HomeMy WebLinkAboutBond Bank Financial Statement Audit 2020
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
December 31, 2020 and 2019
THE CITY OF CARMEL LOCAL PUBLIC
IMPROVEMENT BOND BANK
CONTENTS
Page
INDEPENDENT AUDITORS' REPORT 1-2
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 3-7
FINANCIAL STATEMENTS
Statements of Net Position 8
Statements of Revenues, Expenses and Changes in Net Position 9
Statements of Cash Flows 10
Notes to Financial Statements 11-18
OTHER INFORMATION
Independent Auditors’ Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial Statements
Performed in Accordance with Government Auditing Standards 19-20
1
Independent Auditors' Report
Board of Directors
The City of Carmel Local Public Improvement Bond Bank
Report on the Financial Statements
We have audited the accompanying financial statements of The City of Carmel Local Public
Improvement Bond Bank, which comprise the statements of net position as of December 31, 2020 and
2019, and the related statements of revenues, expenses and changes in net position and cash flows for
the years then ended, and the related notes to the financial statements.
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in
accordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation, and maintenance of internal control relevant to the preparation and fair
presentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States of
America; the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and the Uniform Compliance Guidelines for
Audit of Hospitals and State and Local Governments by Authorized Independent Public Accountants,
issued by the Indiana State Board of Accounts. Those standards and guidelines require that we plan
and perform the audits to obtain reasonable assurance about whether the financial statements are free
from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditors’ judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditors consider internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
2
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, the
financial position of The City of Carmel Local Public Improvement Bond Bank as of December 31, 2020
and 2019, and the changes in its financial position and its cash flows for the years then ended in
accordance with accounting principles generally accepted in the United States of America.
Report on Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 3 through 7 be presented to supplement the basic
financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board, who considers it to be an essential part of
financial reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of America,
which consisted of inquiries of management about the methods of preparing the information and
comparing the information for consistency with management’s responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the
limited procedures do not provide us with sufficient evidence to express an opinion or provide any
assurance.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated March 15,
2021, on our consideration of The City of Carmel Local Public Improvement Bond Bank’s internal
control over financial reporting and on our tests of its compliance with certain provisions of laws,
regulations, contracts and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of The City of Carmel Local
Public Improvement Bond Bank’s internal control over financial reporting or on compliance. That report
is an integral part of an audit performed in accordance with Government Auditing Standards in
considering The City of Carmel Local Public Improvement Bond Bank’s internal control over financial
reporting and compliance.
Indianapolis, Indiana
March 15, 2021
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
3
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
DECEMBER 31, 2020 and 2019
As management of The City of Carmel Local Public Improvement Bond Bank (the Bond Bank), we offer readers
of the Bond Bank’s financial statements this narrative overview and analysis of the financial activities of the Bond
Bank for the years ended December 31, 2020 and 2019.
Indiana Code § 5-1.4 establishes an individual bond bank for each city of second-class stature within the State of
Indiana. The Common Council of the City of Carmel, Indiana (the City) adopted an ordinance declaring the City
as a city of second class stature pursuant to Indiana Code §36-4-1-1.1 on January 4, 2016. The Bond Bank is a
body corporate and politic and an instrumentality of the City, but separate from the City in its corporate capacity
and not an agency of the City, established with the purpose of buying and selling securities of qualified entities.
To accomplish its purpose, the Bond Bank may issue bonds or notes. The Bond Bank also has general powers
which include the power to enter into, make and perform contracts of every lawful kind to accomplish its purpose.
The State pledges to and agrees with the holders of any bonds or notes issued by the Bond Bank that the State
will not limit or alter the rights vested in the Bond Bank to fulfill the terms of any agreement made with the holders
of its bonds or notes, or in any way impair the rights or remedies of the holders of such obligations until the bonds
or notes are fully repaid. The Bond Bank has no taxing power.
