. A failure by the District to comply with the Undertaking will not constitute a default under the Bond Ordinance and beneficial owners of the Bonds are limited to the remedies described in the Undertaking. See THE UNDERTAKING - Consequences of Failure of the District to Provide Information. The District must report any failure to comply with the Undertaking in accordance with the Rule. Any broker, dealer or municipal securities dealer must consider such report before recommending the purchase or sale of the Bonds in the secondary market. Consequently, such a failure may adversely affect the transferability and liquidity of the Bonds and their market price. THE UNDERTAKING The following is a brief summary of certain provisions of the Undertaking of the District and does not purport to be complete. The statements made under this caption are subject to the detailed provisions of the Undertaking, a copy of which is available upon request from the District. Annual Financial Information Disclosure The District covenants that it will disseminate its Annual Financial Information and its Audited Financial Statements, if any (as described below) to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. The District is required to deliver such information within 210 days after the last day of the District s fiscal year (currently on June 30), beginning with the fiscal year ending June 30, If Audited Financial Statements are not available when the Annual Financial Information is filed, the District will submit Audited Financial Statements to the MSRB s Electronic Municipal Market Access ( EMMA ) system within 30 days after availability to the District. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. Annual Financial Information means information of the type contained in the following headings, subheadings and exhibits of the Final Official Statement: All of the tables under the heading PROPERTY ASSESSMENT AND TAX INFORMATION within this Final Official Statement; All of the tables under the heading DEBT INFORMATION within this Final Official Statement; and All of the tables under the heading FINANCIAL INFORMATION within this Final Official Statement. Audited Financial Statements means financial statements of the District as audited annually by independent certified public accountants. Audited Financial Statements are expected to continue to be prepared according to Generally Accepted Accounting Principles as applicable to governmental units (i.e., as subject to the pronouncements of the Governmental Accounting Standards Board and subject to any express requirements of State law). 28

32 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Reportable Events Disclosure The District covenants that it will disseminate in a timely manner (not in excess of ten business days after the occurrence of the Reportable Event) Reportable Events Disclosure to the MSRB in such manner and format and accompanied by identifying information as is prescribed by the MSRB or the Commission at the time of delivery of such information. MSRB Rule G-32 requires all EMMA filings to be in word-searchable PDF format. This requirement extends to all documents to be filed with EMMA, including financial statements and other externally prepared reports. The Reportable Events are: 1. Principal and interest payment delinquencies 2. Non-payment related defaults, if material 3. Unscheduled draws on debt service reserves reflecting financial difficulties 4. Unscheduled draws on credit enhancements reflecting financial difficulties 5. Substitution of credit or liquidity providers, or their failure to perform 6. Adverse tax opinions, the issuance by the Internal Revenue Service of proposed or final determinations of taxability, Notices of Proposed Issue (IRS Form 5701-TEB) or other material notices or determinations with respect to the tax status of the security, or other material events affecting the tax status of the security 7. Modifications to the rights of security holders, if material 8. Bond calls, if material, and tender offers 9. Defeasances 10. Release, substitution or sale of property securing repayment of the securities, if material 11. Rating changes 12. Bankruptcy, insolvency, receivership or similar event of the District* 13. The consummation of a merger, consolidation, or acquisition involving the District or the sale of all or substantially all of the assets of the District, other than in the ordinary course of business, the entry into a definitive agreement to undertake such an action or the termination of a definitive agreement relating to any such actions, other than pursuant to its terms, if material 14. Appointment of a successor or additional trustee or the change of name of a trustee, if material. Consequences of Failure of the District to Provide Information The District shall give notice in a timely manner to the MSRB of any failure to provide disclosure of Annual Financial Information and Audited Financial Statements when the same are due under the Undertaking. In the event of a failure of the District to comply with any provision of the Undertaking, the beneficial owner of any Bond may seek mandamus or specific performance by court order, to cause the District to comply with its obligations under the Undertaking. A default under the Undertaking shall not be deemed a default under the Bond Ordinance, and the sole remedy under the Undertaking in the event of any failure of the District to comply with the Undertaking shall be an action to compel performance. * This event is considered to occur when any of the following occur: the appointment of a receiver, fiscal agent or similar officer for the District in a proceeding under the U.S. Bankruptcy Code or in any other proceeding under state or federal law in which a court or governmental authority has assumed jurisdiction over substantially all of the assets or business of the District, or if such jurisdiction has been assumed by leaving the existing governing body and officials or officers in possession but subject to the supervision and orders of a court or governmental authority, or the entry of an order confirming a plan of reorganization, arrangement or liquidation by a court or governmental authority having supervision or jurisdiction over substantially all of the assets or business of the District. 29

