HomeMy WebLinkAboutBond Bank Financial Statement Audit 2023
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITOR’S REPORT
December 31, 2023 and 2022
THE CITY OF CARMEL LOCAL PUBLIC
IMPROVEMENT BOND BANK
CONTENTS
Page
INDEPENDENT AUDITOR’S REPORT 1-3
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED) 4-8
FINANCIAL STATEMENTS
Statements of Net Position 9
Statements of Revenues, Expenses and Changes in Net Position 10
Statements of Cash Flows 11
Notes to Financial Statements 12-19
OTHER INFORMATION
Independent Auditor’s 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 20-21
1
Independent Auditor’s Report
Board of Directors
The City of Carmel Local Public Improvement Bond Bank
Report on the Audit of Financial Statements
Opinion
We have audited the accompanying financial statements of The City of Carmel Local Public
Improvement Bond Bank as of and for the years ended December 31, 2023 and 2022, and the
related notes to the financial statements, which collectively comprise The City of Carmel Local Public
Improvement Bond Bank’s basic financial statements as listed in the table of contents.
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,
2023 and 2022, and the changes in financial position and cash flows thereof for the years then ended
in accordance with accounting principles generally accepted in the United States of America.
Basis for Opinion
We conducted our audits in accordance with auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial
Statements section of our report. We are required to be independent of The City of Carmel Local
Public Improvement Bond Bank and to meet our other ethical responsibilities, in accordance with the
relevant ethical requirements relating to our audits. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our audit opinion.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for 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.
2
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about The City of
Carmel Local Public Improvement Bond Bank’s ability to continue as a going concern for twelve
months beyond the financial statement date, including any currently known information that may raise
substantial doubt shortly thereafter.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report
that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards and Government Auditing Standards will always detect a material
misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control. Misstatements are considered material if there
is a substantial likelihood that, individually or in the aggregate, they would influence the judgment
made by a reasonable user based on the financial statements.
In performing an audit in accordance with generally accepted auditing standards and Government
Auditing Standards, we:
Exercise professional judgment and maintain professional skepticism throughout the audit.
Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
Obtain an understanding of internal control relevant to the audit 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 City of Carmel Local Public Improvement Bond Bank’s
internal control. Accordingly, no such opinion is expressed.
Evaluate the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluate the overall
presentation of the financial statements.
Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about The City of Carmel Local Public Improvement
Bond Bank’s ability to continue as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control related matters that we identified during the audit.
3
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management’s discussion and analysis on pages 4-8 be presented to supplement the basic financial
statements. Such information is the responsibility of management and, 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 February
19, 2024 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 solely
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
February 19, 2024
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
4
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
DECEMBER 31, 2023 and 2022
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, 2023 and 2022.
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, separate from the City in its corporate capacity, duly created by and validly existing
under the provisions of Indiana Code 5-1.4 as amended (the “Act”), with the right and power to (a) adopt the
Resolution, (b) execute and deliver the Bond Documents, the Official Statement and the Bonds, (c) perform its
obligations under the Bond Documents and the Bonds, (d) issue, execute, sell and deliver the Bonds to the
Purchasers, and (e) carry out and consummate all transactions contemplated by the Bond Documents, the Bonds
and the aforementioned proceedings. 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
The Bond Bank did not issue any new bonds in 2023 or 2022.
The Bond Bank paid $15.6 million in principal payments on outstanding debt in 2023.
The Bond Bank paid $14.5 million in principal payments on outstanding debt in 2022.
5
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 9 to 11 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 12
through 19 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 $764 thousand, $574 thousand, and $543 thousand for the years ended
December 31, 2023, 2022 and 2021, 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,
2023 2022 2021
Current assets $ 29,317 $ 29,242 $ 30,507
Noncurrent assets 448,267 472,029 492,946
Total Assets 477,584 501,271 523,453
Current liabilities 28,469 28,552 29,829
Long-term liabilities 448,351 472,145 493,081
Total Liabilities 476,820 500,697 522,910
Net Position $ 764 $ 574 $ 543
6
FINANCIAL ANALYSIS (CONTINUED)
For the year ended December 31, 2023, the Bond Bank incurred the following changes:
Loans receivable decreased $21.0 million as a result of $15.9 million in loan payments received and $5.1
million in loan premium amortization.