Qualified entities are defined in Indiana Code § 5-1.4 to include, but are not limited to, a city, a county, a special
taxing district located wholly within a county or any authority created under Indiana Code § 36 that leases land or
facilities to any of the foregoing qualified entities. The qualified entities are each a qualified entity as defined in
Indiana Code § 5-1.4. The Bond Bank is authorized to purchase securities offered by a qualified entity, with any
such securities required, upon their delivery to the Bond Bank, to be accompanied by all documentation required
by the Board of Directors and by Indiana Code § 5-1.4-8-2(b). Every qualified entity is authorized and
empowered to contract with the Bond Bank with respect to the purchase of its securities, and the contracts will
contain the terms and conditions of the purchase and may be in any form agreed to by the Bond Bank and the
qualified entity.
The Bond Bank is governed by a five-member Board of Directors, each appointed by the Mayor of the City. The
Mayor appoints an Executive Director and the Board of Directors elects a Chair and Vice-Chair. Each of the five
Directors serves for a term of three years, until a successor is appointed and qualified, and is eligible for
reappointment.
FINANCIAL HIGHLIGHTS
During 2020 and 2019, the Bond Bank did not issue any new bonds.
The Bond Bank paid $10.5 million in principal payments on outstanding debt in 2020.
The Bond Bank paid $7.9 million in principal payments on outstanding debt in 2019.
4
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis are intended to serve as an introduction to the Bond Bank’s basic financial
statements. The Bond Bank is an instrumentality of the City and is maintained as a proprietary fund. Proprietary
funds are used to report any activities for which income fees are charged to external users for goods and
services. In addition, proprietary funds must be used in situations where debt is backed solely by fees and
charges. A proprietary fund is accounted for in a manner similar to a commercial enterprise on the accrual basis
of accounting.
The Bond Bank’s financial statements include statements of net position, statements of revenues, expenses and
changes in net position, statements of cash flows, and the notes to the financial statements.
The statements of net position present information on all of the Bond Bank’s assets and liabilities with the
difference reported as net position.
The statements of revenues, expenses and changes in net position present information showing how the Bond
Bank’s net position changed during each year. All changes in net position are reported as soon as the underlying
event giving rise to the change occurs, regardless of the timing of related cash flows.
In contrast, the statements of cash flows are concerned solely with flows of cash and cash equivalents.
Transactions are recorded when cash is received or exchanged, without concern of when the underlying event
causing the transactions occurred.
These financial statements can be found on pages 8 to 10 of this report.
The notes to the financial statements provide additional information that is essential to a full understanding of the
data provided in the financial statements. The notes to the financial statements can be found on pages 11
through 18 of this report.
FINANCIAL ANALYSIS
Net position may serve over time as a useful indicator of an entity’s financial position. In the case of the Bond
Bank, assets exceeded liabilities by $481 thousand, $506 thousand, and $387 thousand for the years ended
December 31, 2020, 2019 and 2018, respectively.
The City of Carmel Local Public Improvement Bond Bank’s
Condensed Statements of Net Position
(In Thousands of Dollars)
December 31, December 31, December 31,
2020 2019 2018
Current assets $ 18,436 $ 17,596 $ 16,389
Noncurrent assets 376,900 393,057 408,221
Total Assets 395,336 410,653 424,610
Current liabilities 17,818 16,972 15,899
Long-term liabilities 377,037 393,175 408,324
Total Liabilities 394,855 410,147 424,223
Net Position $ 481 $ 506 $ 387
5
FINANCIAL ANALYSIS (CONTINUED)
For the year ended December 31, 2020, the Bond Bank incurred the following changes:
Loans receivable decreased $15.3 million as a result of $10.8 million in loan payments received and $4.5
million in loan premium amortization.
Bonds payable decreased $15.0 million as a result of $10.5 million in debt principal payments and $4.5
million in bond premium amortization.
For the year ended December 31, 2019, the Bond Bank incurred the following changes:
Loans receivable decreased $12.6 million as a result of $8.0 million in loan payments received and $4.6
million in loan premium amortization.
Bonds payable decreased $12.6 million as a result of $7.9 million in debt principal payments and $4.7
million in bond premium amortization.
