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CITY OF ARDEN HILLS, MINNESOTA NOTES TO THE FINANCIAL STATEMENTS DECEMBER 31 Note I: :":::~"~:'::;""CANTACCOUNTING "ouer R A V T The CIty of Arden Hills, Mmnesota (the CIty), operates 4d otiai~J~overnment a .defmed in the State of Minnesota statutes, Under this plan, the g:t:::.nt of the City is directed by a Council cO'1'osed of an elected Mayor and four elected Counell members_ Th ).."p.:Y-P.r<-!~~"'~~-hvp,.,:mthArity~nA....riPtp.;r;rnlnes all matters of policy, The Council appoints persounel responsible for the proper administration of all affairs relating to the City, The City has considered all potential units for which it is fmancially accountable, and other organizations for which the nature and signilicance of their relationship with the City are such that exclusion would cause the City's financial statements to be misleading or incomplete, The Governmental Accounting Standards Board (GASB) has set forth criteria to be considered in determining !inancial accountability, These criteria include appointing a voting majority of an organization's governing body, and (I) the ability of the primary government to impose its will on that organization or (2) the potential for the organization to provide specific benefits to, or impose specific fInancial burdens on the primary governn1cnt. . Blended component units, although legally separate entities, are, in substance, part of the City's operations and so data from these units are combined with data of the City, The blended component unit bas a December 31 year end, The City bas the following component unit. Blended Component Unit The Economic Development Authority (EDA) of the City was created pursuant to Minnesota statutes 469,090 through 469,108 to carry out economic and industrial development and redevelopment consistent with policies established by the Council, It is comprised of the members of the City Council, The EDA activities are blended and reported in a separate special revenue fund. Separate fmancial statements are not issued for this component unit. . B. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of changes in net assets) report infonnation on all of the nonfiduciary activities of the City :md its component unit. For the most part, the effect of interfimd activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likemse, the primary government is reported separately from certain legally separate component units for whicb the City is fmancially accountable, The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. . -23-