Bonds payable decreased $20.7 million as a result of $15.6 million in debt principal payments and $5.1
million in bond premium amortization.
As of December 31, 2023, there was approximately $2.1 million of capitalized interest included in
investments and funds held for qualified entities that had yet to be paid out related to the 2022 bond
issuances, which is a $3 million decrease from 2022.
For the year ended December 31, 2022, the Bond Bank incurred the following changes:
Loans receivable decreased $19.7 million as a result of $14.4 million in loan payments received and $5.3
million in loan premium amortization.
Bonds payable decreased $19.9 million as a result of $14.5 million in debt principal payments and $5.4
million in bond premium amortization.
As of December 31, 2022, there was approximately $5.1 million of capitalized interest included in
investments and funds held for qualified entities that had yet to be paid out related to the 2022 bond
issuances, which is a $2.7 million decrease from 2021.
The Bond Bank did not issue any new bonds during 2023 or 2022.
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, 2023 December 31, 2022 December 31, 2021
Operating Revenues:
Interest $23,389 $23,965 $21,049
Administrative fees - - 97
Total Operating Revenues 23,389 23,965 21,146
Operating Expenses:
Interest 23,176 23,910 21,061
Administrative costs 23 24 23
Total Operating Expenses 23,199 23,934 21,084
Increase in Net Position 190 31 62
Net Position – Beginning of Year 574 543 481
Net Position – End of Year $ 764 $ 574 $ 543
7
FINANCIAL ANALYSIS (CONTINUED)
The Bond Bank had an increase in net position of approximately $190 thousand during the year ending December
31, 2023. Key elements of this increase are as follows:
Interest income was greater than interest expense by approximately $213 thousand.
No administrative fees were charged in 2023 as no new debt was issued, and administrative costs were
$23 thousand.
The Bond Bank had an increase in net position of approximately $31 thousand during the year ending December
31, 2022. Key elements of this increase are as follows:
Interest expense was greater than interest income by approximately $55 thousand.
No administrative fees were charged in 2022 as no new debt was issued, and administrative costs were
$24 thousand.
DEBT ADMINISTRATION
Long-term Debt: At the end of the years ending December 31, 2023, 2022 and 2021, the Bond Bank had bonds
payable net of unamortized premium of approximately $467 million, $488 million and $508 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,
2023 2022 2021
Bonds payable $466,971 $487,705 $507,621
During 2023 and 2022, the Bond Bank did not issue any new bonds.
Following is a summary of the bonds payable activity for 2023 and 2022 (in thousands of dollars):
Balance at Balance at
January 1, 2023 Increases Decreases December 31, 2023
Bonds payable $447,665 $ - $15,560 $432,105
Net premium on bonds 40,040 - 5,174 34,866
Total $487,705 $ - $20,734 $466,971
Balance at Balance at
January 1, 2022 Increases Decreases December 31, 2022
Bonds payable $462,205 $ - $14,540 $447,665
Net premium on bonds 45,416 - 5,376 40,040
Total $507,621 $ - $19,916 $487,705
8
DEBT ADMINISTRATION (CONTINUED)
More detailed information about the Bond Bank’s debt is presented in Note 5 to the financial statements.
REQUESTS OF INFORMATION
This financial report is designed to provide a general overview of the Bond Bank’s finances. Questions
concerning any of this information should be addressed to The City of Carmel Local Public Improvement Bond
Bank, One Civic Square, Carmel, IN 46032.