The City of Carmel Local Public Improvement Bond Bank’s
Statements of Revenue, Expenses and Changes in Net Position
(In Thousands of Dollars)
Year Ended Year Ended Year Ended
December 31, 2020 December 31, 2019 December 31, 2018
Operating Revenues:
Interest $20,130 $20,849 $21,214
Total Operating Revenues 20,130 20,849 21,214
Operating Expenses:
Interest 20,128 20,695 21,141
Administrative costs 27 35 15
Total Operating Expenses 20,155 20,730 21,156
Increase (Decrease) in Net Position (25) 119 58
Net Position – Beginning of Year 506 387 329
Net Position – End of Year $ 481 $ 506 $ 387
The Bond Bank had a decrease in net position of approximately $25 thousand during the year ending December
31, 2020. Key elements of this increase are as follows:
Interest income was greater than interest expense by approximately $2 thousand.
No administrative fees were charged in 2020 as no new debt was issued, and administrative costs were
$27 thousand.
6
FINANCIAL ANALYSIS (CONTINUED)
The Bond Bank had an increase in net position of approximately $119 thousand during the year ending
December 31, 2019. Key elements of this increase are as follows:
Interest income was greater than interest expense by approximately $154 thousand.
No administration fees were charged in 2019 as no new debt was issued, and administrative costs were
$35 thousand.
DEBT ADMINISTRATION
Long-term Debt: At the end of the years ending December 31, 2020, 2019 and 2018, the Bond Bank had bonds
payable net of unamortized premium of approximately $389 million, $404 million and $416 million, respectively.
The bonds payable are secured by specified revenue sources.
The City of Carmel Local Public Improvement Bond Bank’s Outstanding Debt
(In Thousands of Dollars)
December 31, December 31, December 31,
2020 2019 2018
Bonds payable $388,632 $403,630 $416,233
During 2020 and 2019, the Bond Bank issued no new bonds.
Following is a summary of the bonds payable activity for 2020 and 2019 (in thousands of dollars):
Balance at Balance at
January 1, 2020 Increases Decreases December 31, 2020
Bonds payable $362,885 $ - $10,455 $352,430
Net premium on bonds 40,745 - 4,543 36,202
Total $403,630 $ - $14,998 $388,632
Balance at Balance at
January 1, 2019 Increases Decreases December 31, 2019
Bonds payable $370,795 $ - $ 7,910 $362,885
Net premium on bonds 45,438 - 4,693 40,745
Total $416,233 $ - $12,603 $403,630
More detailed information about the Bond Bank’s debt is presented in Note 5 to the financial statements.
7
REQUESTS OF INFORMATION
This financial report is designed to provide a general overview of the Bond Bank’s finances. Questions
concerning any of this information should be addressed to The City of Carmel Local Public Improvement Bond
Bank, One Civic Square, Carmel, IN 46032.
FINANCIAL STATEMENTS
2020 2019ASSETS
Current Assets:
Cash 63,218$ 75,188$ Interest receivable 4,965,041 5,313,631Investments held by trustees, at fair value 2,730,644 2,342,861Loans receivable, current 10,677,002 9,864,555Total Current Assets 18,435,905 17,596,235
Noncurrent Assets:
Loans receivable, net 376,900,706 393,056,266Total Noncurrent Assets 376,900,706 393,056,266
Total Assets 395,336,611 410,652,501
LIABILITIES
Current Liabilities:
Interest payable 6,223,437 6,390,869Funds held for qualified entities - 125,661Bonds payable - current 11,595,000 10,455,000Total Current Liabilities 17,818,437 16,971,530
Noncurrent Liabilities:
Bonds payable, net 377,036,787 393,175,120Total Noncurrent Liabilities 377,036,787 393,175,120
Total Liabilities 394,855,224 410,146,650
NET POSITION 481,387$ 505,851$
See accompanying notes.
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENTS OF NET POSITION
December 31, 2020 and 2019
8
2020 2019OPERATING REVENUES
Interest 20,130,554$ 20,849,397$
Total Operating Revenues 20,130,554 20,849,397
OPERATING EXPENSES
Interest 20,128,488 20,695,460Administrative costs 26,530 35,010Total Operating Expenses 20,155,018 20,730,470
INCREASE (DECREASE) IN NET POSITION (24,464) 118,927
NET POSITION
Beginning of Year 505,851 386,924
End of Year 481,387$ 505,851$
See accompanying notes.