33 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B Amendment; Waiver Notwithstanding any other provision of the Undertaking, the District by resolution or ordinance authorizing such amendment or waiver, may amend the Undertaking, and any provision of the Undertaking may be waived, if: (a) (i) The amendment or the waiver is made in connection with a change in circumstances that arises from a change in legal requirements, including, without limitation, pursuant to a no-action letter issued by the Commission, a change in law, or a change in the identity, nature, or status of the District, or type of business conducted; or (ii) The Undertaking, as amended, or the provision, as waived, would have complied with the requirements of the Rule at the time of the primary offering, after taking into account any amendments or interpretations of the Rule, as well as any change in circumstances; and (b) The amendment or waiver does not materially impair the interests of the beneficial owners of the Bonds, as determined by parties unaffiliated with the District (such as Bond Counsel). In the event that the Commission or the MSRB or other regulatory authority approves or requires Annual Financial Information or notices of a Reportable Event to be filed with a central post office, governmental agency or similar entity other than the MSRB or in lieu of the MSRB, the District shall, if required, make such dissemination to such central post office, governmental agency or similar entity without the necessity of amending the Undertaking. Termination of Undertaking The Undertaking shall be terminated if the District shall no longer have any legal liability for any obligation on or relating to repayment of the Bonds under the Bond Ordinance. The District shall give notice to the MSRB in a timely manner if this paragraph is applicable. Additional Information Nothing in the Undertaking shall be deemed to prevent the District from disseminating any other information, using the means of dissemination set forth in the Undertaking or any other means of communication, or including any other information in any Annual Financial Information or Audited Financial Statements or notice of occurrence of a Reportable Event, in addition to that which is required by the Undertaking. If the District chooses to include any information from any document or notice of occurrence of a Reportable Event in addition to that which is specifically required by the Undertaking, the District shall have no obligation under the Undertaking to update such information or include it in any future disclosure or notice of occurrence of a Reportable Event. Dissemination of Information; Dissemination Agent When filings are required to be made with the MSRB in accordance with the Undertaking, such filings are required to be made through its EMMA system for municipal securities disclosure or through any other electronic format or system prescribed by the MSRB for purposes of the Rule. The District may, from time to time, appoint or engage a Dissemination Agent to assist it in carrying out its obligations under the Undertaking, and may discharge any such Agent, with or without appointing a successor Dissemination Agent. 30

34 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B OPTIONAL REDEMPTION Series 2017A Bonds The Series 2017A Bonds due December 15, , inclusive, are non-callable. The Series 2017A Bonds due December 15, , inclusive, are callable in whole or in part on any date on or after December 15, 2025, at a price of par plus accrued interest to the redemption date. If less than all the Series 2017A Bonds are called, they shall be redeemed in such principal amounts and from such maturities as determined by the District and within any maturity by lot. The Bond Registrar will give notice of redemption, identifying the Series 2017A Bonds (or portions thereof) to be redeemed, by mailing a copy of the redemption notice by first class mail not less than thirty (30) days nor more than sixty (60) days prior to the date fixed for redemption to the registered owner of each Series 2017A Bond (or portion thereof) to be redeemed at the address shown on the registration books maintained by the Bond Registrar. Unless moneys sufficient to pay the redemption price of the Series 2017A Bonds to be redeemed are received by the Bond Registrar prior to the giving of such notice of redemption, such notice may, at the option of the District, state that said redemption will be conditional upon the receipt of such moneys by the Bond Registrar on or prior to the date fixed for redemption. If such moneys are not received, such notice will be of no force and effect, the District will not redeem such Series 2017A Bonds, and the Bond Registrar will give notice, in the same manner in which the notice of redemption has been given, that such moneys were not so received and that such Series 2017A Bonds will not be redeemed. Otherwise, prior to any redemption date, the District will deposit with the Bond Registrar an amount of money sufficient to pay the redemption price of all the Series 2017A Bonds or portions of Series 2017A Bonds which are to be redeemed on the date. Subject to the provisions for a conditional redemption described above, notice of redemption having been given as described above and in the Series 2017A Bond Ordinance, the Series 2017A Bonds or portions of Series 2017A Bonds so to be redeemed will, on the redemption date, become due and payable at the redemption price therein specified, and from and after such date (unless the District shall default in the payment of the redemption price) such Series 2017A Bonds or portions of Series 2017A Bonds shall cease to bear interest. Upon surrender of such Series 2017A Bonds for redemption in accordance with said notice, such Series 2017A Bonds will be paid by the Bond Registrar at the redemption price. Taxable Series 2017B Bonds The Taxable Series 2017B Bonds are not subject to optional redemption prior to maturity. LITIGATION There is no litigation of any nature now pending or threatened restraining or enjoining the issuance, sale, execution or delivery of the Bonds, or in any way contesting or affecting the validity of the Bonds or any proceedings of the District taken with respect to the issuance or sale thereof. FINAL OFFICIAL STATEMENT AUTHORIZATION This Final Official Statement has been authorized for distribution to prospective purchasers of the Bonds. All statements, information, and statistics herein are believed to be correct but are not guaranteed by the consultants or by the District, and all expressions of opinion, whether or not so stated, are intended only as such. 31