FINANCIAL STATEMENTS
2023 2022ASSETS
Current Assets:
Cash 121,203$ 134,569$ Interest receivable 6,363,297 6,495,886Investments held by trustees, at fair value 6,724,576 9,252,337Loans receivable, current 16,108,000 13,359,000Total Current Assets 29,317,076 29,241,792
Noncurrent Assets:
Loans receivable, net 448,266,352 472,029,251Total Noncurrent Assets 448,266,352 472,029,251
Total Assets 477,583,428 501,271,043
LIABILITIES
Current Liabilities:
Interest payable 7,477,787 7,665,501Funds held for qualified entities 2,370,623 5,327,172 Bonds payable - current 18,620,000 15,560,000Total Current Liabilities 28,468,410 28,552,673
Noncurrent Liabilities:
Bonds payable, net 448,351,362 472,144,912Total Noncurrent Liabilities 448,351,362 472,144,912
Total Liabilities 476,819,772 500,697,585
NET POSITION 763,656$ 573,458$
See accompanying notes.
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENTS OF NET POSITION
December 31, 2023 and 2022
9
2023 2022OPERATING REVENUES
Interest 23,389,183$ 23,964,435$
Total Operating Revenues 23,389,183 23,964,435
OPERATING EXPENSES
Interest 23,176,035 23,910,252Administrative costs 22,950 23,677Total Operating Expenses 23,198,985 23,933,929
INCREASE IN NET POSITION 190,198 30,506
NET POSITION
Beginning of Year 573,458 542,952
End of Year 763,656$ 573,458$
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, 2023 and 2022
10
2023 2022OPERATING ACTIVITIES
Cash received from interest and administrative fees 18,348,222$ 18,171,066$
Cash payments for interest, administrative and other expenses (18,253,800) (18,175,132)
Net Cash Provided (Used) by Operating Activities 94,422 (4,066)
INVESTING ACTIVITIES
Maturities of loans to qualified entities 15,881,000 14,378,000
Net Cash Provided by Investing Activities 15,881,000 14,378,000
NON-CAPITAL FINANCING ACTIVITIES
Principal payments to reduce indebtedness (15,560,000) (14,540,000)
Decrease in funds held for qualified entities (2,956,549) (2,723,379) Net Cash Used by Non-Capital Financing Activities (18,516,549) (17,263,379)
NET DECREASE IN CASH AND SHORT-TERM INVESTMENTS (2,541,127) (2,889,445)
CASH AND SHORT-TERM INVESTMENTS
Beginning of Year 9,386,906 12,276,351
End of Year 6,845,779$ 9,386,906$
CASH AND SHORT-TERM INVESTMENTS
Cash 121,203$ 134,569$
Investments held by trustees 6,724,576 9,252,337
TOTAL CASH AND SHORT-TERM INVESTMENTS 6,845,779$ 9,386,906$
RECONCILIATION OF INCREASE IN NET POSITION TO NET
CASH PROVIDED (USED) BY OPERATING ACTIVITIES:
Increase in net position 190,198$ 30,506$
Adjustments to reconcile increase in net position to net cash provided
(used) by operating activities:
Loan premium amortization 5,132,899 5,331,835Bond premium amortization (5,173,550) (5,375,863)
Changes in certain assets and liabilities:
Interest receivable 132,589 (417,506) Interest payable (187,714) 426,962
Net Cash Provided (Used) by Operating Activities 94,422$ (4,066)$
See accompanying notes.
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENTS OF CASH FLOWSYears Ended December 31, 2023 and 2022
11
12
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 2023 and 2022
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 a body corporate and politic,
separate from the City of Carmel (the City) in its corporate capacity, duly created by and validly existing under the
provisions of Indiana Code 5-1.4 as amended (the “Act”), with the right and power to (a) adopt the Resolution, (b)
execute and deliver the Bond Documents, the Official Statement and the Bonds, (c) perform its obligations under
the Bond Documents and the Bonds, (d) issue, execute, sell and deliver the Bonds to the Purchasers, and (e)
carry out and consummate all transactions contemplated by the Bond Documents, the Bonds and the
aforementioned proceedings. The Bond Bank 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.
13
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 considered cash
equivalents.
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. See Note 3. Changes in the fair value of investments are included
in the statements of revenues, expenses and changes in net position.
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 was necessary as of December 31, 2023 and 2022.