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENTS OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Years Ended December 31, 2020 and 2019
9
2020 2019OPERATING ACTIVITIES
Cash received from interest and administrative fees 15,935,811$ 16,267,773$
Cash payments for interest, administrative and other expenses (15,826,890) (16,222,585)
Net Cash Provided by Operating Activities 108,921 45,188
INVESTING ACTIVITIES
Maturities of loans to qualified entities 10,847,553 7,993,345
Maturities of investments - 958,000 Net Cash Provided by Investing Activities 10,847,553 8,951,345
NON-CAPITAL FINANCING ACTIVITIES
Principal payments to reduce indebtedness (10,455,000) (7,910,000) Payments related to funds held for qualified entities (125,661) (1,336,151) Net Cash Used by Non-Capital Financing Activities (10,580,661) (9,246,151)
NET INCREASE (DECREASE) IN CASH AND SHORT-TERM INVESTMENTS 375,813 (249,618)
CASH AND SHORT-TERM INVESTMENTS
Beginning of Year 2,418,049 2,667,667
End of Year 2,793,862$ 2,418,049$
CASH AND SHORT-TERM INVESTMENTS
Cash 63,218$ 75,188$ Short-term investments 2,730,644 2,342,861
TOTAL CASH AND SHORT-TERM INVESTMENTS 2,793,862$ 2,418,049$
RECONCILIATION OF INCREASE (DECREASE) IN NET POSITION TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Increase (decrease) in net position (24,464)$ 118,927$
Adjustments to reconcile increase (decrease) in net position to net cash
provided by operating activities:
Loan premium amortization 4,495,560 4,644,632
Bond premium amortization (4,543,333) (4,693,339)
Changes in certain assets and liabilities:
Interest receivable 348,590 111,715 Interest payable (167,432) (136,747)
Net Cash Provided by Operating Activities 108,921$ 45,188$
See accompanying notes.
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENTS OF CASH FLOWSYears Ended December 31, 2020 and 2019
10
11
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 2020 and 2019
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations: The City of Carmel Local Public Improvement Bond Bank (the Bond Bank) was created
on January 4, 2016 under applicable State of Indiana statutes. The Bond Bank is an instrumentality of the City of
Carmel (the City) but is not a City agency and has no taxing power. It has separate corporate and sovereign
capacity, and its board is composed of five directors appointed by the Mayor of the City.
The Bond Bank is authorized to buy and sell securities for the purpose of providing funds to the following:
City of Carmel, Indiana Carmel Redevelopment Authority
Carmel Redevelopment District Carmel Storm Water District
The Bond Bank enables the qualified entities to issue debt, in some circumstances, at a lower cost of borrowing
and on more favorable terms than would be possible by financing on their own. To accomplish its purpose, the
Bond Bank may issue its own bonds. It also has general powers to enter into, make, and perform contracts of
every lawful kind to accomplish its purpose. Bonds and notes are issued by the Bond Bank to provide funds to
loan to the qualified entities and are limited obligations of the Bond Bank. They are secured and payable solely
from principal and interest payments received by the Bond Bank on loans to qualified entities (evidenced by
bonds and notes issued by the qualified entities) that were made from proceeds of the issuance of particular
bonds or notes, and in certain issues, from designated funds and earnings held in trust. Owners of the Bond
Bank bonds and notes have a claim solely against the payments received on the respective loans to qualified
entities made by the Bond Bank with proceeds from the issuance of particular bonds or notes (and other funds
held in trust when applicable) and have no claims or rights against any other assets held by the Bond Bank.
Indiana statutes permit the Bond Bank to invest in securities authorized by its respective fiduciary documents.
These investments include obligations of the U.S. Treasury and U.S. agencies, commercial paper, certificates of
deposit, repurchase agreements, passbook savings, money market deposit accounts, guaranteed investment
contracts and negotiable order of withdrawal accounts. Repurchase agreements are required to be fully
collateralized by interest-bearing obligations as determined by the current market value computed on the day the
agreement is effective.
The Bond Bank was established to develop infrastructure, and assist in the economic development of the City of
Carmel. Accordingly, financial support is provided to certain city initiatives and properties. Such support
indirectly maintains the credit rating of the Bond Bank, and helps it achieve its statutory purpose. Board approved
financial support expenditures represent support of historical city properties and economic development
initiatives.
