Bond Bank Financial Statement Audit 2016
THE CITY OF CARMEL LOCAL PUBLIC
IMPROVEMENT BOND BANK
FINANCIAL STATEMENTS
AND
INDEPENDENT AUDITORS' REPORT
December 31, 2016
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
Statement of Net Position 8
Statement of Revenues, Expenses and Changes in Net Position 9
Statement of Cash Flows 10
Notes to Financial Statements 11-16
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 17-18
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 (Bond Bank), which comprise the statement of net position as of December
31, 2016, 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.
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 audit. We
conducted our audit 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 Guidelines for Audit of State and Local
Governments by Authorized Public Accountants, issued by the Indiana State Board of Accounts.
Those standards and guidelines require that we plan and perform the audit 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
1
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the net
position of The City of Carmel Local Public Improvement Bond Bank as of December 31, 2016, and the
changes in its net position and its cash flows for the year 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 May 24,
2017, 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 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
May 24, 2017
2
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
MANAGEMENT’S DISCUSSION AND ANALYSIS (UNAUDITED)
DECEMBER 31, 2016
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 year ended December 31, 2016. All amounts, unless otherwise indicated, are expressed in
thousands of dollars and are approximate.
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 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 2016, the Bond Bank issued $298 million in new bonds, which included bond premiums of $54 million.
3
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 a statement of net position, statement of revenues, expenses and
changes in net position, statement of cash flows, and the notes to the financial statements.
Thestatement of net position presents information on all of the Bond Bank’s assets and liabilities with the
difference reported as net position.
Thestatement of revenues, expenses and changes in net position presents information showing how the Bond
Bank’s net position changed during the 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 statement of cash flows is 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.
Thenotes 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 17 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 $121 thousand at the close of the most recent fiscal year.
The City of Carmel Local Public Improvement Bond Bank’s
Statement of Net Position
(In Thousands of Dollars)
December 31,
2016
Current assets $ 22,533
Noncurrent assets 345,876
Total Assets 368,409
Current liabilities 22,269
Long-term liabilities 346,019
Total Liabilities 368,288
Net Position $ 121
4
FINANCIAL ANALYSIS (CONTINUED)
During 2016 the Bond Bank had three bond issuances supporting funding to the following Qualified Entities:
Issuance #1 ($214,455,000) – The proceeds from the sale of the bonds were used for the following:
Qualified Obligations of the City of Carmel acquired by the Bond Bank:
1) $1,214,000 of City of Carmel General Obligation Bonds, Series 2016A
2) $1,089,000 of City of Carmel General Obligation Bonds, Series 2016B
3) $1,633,000 of City of Carmel General Obligation Bonds, Series 2016C
4) $1,373,000 of City of Carmel General Obligation Bonds, Series 2016D
5) $1,599,000 of City of Carmel General Obligation Bonds, Series 2016E
6) $1,577,000 of City of Carmel General Obligation Bonds, Series 2016F
7) $1,373,000 of City of Carmel General Obligation Bonds, Series 2016G
8) $1,577,000 of City of Carmel General Obligation Bonds, Series 2016H
9) $1,426,000 of City of Carmel General Obligation Bonds, Series 2016I
10) $1,513,000 of City of Carmel General Obligation Bonds, Series 2016J
11) $1,394,000 of City of Carmel General Obligation Bonds, Series 2016K
12) $1,383,000 of City of Carmel General Obligation Bonds, Series 2016L
13) $1,211,000 of City of Carmel General Obligation Bonds, Series 2016M
Qualified Obligations of the Carmel Redevelopment Authority acquired by the Bond Bank:
14) $139,872,000 of City of Carmel Redevelopment Authority Lease Rental Bonds, Series 2016A
(Public Infrastructure Projects)
15) $10,337,000 of City of Carmel Redevelopment Authority Lease Rental Bonds, Series 2016B
(Economic Development Projects)
16) $15,164,000 of City of Carmel Redevelopment Authority Lease Rental Refunding Bonds, Series
2016C (Energy Center Projects)
Qualified Obligations of the Carmel Storm Water District acquired by the Bond Bank:
17) $30,720,000 of City of Carmel Storm Water District Bonds, Series 2016
Issuance #2 ($29,720,000) – The proceeds from the sale of the bonds were used for the following:
Carmel Redevelopment District: Qualified Obligation 1 - $18,830,000 of City of Carmel, Indiana,
Redevelopment District Taxable Bonds of 2016 (City Center II Projects)
Carmel Redevelopment Authority: Qualified Obligation 2 - $10,890,000 of City of Carmel Redevelopment
Authority Taxable Lease Rental Bonds, Series 2016D (Midtown Phase 1A Projects)
Issuance #3 ($53,735,000) – The proceeds from the sale of the bonds were used for the following:
Proceeds from the sale were used to purchase the City of Carmel, Indiana, Junior Waterworks Revenue
Bonds of 2008. The interest rates on the Qualified Obligation varies from the bonds payable.