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 February 19, 2024, 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, 2023, are summarized as follows:
Cost Fair Value
Cash $ 121,203 $ 121,203
Investments:
Money market funds 6,724,576 6,724,576
Total Deposits and Investments $ 6,845,779 $ 6,845,779
The Bond Bank’s deposits and investments at December 31, 2022, are summarized as follows:
Cost Fair Value
Cash $ 134,569 $ 134,569
Investments:
Money market funds 9,252,337 9,252,337
Total Deposits and Investments $ 9,386,906 $ 9,386,906
14
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, 2023, 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 $6,724,576 $6,724,576 - - -
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
The following table provides information on the credit ratings associated with the Bond Bank’s investments at
December 31, 2023:
Credit Ratings S&P Fitch Moody’s Fair Value
Money market funds AAAm AAAmf Aaa-mf $6,724,576
Concentration of Credit Risk
There are no limits on the amount that may be invested in any one issuer. The following shows investments in
issuers that represents 5% or more of the total investments at December 31, 2023:
Percent of
Investment Total Investments
Federal Hermes Treasury Obligation Fund 57%
Federated Government Obligations Fund 42%
15
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, 2023
and 2022.
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.
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, 2023 and 2022:
2023 Level 1 Total
Assets
Investments Held by Trustees:
Money market fund shares $6,724,576 $6,724,576
Total Assets at Fair Value $6,724,576 $6,724,576
2022
Assets
Investments Held by Trustees:
Money market fund shares $9,252,337 $9,252,337
Total Assets at Fair Value $9,252,337 $9,252,337
16
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, 2023 and 2022, were as follows:
2023 2022
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%. $176,763,000 $183,804,000
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%. 25,325,000 26,425,000
City of Carmel, Program Bonds, Series 2016 (Waterworks Revenue
Bonds), maturing May 1, 2017 to 2028, with interest ranging from
4.125% to 5%. 37,865,000 41,525,000
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%. 6,720,000 6,980,000
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%. 66,535,000 68,205,000
Carmel Municipal Facilities Building Corporation Lease Rental
Revenue Bonds, Series 2022 (LIT Supported / Property Tax
Back-Up) (“LIT/PT Bonds”), maturing January 15, 2025
to 2041, with interest ranging from 3.00% to 4.00%. 32,380,000 32,380,000
City of Carmel Redevelopment Authority Ad Valorem Property
Tax Lease Rental Bonds, Series 2022 (“SBT Bonds”),
maturing July 15, 2024 to 2041, with interest ranging from
3.00% to 4.00%. 54,225,000 54,225,000
City of Carmel Taxable Redevelopment District Bonds,
Series 2022 (“TIF/SBT Bonds”), maturing January 15, 2023
to 2035, with interest ranging from 0.211% to 2.301%. 19,240,000 21,390,000
City of Carmel Taxable Local Income Tax General Obligation
Bonds, Series 2022 (“TIF/SBT Bonds”), maturing January 15, 2025
to 2041, with interest ranging from 0.855% to 2.706%. 10,550,000 10,550,000
429,603,000 445,484,000
Plus: Unamortized premium 34,771,352 39,904,251
464,374,352 485,388,251
Less: Current portion of loans receivable (16,108,000) (13,359,000)
Loans Receivable, net $448,266,352 $472,029,251
17
NOTE 4 - LOANS RECEIVABLE (CONTINUED)
Loans receivable from qualified entities, registered to the Bond Bank, are either serial, term, or serial and term
maturities.
