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CITY OF LINO LAKES, MINNESOTA <br />NOTES TO FINANCIAL STATEMENTS <br />December 31, 2017 <br /> <br /> <br /> <br /> <br />emphasis of governmental and proprietary fund financial statements is on major individual <br />governmental and enterprise funds, with each displayed as separate columns in the fund financial <br />statements. All remaining governmental and enterprise funds are aggregated and reported as nonmajor <br />funds. <br /> <br />Proprietary fund operating revenues, such as charges for services, result from exchange transactions <br />associated with the principal activity of the fund. Exchange transactions are those in which each party <br />receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and <br />investment earnings, result from nonexchange transactions or incidental activities. <br /> <br />The City reports the following major governmental funds: <br /> <br />General Fund is the City’s primary operating fund. It accounts for all financial resources of the <br />general government, except those required to be accounted for in another fund. <br /> <br />General Obligation Improvement Bonds of 2005A Fund accounts for the accumulation of resources <br />for, and the payment of, interest, principal and related costs on general long-term debt. The fund <br />was closed in 2017. <br /> <br />General Obligation Improvement Note of 2009A Fund accounts for the accumulation of resources <br />for, and the payment of, interest, principal and related costs on general long-term debt. The note <br />was used to finance improvement projects at the I-35E and County Road 14 interchange. <br /> <br />General Obligation Improvement Bonds of 2016B Fund accounts for the accumulation of resources <br />for, and the payment of, interest, principal and related costs on general long-term debt. <br /> <br />Area and Unit Charge Fund accounts for the collection of water and sewer unit charges to be used <br />for debt payments and construction of governmental infrastructure. <br /> <br />The City reports the following major proprietary funds: <br /> <br />The Water Fund accounts for customer water service charges which are used to finance water <br />system operating expenses. <br /> <br />The Sewer Fund accounts for customer sewer service charges which are used to finance sanitary <br />sewer system operating expenses. <br /> <br />Additionally, the City reports the following fund type: <br /> <br />Agency funds account for assets held as an agent for individuals, private organizations and other <br />governmental units. The City’s agency fund accounts for pass-through contractor’s deposits <br />relating to prospective developments. <br /> <br /> <br />C. MEASUREMENT FOCUS AND BASIS OF ACCOUNTING <br /> <br />The government-wide financial statements are reported using the economic resources measurement <br />focus and the accrual basis of accounting, as are the proprietary fund financial statements. Revenues <br />are recorded when earned and expenses are recorded when a liability is incurred, regardless of the <br />timing of related cash flows. Property taxes are recognized as revenues in the year for which they are <br />levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements <br />46