Basis of Presentation: The Bond Bank is accounted for as a proprietary fund. The financial statements of the
Bond Bank have been prepared on the accrual basis of accounting and using the economic resources
measurement focus. Accordingly, the Bond Bank recognizes revenue in the period earned and expenses in the
period incurred. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body
for establishing accounting and financial reporting principles.
Estimates: Management uses estimates and assumptions in preparing financial statements in accordance with
accounting principles generally accepted in the United States of America. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities, and the
reported revenues and expenses. Actual results could vary from the estimates that were used.
Cash and Equivalents include deposits in financial institutions and short-term investments with original
maturities of three months or less. Short-term investments held in trust accounts are included as investments.
12
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments: All investments are reflected at fair value, which is the price that would be received to sell an asset
or transfer a liability in an orderly transaction. Changes in the fair value of investments are included in the
statements of revenues, expenses and changes in net position. See Note 3.
Loans Receivable: Loans to qualified entities are recorded at cost and adjusted for amortization of discounts or
premiums on a basis approximating a constant return rate over the remaining life of the loan. Because there are
a small number of significant loans outstanding, management estimates the allowance for loan loss by identifying
specific troubled loans. The determination of the adequacy of the allowance for loan losses is based on
estimates that are particularly susceptible to significant changes in the economic environment and market
conditions. Management does not believe an allowance is necessary as of December 31, 2020 and 2019.
Original Issue Premiums and Discounts: Original issue premiums and discounts on bonds are amortized
using a method that approximates the effective interest method over the life of the bonds to which they relate.
Bond Issuance Costs: Bond issuance costs are passed through to the qualified entities.
Income Taxes: The Bond Bank is exempt from federal and state income taxes.
Subsequent Events: The Bond Bank has evaluated the financial statements for subsequent events occurring
through March 15, 2021, the date the financial statements were available to be issued.
NOTE 2 - DEPOSITS AND INVESTMENTS
Proceeds of certain bond issues are invested with various banks in their capacity as trustees under trust
agreements executed concurrently with the indentures and are pledged to the repayment of certain bonds
payable. The Bond Bank Act permits funds to be invested as provided in trust indentures executed by the Bond
Bank and based on resolutions of its Board of Directors.
The Bond Bank’s deposits and investments at December 31, 2020, are summarized as follows:
Cost Fair Value
Cash $ 63,218 $ 63,218
Investments:
Money market funds 2,730,644 2,730,644
Total Deposits and Investments $2,793,862 $2,793,862
The Bond Bank’s deposits and investments at December 31, 2019, are summarized as follows:
Cost Fair Value
Cash $ 75,188 $ 75,188
Investments:
Money market funds 2,342,861 2,342,861
Total Deposits and Investments $2,418,049 $2,418,049
13
NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED)
Deposits with Financial Institutions
Custodial risk is the risk that in the event of bank failure, the Bond Bank’s deposits may not be returned to it.
Cash deposits up to $250,000 per financial institution are insured by Federal Deposit Insurance Corporation
(FDIC). Balances that exceed $250,000 are covered by the Public Deposit Insurance Fund.
Investments
Investments are restricted for repayment of bonds payable issued under the respective programs (see Note 5).
Investments are also restricted to authorized investments per the applicable trust indentures.
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment.
As of December 31, 2020, the Bond Bank had the following investments and maturities:
Investment Maturities (in Years)
More
Than
Investment Type Fair Value Less Than 1 1-5 6-10 10
Money market funds $2,730,644 $2,730,644 - - -
Custodial Credit Risk of Investments
Custodial credit risk is the risk that the Bond Bank will not be able to recover the value of its deposits, investments
or collateral securities that are in the possession of an outside party if the counterparty fails. Investment
securities are exposed to risk if the securities are uninsured, are not registered in the name of the Bond Bank,
and are held by either the counterparty or the counterparty’s trust department or agent but not in the Bond Bank’s
name. The Bond Bank has no custodial risk on investments.