NOTE 5 - BONDS AND NOTES PAYABLE
The Bond Bank's bonds payable at December 31, 2023 and 2022, are summarized as follows:
2023 2022
Multipurpose Bonds, Series 2016, maturing January 15, 2017 to
2036, with interest ranging from 2% to 5%. $177,855,000 $184,825,000
Taxable Special Program Bonds, Series 2016, maturing January 15,
2020 to 2041, with interest ranging from 1.576% to 3.762%. 25,680,000 26,775,000
Special Program Bonds, Series 2016, maturing June 1, 2017 to 2028,
with interest ranging from 3% to 5%. 37,845,000 41,480,000
Taxable Special Program Bonds, Series 2017, maturing July 15,
2020 to 2042, with interest ranging from 1.973% to 3.864%. 6,720,000 6,980,000
Special and Taxable Special Program Bonds, Series 2017, maturing
July 15, 2020 to 2042, with interest ranging from 1.973% to 3.864%. 66,535,000 68,205,000
Multipurpose Bonds, Series 2022A, maturing July 15, 2024 to 2041,
with interest ranging from 3% to 4%. 86,605,000 86,605,000
Taxable Multipurpose Bonds, Series 2022B, maturing January 15, 2023
to 2041, with interest ranging from 0.211% to 2.706%. 30,865,000 32,795,000
432,105,000 447,665,000
Plus: Unamortized premium 34,866,362 40,039,912
466,971,362 487,704,912
Less: Current portion of bonds payable (18,620,000) (15,560,000)
Bonds Payable, net $448,351,362 $472,144,912
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, 2023, are summarized as
follows:
General Direct
Obligation Placement
Principal Bonds Payable Bond Payable Total
2024 $ 18,265,000 $ 355,000 $ 18,620,000
2025 22,010,000 365,000 22,375,000
2026 25,150,000 380,000 25,530,000
2027 28,165,000 555,000 28,720,000
2028 33,630,000 905,000 34,535,000
18
NOTE 5 - BONDS AND NOTES PAYABLE (CONTINUED)
General Direct
Obligation Placement
Principal (Continued) Bonds Payable Bond Payable Total
2029-2033 $145,530,000 $ 8,210,000 $153,740,000
2034-2038 112,005,000 11,805,000 123,810,000
2039-2042 24,775,000 - 33,965,000
409,530,000 22,575,000 432,105,000
Plus: Unamortized premium on bonds 34,866,362 - 34,866,362
444,396,362 22,575,000 466,971,362
Interest
2024 16,868,049 719,600 17,587,649
2025 16,032,078 708,160 16,740,238
2026 15,035,991 696,400 15,732,391
2027 13,915,741 684,080 14,599,821
2028 12,638,321 663,600 13,301,921
2029-2033 45,733,714 2,716,480 48,450,194
2034-2038 13,424,515 953,680 14,378,195
2039-2042 1,227,178 - 1,227,178
134,875,587 7,142,000 142,017,587
Total Debt Service $579,271,949 $29,717,000 $608,988,949
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.
19
NOTE 5 - BONDS AND NOTES PAYABLE (CONTINUED)
Changes in long-term liabilities were as follows:
Beginning Ending Due Within
2023 Balance Increases Decreases Balance One Year
General obligation
bonds payable $424,755,000 $ - $15,225,000 $409,530,000 $18,265,000
Direct placement
bonds payable 22,910,000 - 335,000 22,575,000 355,000
Net premium on bonds 40,039,912 - 5,173,550 34,866,362 -
Total $487,704,912 $ - $20,733,550 $466,971,362 $18,620,000
2022
General obligation
bonds payable $438,970,000 $ - $14,215,000 $424,755,000 $15,225,000
Direct placement
bonds payable 23,235,000 - 325,000 22,910,000 335,000
Net premium on bonds 45,415,777 - 5,375,865 40,039,912 -
Total $507,620,777 $ - $19,915,865 $487,704,912 $15,560,000
NOTE 6 - CONCENTRATION OF CREDIT RISK
The Bond Bank has loans to qualified entities, all of whom are located in Carmel, Indiana.
OTHER INFORMATION
20
Independent Auditor’s 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 and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of The City of Carmel
Local Public Improvement Bond Bank as of and for the year ended December 31, 2023, and the related
notes to the financial statements, which collectively comprise The City of Carmel Local Public
Improvement Bond Bank’s basic financial statements, and have issued our report thereon dated
February 19, 2024.
Report on Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered The City of Carmel
Local Public Improvement 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 City of Carmel Local Public Improvement Bond Bank’s internal control.
Accordingly, we do not express an opinion on the effectiveness of The City of Carmel Local Public
Improvement 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 or significant deficiencies may exist that were not identified.
21
Report on Compliance and Other Matters
As part of obtaining reasonable assurance about whether The City of Carmel Local Public Improvement
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
February 19, 2024