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CITY OF ST. ANTHONY, MINNESOTA NOTES TO FINANCIAL STATEMENTS December 31, 2008 Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of St. Anthony, Minnesota (the City) operates pursuant to applicable Minnesota laws and statutes under the council-manager plan (Statutory Plan B) as defined by State statutes. The government of the City is directed by a Council composed of an elected mayor and four other elected members. The Council exercises legislative authority and determines matters of policy. The Council appoints the City Manager who is responsible for the administration of all affairs relating to the City. The financial statements of the City of St. Anthony have been prepared in conformity with generally accepted accounting principles as applied to governmental units by the Governmental Accounting Standards Board (GASB). The following is a summary of the significant accounting policies. A. FINANCIAL REPORTING ENTITY As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City (the primary government) and its component units. The component unit discussed below is included in the City's reporting entity because of the significance of their operational or financial relationships with the City. COMPONENT UNITS In conformity with generally accepted accounting principles, the financial statements of the component unit have been included in the financial reporting entity as a blended component unit. The Housing and Redevelopment Authority (HRA) is an entity legally separate from the City. However, for financial reporting purposes, the HRA is reported as if it were part of the City's operations because the members of the City Council serve as HRA board members and its activity is confined to the City. The City established the HRA under State statutes to assist and support housing and redevelopment projects undertaken within the City which are under the statutory authority of the HRA. The City reviews and approves tax levies and other financial matters related to the HRA. The City provides major financing of HRA activities and debt issued in connection with HRA projects are general obligations of the City. The activity of the HRA is reported in the HRA Debt Service Fund, the HRA Projects Fund and the HRA Special Revenue Fund. Separate financial statements are not prepared for the HRA. 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 information on all activities of the primary government and its component units. For the most part, the effect of interfund 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. 41 t.