Credit Risk Disclosure
The following table provides information on the credit ratings associated with the Bond Bank’s investments at
December 31, 2020:
Credit Ratings S&P Fitch Moody’s Fair Value
Money market funds AAAm AAAmf Aaa-mf $2,730,644
Concentration of Credit Risk
There are no limits on the amount that may be invested in any one issuer. The following shows an investment in
an issuer that represents 5% or more of the total investments at December 31, 2020:
Huntington Conservative Deposit Account 100%
14
NOTE 3 - FAIR VALUE MEASUREMENTS
The Bond Bank has categorized its assets and liabilities that are measured at fair value into a three-level fair
value hierarchy. The hierarchy prioritizes the inputs to valuation techniques used to measure fair value. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities
(Level 1) and the lowest priority to unobservable inputs (Level 3). The asset or liability’s fair value measurement
level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value
measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use
of unobservable inputs.
The three levels of the fair value hierarchy are described as follows:
Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in
active markets that the Bond Bank has the ability to access.
Level 2 – Inputs to the valuation methodology may include: quoted prices for similar assets or liabilities in
active markets; quoted prices for identical or similar assets or liabilities in inactive markets; inputs other than
quoted prices that are observable for the asset or liability; and/or inputs that are derived principally from or
corroborated by observable market data by correlation or other means. If the asset or liability has a specified
(contractual) term, the Level 2 input must be observable for substantially the full term of the asset or liability.
Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
In situations where there is little or no market activity for the asset or liability, the Bond Bank makes estimates
and assumptions related to the pricing of the asset or liability including assumptions regarding risk.
Following is a description of the valuation methodologies used by the Bond Bank for assets that are measured at
fair value on a recurring basis. There have been no changes in the methodologies used at December 31, 2020
and 2019.
Money Market Fund Shares: Valued at the daily closing price as reported by the funds. These funds are
required to publish their daily net asset value (NAV) and to transact at that price. These funds are deemed to
be actively traded.
For those assets and liabilities measured at fair value, management determines the fair value measurement
policies and procedures in consultation with the Bond Bank’s Board of Directors. Those policies and procedures
are reassessed at least annually to determine if the current valuation techniques are still appropriate. At that
time, the unobservable inputs used in the fair value measurements are evaluated and adjusted, as necessary,
based on current market conditions and other third-party information.
The preceding methods may produce a fair value calculation that may not be indicative of net realizable value or
reflective of future fair values. Furthermore, although the Bond Bank’s management believes its valuation
methods are appropriate and consistent with other market participants, the use of different methodologies or
assumptions to determine the fair value of certain assets could result in a different fair value measurement at the
reporting date.
Following is a summary, within each level of the fair value hierarchy, of the Bond Bank’s assets that are
measured at fair value on a recurring basis as of December 31, 2020 and 2019:
2020 Level 1 Total
Assets
Investments:
Money market fund shares $2,730,644 $2,730,644
Total Assets at Fair Value $2,730,644 $2,730,644
15
NOTE 3 - FAIR VALUE MEASUREMENTS (CONTINUED)
2019 Level 1 Total
Assets
Investments:
Money market fund shares $2,342,861 $2,342,861
Total Assets at Fair Value $2,342,861 $2,342,861
NOTE 4 - LOANS RECEIVABLE
All purchases of qualified obligations are authorized by the Board of Directors of the Bond Bank. Prior to being
presented to the Board of Directors, an evaluation of each purchase is made by the Bond Bank’s management
and independent consultants. Repayment of these obligations by the qualified entities is funded by many
sources, including property tax revenues and user fees.
The Bond Bank's loans receivable from qualified entities at December 31, 2020 and 2019, were as follows:
2020 2019
Carmel Redevelopment District, Carmel Redevelopment Authority,
and Carmel Storm Water District, Multipurpose Bonds, Series 2016,
maturing January 15, 2017 to 2036, with interest ranging from
2% to 5%. $196,742,002 $202,689,555
Carmel Redevelopment District and Carmel Redevelopment
Authority, Taxable Special Program Bonds, 2016 (City
Center II and Midtown Phase 1A), maturing January 15, 2020
to 2041, with interest ranging from 1.576% to 3.762%. 28,570,000 29,720,000
City of Carmel, Program Bonds, Series 2016 (Waterworks Revenue
Bonds), maturing May 1, 2017 to 2028, with interest ranging from
4.125% to 5%. 47,405,000 49,700,000
Carmel Redevelopment Authority Taxable Special Program Bonds,
Series 2017 (Midtown South Project) maturing July 15, 2020 to
2042, with interest ranging from 1.973% to 3.864%. 7,385,000 7,405,000
Carmel Redevelopment Authority Special and Taxable Special
Program Bonds, Series 2017 (LIT and TIF Supported) maturing
July 15, 2018 to 2037, with interest ranging from 2.006% to 5.000%. 71,500,000 72,935,000
351,602,002 362,449,555
Plus: Unamortized premium 35,975,706 40,471,266
387,577,708 402,920,821
Less: Current portion of loans receivable (10,677,002) (9,864,555)
Long-term Portion of Loans Receivable, net $376,900,706 $393,056,266
Loans receivable from qualified entities, registered to the Bond Bank, are either serial, term, or serial and term
maturities.