35 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B INVESTMENT RATING The Bonds has been rated AA+/Stable by S&P Global Ratings, New York, New York ( S&P ). The District has supplied certain information and material concerning the Bonds and the District to S&P as part of its application for an investment rating on the Bonds. A rating reflects only the views of the rating agency assigning such rating and an explanation of the significance of such rating may be obtained from such rating agency. Generally, such rating service bases its rating on such information and material, and also on such investigations, studies and assumptions that it may undertake independently. There is no assurance that such rating will continue for any given period of time or that it may not be lowered or withdrawn entirely by such rating service if, in its judgment, circumstances so warrant. Any such downward change in or withdrawal of such rating may have an adverse effect on the secondary market price of the Bonds. An explanation of the significance of the investment rating may be obtained from the rating agency: S&P Global Ratings, 55 Water Street, New York, New York 10041, telephone CERTAIN LEGAL MATTERS Certain legal matters incident to the authorization, issuance and sale of the Bonds are subject to the approving legal opinion of Chapman and Cutler LLP, Chicago, Illinois, as Bond Counsel (the Bond Counsel ), who has been retained by, and acts as, Bond Counsel to the District. Bond Counsel has not been retained or consulted on disclosure matters and has not undertaken to review or verify the accuracy, completeness or sufficiency of this Final Official Statement or other offering material relating to the Bonds and assumes no responsibility for the statements or information contained in or incorporated by reference in this Final Official Statement, except that in its capacity as Bond Counsel, Chapman and Cutler LLP has, at the request of the District, reviewed only those portions of this Final Official Statement involving the description of the Bonds, the security for the Bonds (excluding forecasts, projections, estimates or any other financial or economic information in connection therewith) and the description of the federal tax treatment of the interest on the Bonds. This review was undertaken solely at the request and for the benefit of the District and did not include any obligation to establish or confirm factual matters set forth herein. Series 2017A Bonds UNDERWRITING The Series 2017A Bonds were offered for sale by the District at a public, competitive sale on July 10, The best bid submitted at the sale was submitted by UBS Financial Services Inc., New York, New York (the Series 2017A Underwriter ). The District awarded the contract for sale of the Series 2017A Bonds to the Series 2017A Underwriter on July 11, 2017 at a price of $40,172, (reflecting the par amount of $40,000,000, plus a reoffering premium of $720, and less an Underwriter s discount of $547,900.50). The Series 2017A Underwriter has represented to the District that the Series 2017A Bonds have been subsequently re-offered to the public initially at the yields or prices set forth on page 2 of this Final Official Statement. Taxable Series 2017B Bonds The Taxable Series 2017B Bonds were offered for sale by the District at a public, competitive sale on July 10, The best bid submitted at the sale was submitted by Citigroup, Inc., Dallas, Texas (the Taxable Series 2017B Underwriter ). The District awarded the contract for sale of the Taxable Series 2017B Bonds to the Taxable Series 2017B Underwriter on July 11, 2017 at a price of $9,976, (reflecting the par amount of $10,000,000, plus a reoffering premium of $28, and less an Underwriter s discount of $51,687.50). The Taxable Series 2017B Underwriter has represented to the District that the Taxable Series 2017B Bonds have been subsequently re-offered to the public initially at the yields or prices set forth on page 3 of this Final Official Statement. 32

36 Forest Preserve District of Kane County, Kane County, Illinois $40,000,000 General Obligation Bonds, Series 2017A $10,000,000 Taxable General Obligation Bonds, Series 2017B MUNICIPAL ADVISOR The District has engaged Speer Financial, Inc. as municipal advisor (the Municipal Advisor ) in connection with the issuance and sale of the Bonds. The Municipal Advisor is a Registered Municipal Advisor in accordance with the rules of the MSRB. The Municipal Advisor will not participate in the underwriting of the Bonds. The financial information included in the Final Official Statement has been compiled by the Municipal Advisor. Such information does not purport to be a review, audit or certified forecast of future events and may not conform with accounting principles applicable to compilations of financial information. The Municipal Advisor is not obligated to undertake any independent verification of or to assume any responsibility for the accuracy, completeness or fairness of the information contained in this Final Official Statement, nor is the Municipal Advisor obligated by the District s continuing disclosure undertaking. CERTIFICATION We have examined this Final Official Statement dated July 11, 2017, for the $40,000,000 General Obligation Bonds, Series 2017A and the $10,000,000 Taxable General Obligation Bonds, Series 2017B, believe it to be true and correct and will provide to the purchaser of the Bonds at the time of delivery a certificate confirming to the purchaser that to the best of our knowledge and belief information in the Official Statement was at the time of acceptance of the bid for the Bonds and, including any addenda thereto, was at the time of delivery of the Bonds true and correct in all material respects and does not include any untrue statement of a material fact, nor does it omit the statement of any material fact required to be stated therein, or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. /s/ MICHAEL KENYON /s/ KENNETH STANISH President, Board of Commissioners Director of Finance FOREST PRESERVE DISTRICT OF FOREST PRESERVE DISTRICT OF KANE COUNTY KANE COUNTY Kane County, Illinois Kane County, Illinois 33

37 APPENDIX A THE FOREST PRESERVE DISTRICT OF KANE COUNTY, KANE COUNTY, ILLINOIS FISCAL YEAR 2016 AUDITED FINANCIAL STATEMENTS

38 FOREST PRESERVE DISTRICT OF KANE COUNTY, ILLINOIS COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2016 Prepared by: Ken Stanish, Finance Director David Petschke, Accounting Manager

