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CITY OF ORONO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />DECEMBER 31, 2015 <br /> <br /> <br />(28) <br /> <br />NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES <br />A. Organization <br />The City of Orono, Minnesota (the City) operates under the "Optional Plan A" form of <br />government as defined in Minnesota Statutes. Under this plan, the City Council, <br />composed of an elected mayor and four elected trustees or council members, exercises <br />legislative authority and determines all matters of policy. The City Administrator, <br />appointed by the City Council, is responsible for the proper administering of all affairs <br />relating to the City. <br /> <br />The financial statements and the accounting policies of the City conform to accounting <br />principles generally accepted in the United States of America as applicable to <br />governmental units. <br /> <br />B. Reporting Entity <br />As required by accounting principles generally accepted in the United States of America, <br />these financial statements include the City (the primary government) and its component <br />unit. A component unit is a legally separate entity for which the primary government is <br />financially accountable, or for which the exclusion of the component unit would render <br />the financial statements of the primary government misleading. The criteria used to <br />determine if the primary government is financially accountable for a component unit <br />includes whether or not the primary government appoints the voting majority of the <br />potential component unit's board, is able to impose its will on the potential component <br />unit, is in a relationship of financial benefit or burden with the potential component unit, <br />or is fiscally depended upon by the potential component unit. <br /> <br />The Orono Housing and Redevelopment Authority (Orono HRA) is a legally separate <br />organization created in accordance with Minnesota Statute § 469.003. Its purpose is to <br />clear and redevelop blighted areas within the City and to provide adequate housing for <br />low and moderate income residents. The Orono HRA is fiscally dependent upon the City, <br />and its governing board consists of the City's mayor and council members. Therefore, <br />the Orono HRA has been reported as a blended component unit of the City, with its <br />funds reported as though they are funds of the City. The financial activity at this time is <br />limited to debt payments within the Orono HRA debt service funds, namely the public <br />facilities and project revenue bonds. <br /> <br />There are no other organizations that, when considered, would be included in the <br />financial statements as a component unit.