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CITY OF LITTLE CANADA, MINNESOTA NOTES TO BASIC FINANCIAL STATEMENTS DECEMBER 31, 2015 (40) NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) E. Fund Financial Statement Presentation (Continued) Proprietary fund financial statements are reported using the economic resources measurement focus and accrual basis of accounting, similar to the government-wide financial statements. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise funds are charges to customers for sales and services. The operating expenses for the enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Fiduciary fund financial statements use the accrual basis of accounting. Agency funds, the City’s only fiduciary type, are custodial in nature (assets equal liabilities) and do not have a measurement focus. Description of Funds The City reports the following major governmental funds: General Fund – This is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Canabury Square Condominiums HIA Debt Service Fund – This fund is used to account for the debt service associated with housing improvement area project costs for the Canabury Square condominiums. General Capital Improvements Capital Project Fund – This fund is used to account for major capital improvement/acquisition projects. Rice/LC Road Development Capital Project Fund – This fund is used to account for project costs and the related financing for the Rice Street/Little Canada Road redevelopment project. Water/Sewer Equipment Replacement Capital Project Fund – This fund is used to account for funds set aside from the City’s water and sewer operating utilities as well as other government sources of revenue to be used for future equipment replacement and capital costs. Infrastructure CIP Capital Project Fund – This fund is used to account for accumulating reserve balances as bond issues are fully redeemed. TIF #5-1 St. Jude Capital Project Fund – This fund is used to account for project costs associated with St. Jude expansion and other redevelopment along Rice Street and Highway 36 funded by tax increment financing.