39 TABLE OF CONTENTS PAGE INTRODUCTORY SECTION List of Principal Officials... i Organization Chart... ii Transmittal Letter...iii - viii Certificate of Achievement for Excellence in Financial Reporting... ix FINANCIAL SECTION INDEPENDENT AUDITORS' REPORT MANAGEMENT S DISCUSSION AND ANALYSIS... MD&A 1-11 BASIC FINANCIAL STATEMENTS Government-Wide Financial Statements Statement of Net Position Statement of Activities Fund Financial Statements Balance Sheet Governmental Funds Reconciliation of Total Governmental Fund Balance to Net Position Governmental Activities... 9 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities Governmental Activities...12 Statement of Net Position Proprietary Fund...13 Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Fund...14 Statement of Cash Flows Proprietary Fund...15 Notes to the Financial Statements REQUIRED SUPPLEMENTARY INFORMATION Schedule of Funding Progress and Employer Contributions Other Post-Employment Benefits Plan...49 Schedule of Employer Contributions Illinois Municipal Retirement Fund...50 Schedule of Changes in the Employer s Net Pension Liability Illinois Municipal Retirement Fund...51 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual General Fund...52 FOREST PRESERVE DISTRICT OF KANE COUNTY, ILLINOIS TABLE OF CONTENTS PAGE FINANCIAL SECTION Continued COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES Schedule of Revenues Budget and Actual General Fund Schedule of Expenditures Budget and Actual General Fund Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual Debt Service Fund...56 Construction and Development Capital Projects Fund...57 Land Acquisition Capital Projects Fund...58 Combining Balance Sheet Nonmajor Governmental Funds...59 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds...60 Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Illinois Municipal Retirement Special Revenue Fund...61 Insurance Liability Special Revenue Fund...62 Social Security Special Revenue Fund...63 Schedule of Revenues, Expenses and Changes in Net Position Budget and Actual Cultural and Events Center Enterprise Fund...64 SUPPLEMENTAL SCHEDULES Long-Term Debt Requirements General Obligation Bonds of Taxable General Obligation (Alternate Revenue Source) Bonds of General Obligation Bonds of 2011A...67 General Obligation Limited Tax Refunding Bonds of 2011B...68 General Obligation Refunding Bonds of General Obligation Limited Tax Refunding Bonds of 20015A...70 General Obligation Refunding Bonds of 2015B...71 General Obligation Limited Tax Refunding Bonds of 20016A...72 Taxable General Obligation (Alternate Revenue Source) Bonds of 2016B...73

40 TABLE OF CONTENTS PAGE STATISTICAL SECTION (Unaudited) Net Position by Component Last Ten Fiscal Years Changes in Net Position Last Ten Fiscal Years Fund Balances of Governmental Funds Last Ten Fiscal Years Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years Assessed Value and Actual Value of Taxable Property Last Ten Fiscal Years Direct and Overlapping Property Tax Rates Last Eight Tax Levy Years Principal Property Tax Payers Current Tax Levy Year and Nine Tax Levy Years Ago...86 Property Tax Levies and Collections Last Ten Fiscal Years...87 Ratios of Outstanding Debt by Type Last Ten Fiscal Years...88 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years...89 Schedule of Direct and Overlapping Governmental Activities Debt...90 Schedule of Legal Debt Margin Last Ten Fiscal Years Demographic and Economic Statistics Last Ten Fiscal Years...93 Principal Employers Current Tax Levy Year and Nine Tax Levy Years Ago...94 Full-Time Equivalent Government Employees by Function Last Nine Fiscal Years...95 Operating Indicators by Function/Program Last Nine Fiscal Years Capital Asset Statistics by Function/Program Last Nine Fiscal Years INTRODUCTORY SECTION This section includes the District s: List of Principal Officials Organization Chart Transmittal Letter Certificate of Achievement for Excellence in Financial Reporting

41 List of Principal Officials PRESIDENT Michael Kenyon, District 16 PRESIDENT PRO TEM AND TREASURER Mark Davoust, District 14 SECRETARY Philip Lewis, District 13 FOREST PRESERVE COMMISSION Chris Lauzen, County Board Chair John Martin, District 11 Myrna Molina, District 1 John J. Hoscheit, District 12 Theresa Barreiro, District 2 Barbara Wojnicki, District 15 Don Ishmael, District 3 Deborah Allen, District 17 Brian Pollack, District 4 Drew Frasz, District 18 Bill Lenert, District 5 Kurt Kojzarek, District 19 Brian Dahl, District 6 Cristina Castro, District 20 Monica Silva, District 7 Rebecca Gillam, District 21 Maria Vazquez, District 8 Douglas Scheflow, District 22 Thomas (T.R.) Smith, District 9 Maggie Auger, District 23 Susan Starrett, District 10 Joseph Haimann, District 24 EXECUTIVE DIRECTOR Monica A. Meyers FINANCE DIRECTOR Ken Stanish i