16
NOTE 5 - BONDS AND NOTES PAYABLE
The Bond Bank's bonds payable at December 31, 2020 and 2019, are summarized as follows:
2020 2019
Multipurpose Bonds, Series 2016, maturing January 15, 2017 to
2036, with interest ranging from 2% to 5%. $197,505,000 $203,345,000
Taxable Special Program Bonds, Series 2016, maturing January 15,
2020 to 2041, with interest ranging from 1.576% to 3.762%. 28,790,000 29,720,000
Special Program Bonds, Series 2016, maturing June 1, 2017 to 2028,
with interest ranging from 3% to 5%. 47,250,000 49,480,000
Taxable Special Program Bonds, Series 2017, maturing July 15,
2020 to 2042, with interest ranging from 1.973% to 3.864%. 7,385,000 7,405,000
Special and Taxable Special Program Bonds, Series 2017, maturing
July 15, 2020 to 2042, with interest ranging from 1.973% to 3.864%. 71,500,000 72,935,000
352,430,000 362,885,000
Plus: Unamortized premium 36,201,787 40,745,120
388,631,787 403,630,120
Less: Current portion of bonds payable (11,595,000) (10,455,000)
Long-term Portion of Bonds Payable, net $377,036,787 $393,175,120
All of the bond issues listed above are either serial or serial and term maturities.
The faith, credit and taxing power of the City of Carmel or any political subdivision thereof are not pledged to the
payment of principal and interest on these obligations.
Scheduled principal payments due on bonds payable outstanding at December 31, 2020, are summarized as
follows:
General Direct
Obligation Placement
Principal Bonds Payable Bond Payable Total
2021 $ 11,280,000 $ 315,000 $ 11,595,000
2022 12,245,000 325,000 12,570,000
2023 13,295,000 335,000 13,630,000
2024 15,575,000 355,000 15,930,000
2025 16,810,000 365,000 17,175,000
2026-2030 107,720,000 4,095,000 111,815,000
2031-2035 121,620,000 10,560,000 132,180,000
2036-2040 28,630,000 7,200,000 35,830,000
2041-2042 1,705,000 - 1,705,000
328,880,000 23,550,000 352,430,000
Plus: Unamortized premium on bonds 36,201,787 - 36,201,787
$365,081,787 $23,550,000 $388,631,787
17
NOTE 5 - BONDS AND NOTES PAYABLE (CONTINUED)
General Direct
Obligation Placement
Interest Bonds Payable Bond Payable Total
2021 $ 14,615,028 $ 751,120 $ 15,366,148
2022 14,224,589 740,960 14,965,549
2023 13,693,700 730,480 14,424,180
2024 13,072,030 719,600 13,791,630
2025 12,326,323 708,160 13,034,483
2026-2030 47,721,693 3,271,840 50,993,533
2031-2035 22,523,535 2,135,200 24,658,735
2036-2040 2,132,906 307,200 2,440,106
2041-2042 46,738 - 46,738
140,356,542 9,364,560 149,721,102
Total Debt Service $505,438,329 $32,914,560 $538,352,889
Events of Default and Remedies
The bond agreements allow for remedies in case there is an event of default. An event of default can be (i)
default in the due and punctual payment of any principal or interest on any bond (ii) the Bond Bank fails to make
required remittances to the Trustee within the time limits prescribed in the Bond Bank Indenture (iii) default in
carrying out any of its other covenants, agreements, or conditions contained in the bond indenture or in the bonds
(iv) any warranty, representation or other statement contained in the bond indenture or in any instrument
furnished in compliance with or in reference to the bond indenture is found to be false or misleading in any
material respect and not remedied in appropriate time (v) a petition is filed against Bond Bank under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation of any
jurisdiction (vi) the Bond Bank is generally not paying their debts as such debts become due and (vii) the Bond
Bank is rendered incapable of fulfilling its obligations under the bond indenture.