42 1996 S. Kirk Road, Suite 320, Geneva, Illinois October 12, 2016 To: President Kenyon Commissioners Citizens of the Forest Preserve District of Kane County The Comprehensive Annual Financial Report (CAFR) of the Forest Preserve District of Kane County for the fiscal year ended, is hereby submitted as mandated by state statutes. This report provides a broad view of the District s financial activities for the 2016 fiscal year and its financial position as of. Although addressed to the elected officials and residents of the District, this report also has a number of other audiences including: bondholders of the District, financial institutions, credit rating agencies, and other governmental entities. Management assumes full responsibility for the completeness and reliability of the information contained in this report, based upon a comprehensive framework of internal controls established for this purpose. Since the cost of internal controls should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatements. We believe that the information is presented in a manner designed to fairly set forth the financial position of the District and the changes in financial position, and that all disclosures necessary to enable the reader to gain the maximum understanding of the District s financial affairs are included. The Management s Discussion and Analysis complement this letter and should be read in conjunction with it. PROFILE OF THE FOREST PRESERVE DISTRICT The Forest Preserve District of Kane County was formed in 1925 by public referendum with the mission to acquire, hold and maintain lands within Kane County that contribute to the preservation of natural or historic resources and habitats, flora or fauna; and to restore, restock, protect and preserve such lands for the education, recreation, and pleasure of all its citizens. Kane County is located within northeastern Illinois, approximately 40 miles west of Chicago and is considered one of the collar counties. The District s existing forest preserves, facilities and natural areas have taken many years to acquire and develop, and are a large part of Kane County s culture. The forest preserve system continues to contribute to the overall livability and quality of life valued by Kane County s residents, workers and visitors. Open space protects land from development, improves wildlife habitat, cleans our air and water, and provides healthy recreational opportunities. The residents of Kane County have long been supporters of the Forest Preserve District s mission and have supported open space land acquisition and preserve improvement referenda in 1999, 2005, 2007 and With the public s support, the District s goals have been to: Add acreage to existing forest preserve natural areas; Acquire land for new forest preserves; Increase flood control and water protection; Preserve and restore woodlands, wetlands and prairies; Provide locations for residents to escape urban stresses and balance development; Improve the District s renowned trail system; And, expand recreation and environmental education. Currently, the District manages 20,709 acres of public open space and includes 98 properties. District holdings are spread throughout Kane County and consist of a diverse portfolio of properties including woodlands, prairies and wetlands; property along the Fox River, which runs the length of the County; greenbelts along creeks and waterways; and, environmentally significant properties in critical growth areas. Additionally, the District owns a variety of unique facilities; Fifth Third Bank Ballpark, home of the Kane County Cougars; the Fox Valley Ice Arena, home of the Chicago Steel; Strikers Indoor Soccer Facility; three golf courses; Barbara Belding Lodge at Brewster Creek; Big Rock campground and Paul Wolff campground; Camp Tomo Chi Chi Knolls youth-specific campground and the Creek Bend Nature Center. The District is governed by the Forest Preserve Commission. Those elected to the Kane County Board also serve as members of the Forest Preserve Commission. Kane County is comprised of 24 Board districts. One commissioner is elected from each district for a four-year term. Half of the Board is elected every two years. The president of the Forest Preserve Commission is elected by fellow Commission members, every two years. With the Forest Preserve Commission s approval, the president appoints commissioners to serve on the following committees: Executive, Finance & Administration, Land Acquisition, and Planning & Utilization. The Commission and the Executive Committee handle the District business of preparing policies and acquiring open space for the citizens of Kane County. The Forest Preserve District employs 73 full-time, 27 year-round, part-time and 63 summer seasonal/intern staff. This report includes all of the funds of the District. The District does not have any component units but is considered a component unit of Kane County. The District participates in the Illinois Municipal Retirement Fund (IMRF) and the Park District Risk Management Agency (PDRMA). These organizations are separate governmental units because: (1) they are legally separate, organized entities, (2) are fiscally independent of the Forest Preserve District of Kane County, and (3) are governed iv iii

43 by their own boards. Audited financial statements for these organizations are not included in this report. However, such statements are available upon request from their respective business offices. Local Economy Kane County is part of the Chicago metropolitan area and lies on the western edge of the northeastern Illinois region and is the fifth largest county in Illinois. The county is approximately 522 square miles in area. The County s estimated population of 530,847 represents an increase of 2.8% since the 2010 Census of 516,269. The equalized assessed value of the county steadily declined since the Great Recession of In 2008, the EAV reached a peak of $15.9 billion and then declined to a low of $11.6 billion in tax year In tax year 2015, the EAV rose to $12.2 billion. During this difficult time, the Commission decided to freeze the operating levies. Even with these challenges, the District has maintained a strong financial position by remaining fiscally conservative. The District is extremely proud of maintaining its AA+ rating from Standard & Poor s Rating Committee. Several economic indicators contribute to the financial strength of Kane County. The leading 10 taxpayers account for a very diverse 2.0% of equalized assessed value (EAV). The fair market value of the tax base is an estimated $35 billion, or what is considered to be a very strong $65,757 per capita. According to the Illinois Department of Employment Security, Kane County s June 2016 unemployment rate was 5.2%, below the state s 6.0% rate. Incomes for County residents are considered strong, as represented by the County s median household income of 126% of the state level and 134% of the national level. This is due in part to County residents having access to a wide variety of jobs both locally and throughout the western suburbs. While the District is below its tax rate limit for the both the General Fund (the District s major operating fund) and the Construction & Development Fund, the 1991 imposition of the Property Tax Limitation Act (Tax Cap) legislation in Illinois continues to limit levy growth. Under current legislation, the growth in total property tax extension for nonhome rule governments in the five collar counties (Kane, Lake, McHenry, DuPage and Will Counties) and other affected counties will be limited to the lesser of 5% or the Consumer Price Index published by the U.S. Bureau of Labor Statistics of the preceding calendar year. Major Initiatives The Forest Preserve District enjoyed a busy and successful year in 2016, with many significant projects taking shape and being completed. Among the projects of which the District is most proud are the following: Debt Refinancing The District saved $2.83 million on a net present value basis in interest expense by conducting 4 separate bond refinancings during the course of the fiscal year. The District was able to accomplish this due to a low interest rate environment and a strong credit rating. Land Acquisitions The District acquired three strategic parcels that totaled acres during the fiscal year: o Volkening acres o Travis acres o Raceway Woods Dundee Township 50 acres Grant Awards The District was awarded 2 grants, totaling $9,540. Grant revenue earned in the fiscal year was $233,426, with the majority of this coming from an RTP Grant for Freeman Kame Horse & Hike Trail and an IDNR Grant for the causeway removal at the Fabyan Forest Preserve, which were awarded in the prior year. Future Initiatives With a focus on continued growth across the county, the Forest Preserve District of Kane County is poised to accomplish the following significant projects within the near year: Natural Resource Facility The District is in the process of finalizing plans for a new Natural Resource facility. This will provide the Natural Resource staff with a modernized facility that will have room for future growth. Settler s Hill Golf Course Improvements A new driving range and practice green will be added to the layout. Fabyan Causeway Removal Project The existing causeway that is on the north end of the Fabyan Island, and is no longer functioning properly, will be removed. This will improve the water quality on the western side of the island due to increasing the flow of water. Funding for this project will come from the Illinois Department of Natural Resources. (The project is currently on hold due to the state s budget challenges.) Carpentersville Dam Removal Project Removal of this dam will improve the river corridor by providing better habitat for the plants and animals that live in and around the dam. The District has signed a contract with the Illinois Department of Natural Resources to fund the removal. (The project is currently on hold due to the state s budget challenges.) Raymond Street Bike Trail The bridge that allowed pedestrians to go beneath the existing railroad tracks was damaged repeatedly due to flooding and permanently removed. Staff is currently working on various designs that would move the trail away from the water while still providing safe passage past the railroad tracks. The District has received a CMAP-TAP grant for $1,774,896 (80% of the cost of the project). vi v

44 Freeman Kame Forest Preserve Improvements The District received a grant (IDNR RTP Grant) to install a shelter, restroom, parking lot and.66 mile of trail in the southern section of the preserve. The new trail will connect to the existing 3.5 miles of trails to the north and the Tomo Chi Chi Knolls Campground and Lodge. The project is scheduled for completion in the summer of 2017 with a formal opening in early fall Financial Management Policies The District s financial policies seek to improve the preserves, programs and services provided within the County as well as enhance the financial capability of the Forest Preserve. In 2015, the District performed a comprehensive review of all policies (including financial management policies). The District begins its budget process in December. Directors from each department work with their respective staff to submit a departmental budget that is then compiled into one document that accounts for all funds. Numerous meetings are held to determine the priority of items presented and the balanced budget is then presented to the finance committee. Once approved it is then forwarded to the executive committee and to full commission for final approval prior to the start of the fiscal year. Other Information Independent Audit State statutes require an annual audit by independent, licensed, certified public accountants. The Forest Preserve District has engaged the accounting firm of Lauterbach & Amen, LLP to perform the audit for the fiscal year ending June 30, Their unmodified opinion on the basic financial statements is included in this report. Awards The Government Finance Officers Association (GFOA) of the United States and Canada awarded the Certificate of Achievement for Excellence in Financial Reporting to the Forest Preserve for the year ending June 30, The award is based on the ability of a governmental unit to present an easily readable and efficiently organized financial report. The contents must conform to the standards specified by the Certificate of Achievement program, as well as, satisfy all legal requirements and generally accepted accounting principles. The certificate is valid for one year. The District believes the current report conforms to the requirements, and is submitting it to the Government Finance Officers Association to determine eligibility. This is the fourth consecutive year the District has received this award. vii

45 FINANCIAL SECTION This section includes: Independent Auditors Report Management s Discussion and Analysis Basic Financial Statements Required Supplementary Information Combining and Individual Fund Statements and Schedules

46 INDEPENDENT AUDITORS REPORT

47 Forest Preserve District of Kane County, Illinois October 12, 2016 Page 2 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis as listed in the table of contents and budgetary information reported in the required supplementary information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Forest Preserve District of Kane County, Illinois, basic financial statements. The introductory section, combining and individual fund financial statements and budgetary comparison schedules, supplemental schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the financial statements. The combining and individual fund financial statements and budgetary comparison schedules and supplemental schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and budgetary comparison schedules and supplemental schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. LAUTERBACH & AMEN, LLP MANAGEMENT S DISCUSSION AND ANALYSIS 2

48 FOREST PRESERVE DISTRICT OF KANE COUNTY MANAGEMENT S DISCUSSION AND ANALYSIS FOR THE YEAR ENDED JUNE 30, 2016 As the management of the Forest Preserve District of Kane County (the District), we offer readers of the District s financial statements this narrative overview and analysis of the financial activities for the fiscal year ended. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which may be found on pages iii through viii of this report. USING THE FINANCIAL SECTION OF THIS COMPREHENSIVE ANNUAL REPORT In the past, the primary focus of local government financial statements has been to summarize fund type information on a current financial resource basis. Since 2003, this approach has been modified and the District s financial statements now present two kinds of statements, each with a different snapshot of the District s finances. The focus of the financial statements is on both the District as a whole (government-wide), and on the major individual funds. Both perspectives (government-wide and major fund) allow the user to address relevant questions, broaden a basis for comparison (year-toyear or government-to-government) and enhance the District s accountability. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the District s finances, in a manner similar to private-sector business. The government-wide financial statements include the Statement of Net Position and the Statement of Activities. The Statement of Net Position presents information on all of the District s assets/deferred outflows of resources and liabilities/deferred inflows of resources. Net position is being reported as the amount of assets/deferred outflows less liabilities/deferred inflows. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the District is improving or deteriorating. The Statement of Activities presents information showing how the District s net position changed during the 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 the cash flows. Thus, revenues and expenses are reported in this statement for some items that will result only in cash flows in future fiscal periods (for example, earned but unused vacation leave). The change in net position presents the financial burden that was placed on the District s taxpayers by each of these functions. Providing this information allows the public to consider the cost of each function in comparison to the benefits they believe are provided by that function. Both government-wide financial statements distinguish functions of the District 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 District include general government and capital projects. The business-type activities include the Fifth Third Bank Ballpark. The government-wide financial statements can be found on pages 3 6 of this report. MD&A 1 Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The District, 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 District can be divided into two categories: governmental funds and proprietary 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 statements focus on near-term inflows and outflows of spendable resources, as well as, balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government s near-term financing requirements. The focus of governmental funds is narrower than that of the government-wide financial statements. Therefore, 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 government s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities as shown respectively on pages The District maintains seven individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General, Debt Service, Construction & Development, and Land Acquisition funds. All of these are considered to be major funds. Data from the other three governmental funds are combined into a single, aggregate presentation. Individual fund data for each of the non-major governmental funds is provided in the combining statements on pages in this report. The District adopts an annual budget for all governmental funds. Budgetary comparison schedules have been provided to demonstrate compliance with the budget shown on pages 52 58, and The basic governmental fund financial statements can be found on pages 7 8 and of this report. Proprietary Funds. The District maintains one type of proprietary fund called an enterprise fund. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The District uses an enterprise fund to account for the Fifth Third Bank Ballpark. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. Proprietary fund financial statements provide separate information for the ballpark, which is considered to be a major fund of the District. The basic proprietary fund financial statements can be found on pages of this report. MD&A 2