The remedies include the following (i) the bond trustee may pursue any available remedy at law or in equity or by
statue to enforce the payment of the principal of and interest on the bonds (ii) the bond trustee may by action or
suit in equity require the Bond Bank to account as if it were the trustee of an express trust for the owners of the
bonds and may take such action with respect to the qualified obligations as the bond trustee deems necessary or
appropriate and in the best interest of the owners of the bonds (iii) upon the filing of a suit or other
commencement of judicial proceedings to enforce any rights of the bond trustee and of the owners of bonds
under the bond indenture, the bond trustee will be entitled to the appointment of a receiver or receivers of the
trust estate and of the revenues, issues, earnings, income, products and profits and (iv) if the bond trustee
certifies that there are sufficient money on deposit in the funds and accounts to pay principal of and accrued
interest on bonds outstanding, the trustee may declare the principal of and accrued interest on all bonds to be
due and payable immediately in accordance with the provisions of the bond indenture and the act, by notice to the
Bond Bank and the Corporation Counsel of the City.
18
NOTE 5 - BONDS AND NOTES PAYABLE (CONTINUED)
Changes in long-term liabilities were as follows:
Beginning Ending Due Within
2020 Balance Increases Decreases Balance One Year
General obligation
bonds payable $339,035,000 $ - $10,155,000 $328,880,000 $11,280,000
Direct placement
bonds payable 23,850,000 - 300,000 23,550,000 315,000
Net premium on bonds 40,745,120 - 4,543,333 36,201,787 -
Total $403,630,120 $ - $14,998,333 $388,631,787 $11,595,000
2019
General obligation
bonds payable $346,795,000 $ - $ 7,760,000 $339,035,000 $10,155,000
Direct placement
bonds payable 24,000,000 - 150,000 23,850,000 300,000
Net premium on bonds 45,438,459 - 4,693,339 40,745,120 -
Total $416,233,459 $ - $12,603,339 $403,630,120 $10,455,000
NOTE 6 - CONCENTRATION OF CREDIT RISK
The Bond Bank has loans to qualified entities, all of whom are located in Carmel, Indiana.
OTHER INFORMATION
19
Independent Auditors' Report on Internal Control over
Financial Reporting and on Compliance and Other Matters
Based on an Audit of Financial Statements Performed
in Accordance with Government Auditing Standards
Board of Directors
The City of Carmel Local Public Improvement Bond Bank
We have audited, in accordance with the auditing standards generally accepted in the United States of
America, the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States; and the Uniform Compliance Guidelines for
Audit of Hospitals and State and Local Governments by Authorized Independent Public Accountants,
issued by the Indiana State Board of Accounts the financial statements of The City of Carmel Local
Public Improvement Bond Bank (the Bond Bank), which comprise the statement of net position as of
December 31, 2020, and the related statements of revenues, expenses and changes in net position
and cash flows for the year then ended, and the related notes to the financial statements, and have
issued our report thereon dated March 15, 2021.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Bond Bank’s
internal control over financial reporting (internal control) as a basis for designing audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinion on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Bond Bank’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Bond Bank’s
internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a
combination of deficiencies, in internal control, such that there is a reasonable possibility that a material
misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a
timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control
that is less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any
deficiencies in internal control that we consider to be material weaknesses. However, material
weaknesses may exist that have not been identified.
20
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Bond Bank’s financial statements are free
from material misstatement, we performed tests of its compliance with certain provisions of laws,
regulations, contracts, and grant agreements, noncompliance with which could have a direct and
material effect on the financial statements. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance or other matters that are required to be
reported under Government Auditing Standards.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the
entity’s internal control or on compliance. This report is an integral part of an audit performed in
accordance with Government Auditing Standards in considering the entity’s internal control and
compliance. Accordingly, this communication is not suitable for any other purpose.
Indianapolis, Indiana
March 15, 2021