49 Notes to the Financial Statements The notes provide additional information that is essential to understanding the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 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 District s progress in funding its obligation to provide benefits for its employees and a budgetary comparison schedule for the General Fund. Required supplementary information can be found on pages of this report. The combining and individual fund statements, referred to earlier in connection with Governmental Funds, are presented immediately following the required supplementary information. Combining and individual fund statements and schedules can be found on pages of this report. Financial Analysis of the District as a Whole Beyond presenting current-year financial information in the government-wide and major individual fund formats, the District also presents comparative information from prior years in the Management s Discussion and Analysis. By doing this, the District strives to provide the best means of analyzing its financial condition and position as of. MD&A 3 GOVERNMENT-WIDE STATEMENTS Statement of Net Position Net position may serve over time as a useful indicator of a government s financial position. The following table presents a condensed summary of net position as of, along with 2015 data for comparison: Assets: Current and other assets Capital assets Table 1 Statement of Net Position As of, and 2015 (in thousands) Governmental Business-type Total Activities Activities Activities $ 60,987 $ 61,329 $ 3,712 $ 3,576 $ 64,699 $ 64, , ,512 13,231 13, , ,347 Total assets 471, ,841 16,943 17, , ,252 Deferred Outflows: 1, , Liabilities: Current liabilities 24,393 23, ,895 23,863 Non-current liabilities: 131, ,424 5,740 5, , ,258 Total liabilities 155, ,913 6,242 6, , ,120 Deferred Inflows: 37,160 38, ,160 38,773 Net Position: Net investment in capital assets 258, ,280 7,011 7, , ,937 7,372 7, ,372 7,111 Restricted Unrestricted (deficit) 14,654 10,425 3,983 3,547 18,637 13,972 Total Net Position $ 280,693 $ 255,816 $ 10,994 $ 11,204 $ 291,687 $ 267,019 The District s assets/ deferred outflows of resources exceeded its liabilities/deferred inflows of resources by $292 million at. By far, the largest portion of the District s net position 91.1% or $265.7 million is in its net investment in capital assets (for example, land, buildings, machinery and equipment) less any related outstanding debt used to acquire those capital assets. The District uses these assets to provide services to citizens; consequently, these assets are not available for future spending. Although the District s investment in its capital assets is reported net of related debt, the resources needed to repay this debt must be from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional 2.5% or $7.4 million of the District s net position represents resources that are subject to external restrictions that govern their use. The remaining 6.4% or $18.6 million represents unrestricted net position that may be used to meet the District s ongoing obligations to citizens and creditors. MD&A 4

50 The deferred outflows of $2.2 million shown on the Statement of Net Position are due to $1.3 million of deferred items due to the GASB Statement No. 68 which has been implemented in fiscal year 2015 for reporting the Illinois Municipal Retirement Fund. The Statements establish standards for measuring and recognizing liabilities, deferred outflows of resources, deferred inflows of resources, and expense/expenditures related to the pension plans. The Statement specifically identifies the methods and assumptions that are to be used in calculating and disclosing these pension-related accounts in the financial statements, see p. 45 in the notes for additional note disclosures. The increase in Net Position from the prior year, illustrated above, was mainly due to the District s reduction in general obligation bonds within the fiscal year. The principal payments on general obligation debt were $22.8 million, which was a 13.2% decrease to long-term debt. An additional reason for the increase in net position was due to the Districts revenue s exceeding expenses due to District staff being fiscally conservative. For more detailed information, see the Statement of Revenues, Expenditures, and Changes in Fund Balance on pages Changes in Net Position The following table presents a condensed summary of changes in net position as of, along with 2015 data for comparison: Revenues Program Revenues: Table 2 Changes in Net Position For the Fiscal Year Ended and 2015 (in thousands) Governmental Business-type Activities Activities Total Activities Charges for Services 2,593 2, ,386 3,302 Capital Grants and Contributions 233 1, ,094 Taxes 36,055 35, ,055 35,577 Investment Income Miscellaneous 745 1, ,396 Total Revenue 39,771 40, ,655 40,761 42,497 Expenses Program Expenses: General Government 8,754 8, ,754 8,620 Land Acquisition & Development Interest and Fiscal Charges Cultural & Events Center 1,359 2, ,359 2,124 4,780 5, ,780 5, ,200 1,064 1,200 1,064 Total Expenses 14,893 16,444 1,200 1,064 16,093 17,508 Transfers Change in Net Position $ 24,878 $ 24,397 $ (210) $ 591 $ 24,668 $ 24,989 Beginning Net Position $ 255,815 $ 231,418 $ 11,204 $ 10,613 $ 267,019 $ 242,031 Ending Net Position $ 280,693 $ 255,815 $ 10,994 $ 11,204 $ 291,687 $ 267,019 MD&A 5 The overall net position increased by 9.2% in 2016 to $291.7 million, as compared to the previous year s net position of $267.0 million. The increase in net position was primarily due to decreased expenses in the interest and fiscal charges and land acquisitions by the District during the fiscal year combined with increased property tax taxes that reflects the levy of debt service payments. Total revenue in 2016 decreased 4.1% to $40.8 million, as compared to the previous year s revenue of $42.5 million. The decrease was due mainly to fewer grants received in the fiscal year. Further descriptions are detailed below: Charges for services and user fees increased 2.5% during the year, which was due in part to the timing of payments from the baseball operations in the business-type fund and due to increased fees for farm rentals in the General Fund. Property and replacement tax revenue increased 1.3% in 2016, which is primarily due to the property taxes received from the tax levy which is required to pay debt service payments during the fiscal year. The operating property tax levy was frozen during the fiscal year, but the majority increase noted was due to Referenda debt approved by the citizens of Kane County. Capital grants and contributions decreased by 78.7%. The District was successful in obtaining several capital grants during the previous fiscal year from both the State and Federal government. Due to the current economic factors affecting the State and fewer opportunities for grant supported acquisitions, this revenue has decreased in the current fiscal year. Governmental Activities Revenue from Governmental Activities decreased 2.6% or from $40.8 million in fiscal year 2015 to $39.8 million for fiscal year The decrease primarily resulted from a decrease in capital grants and contribution received during the year. In addition, the property tax operating levy was frozen in the current fiscal year. The increased amount of property taxes reflects the levy of debt service payments. Property tax revenues represent the largest portion of the revenue base, yielding 93% of the total revenue. Property taxes fund Governmental Activities including, but not limited to, the District s contribution to the General Fund, Illinois Municipal Retirement Fund (IMRF), Social Security Fund, Insurance Liability Fund, Construction & Development Fund and Debt Service Fund. Charges for services accounted for 6.5% of total revenues. The District does not receive all of its funding through property tax revenue. Therefore, it also must charge a fee for programs and services, as well as the use of its farm land in order to cover costs. These fees are evaluated each year, before the preparation of the following fiscal year s budget. The cost of all governmental activities this year was $14.9 million. General government expenses accounted for 58.8% of total expenses or $8.8 million. These expenses included administrative services needed to support all District operations. Also included in total expenses for governmental activities in 2016 is $1.2 million in depreciation expense. Interest and fiscal charges accounted for 32.1% of total expenses or $4.8 million. These costs were related to the current interest payments of outstanding debt. Land acquisition and development expenses captured 9.1% of the total expenses or $1.4 million; this includes costs associated with adding new properties and opening new facilities. MD&A 6

51 The following graph illustrates the major sources of revenue for governmental activities for fiscal year The following graph identifies the significant percentage of user fees received by the District: The Expense and Program Revenue chart reveals governmental functions where program expenses greatly exceed revenues. As presented above, the General Government expenses are in part funded by charges for services, however the costs are primarily funded through property tax revenue. Revenue shown in the chart for land acquisition and development includes a riverboat grant from Kane County in the amount of $250,000. The land acquisition and development fund also received revenue from two grants in the amount of $223,886 to assist with construction and development in the current fiscal year. MD&A 7 Business-type Activities Total revenues of the District s business-type activities decreased 40.2% or $1.66 million to $.99 million in This decrease was primarily due to a capital contribution from the Kane County Cougars for improvements installed at the Fifth Third Ballpark in fiscal year This was a onetime contribution for improvements to the ball park. Charges for services increased by 7.9% in the fiscal year due to the timing and amount of payments for baseball activities. Charges for services primarily reflect the payments received for baseball activities. Total expenses increased 12.8% from $1.1 million to $1.2 million in The increase in expenses was partially contributed by the costs of issuance of refunding the 2008 general obligation alternate revenue source bonds in FINANCIAL ANALYSIS OF THE GOVERNMENT S FUNDS As noted earlier, the Forest Preserve District of Kane County uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds The focus on the District s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. In particular, an unrestricted/unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of a fiscal year. At the end of the 2016 fiscal year, governmental funds reported a combined ending fund balance of $23.6 million, increasing approximately.7% or $153,538 from fiscal year The majority of increased fund balance was from the Construction and Development Fund which are detailed below. The fund balance in the Debt Service Fund increased 9.5% or $394,959 from fiscal year The Debt Service Fund is used to pay the bond principal payments and interest. The fund balance increased during the year due to the timing of property tax collections compared to the payments of bond principal and interest. The Land Acquisition Fund decreased 26.5% or $813,579 due to land acquisitions during the fiscal year. The District acquired 3 different properties totaling Acres. The properties acquired were the Raceway Woods Dundee Township property which was 50 Acres, the Volkening property which was Acres, and the Travis Property which was Acres. The fund balance in the General Fund decreased 18.4% or $1.34 million from fiscal year More information on the General fund highlights are found on MD&A page 9. MD&A 8