Consequently, the principal amount of $54,165,000 for the loans receivable is different from the principal
amount of $53,735,000 for the bonds payable.
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FINANCIAL ANALYSIS (CONTINUED)
The City of Carmel Local Public Improvement Bond Bank’s
Statement of Revenue, Expenses and Changes in Net Position
(In Thousands of Dollars)
Year Ended
December 31, 2016
Operating Revenues:
Interest $9,806
Fees 89
Total Operating Revenues 9,895
Operating Expenses:
Interest 9,773
Administrative costs 1
Total Operating Expenses 9,774
Increase in Net Position 121
Net Position – Beginning of Year
Net Position – End of Year $ 121
The Bond Bank had an increase in net position of approximately $121 thousand during the current fiscal year.
Key elements of this increase are as follows:
Interest income was greater than interest expense by approximately $33 thousand.
An administration fee of $89 thousand was also charged in 2016 for operating expenses.
DEBT ADMINISTRATION
Long-term Debt: At the end of the current fiscal year, the Bond Bank had bonds payable net of
premium/discount of approximately $350 million. 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,
2016
Bonds payable $349,525
During 2016, the Bond Bank issued $297.9 million in new bonds, including bond premiums of $54.1 million.
6
DEBT ADMINISTRATION (CONTINUED)
Following is a summary of the new bonds issued in the current fiscal year.
Issuance #1 ($214,455,000) was used to acquire qualified obligations of the City of Carmel in the amount of
$18,362,000, acquire qualified obligations of the City of Carmel Redevelopment Authority in the amount of
$165,373,000, and acquire qualified obligations of the City of Carmel Storm Water District in the amount of
$30,720,000. A portion of the purchase price of the Qualified Obligations was applied to payment of
capitalized interest on the bonds, together with the cost of issuance of the Qualified Obligations and certain
related expenses.
Issuance #2 ($29,720,000) was used to acquire qualified obligations of the City of Carmel Redevelopment
District in the amount of $18,830,000 for City Center II Projects and acquire qualified obligations of the City of
Carmel Redevelopment Authority in the amount of $10,890,000 for Midtown Phase 1A Projects. A portion of
the purchase price of the Qualified Obligations was applied to payment of capitalized interest on the bonds,
together with the cost of issuance of the Qualified Obligations and certain related expenses.
Issuance #3 ($53,735,000) was used to purchase the City of Carmel, Indiana, Junior Waterworks Revenue
Bonds of 2008, fund the Bond Bank Reserve Requirement of the Bond Bank Reserve Account, and pay the
costs of issuance of the Series 2016 Bonds, together with the related expenses.
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.
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FINANCIAL STATEMENTS
THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENT OF NET POSITION
December 31, 2016
ASSETS
Current Assets:
Cash and equivalents
$ 145,636
Interest receivable
7,355,207
Investments held by trustee, at fair value
11,377,000
Loans receivable, current
3,655,000
Total Current Assets
22,532,843
Noncurrent Assets:
Loans receivable
345,876,326
Total Noncurrent Assets
345,876,326
Total Assets
368,409,169
LIABILITIES
Current Liabilities:
Interest payable
7,330,593
Funds held for qualified entities
11,433,129
Bonds payable - current
3,505,000
Total Current Liabilities
22,268,722
Noncurrent Liabilities:
Bonds payable
346,019,547
Total Noncurrent Liabilities
346,019,547
Total Liabilities
368,288,269
NET POSITION
$ 120,900
See accompanying notes.
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THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
Year Ended December 31, 2016
OPERATING REVENUES
Interest
$ 9,805,934
Administrative fees
89,331
Total Operating Revenues
9,895,265
OPERATING EXPENSES
Interest
9,773,891
Administrative costs
474
Total Operating Expenses
9,774,365
INCREASE IN NET POSITION
120,900
NET POSITION
Beginning of Year
-
End of Year
$ 120,900
See accompanying notes.
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THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
STATEMENT OF CASH FLOWS
Year Ended December 31, 2016
OPERATING ACTIVITIES
Fees received
$ 89,331
Cash payments for administrative and other expenses
(474)
Net Cash Provided by Operating Activities
88,857
INVESTING ACTIVITIES
Issuance of loans to qualified entities
(351,974,624)
Increase in investments
(11,377,000)
Interest received on loans and investments
650
Net Cash Used by Investing Activities
(363,350,974)
NON-CAPITAL FINANCING ACTIVITIES
Proceeds from debt issuance
351,974,624
Increase in funds held for qualified entities
11,433,129
Net Cash Provided by Non-Capital Financing Activities
363,407,753
NET INCREASE IN CASH AND EQUIVALENTS
145,636
CASH AND EQUIVALENTS
Beginning of Year
-
End of Year
$ 145,636
RECONCILIATION OF OPERATING INCOME TO NET
CASH PROVIDED BY OPERATING ACTIVITIES:
Operating income
$ 120,900
Adjustments to reconcile operating income to net cash
provided by operating activities:
Interest income
(9,805,934)
Interest expense
9,773,891
Net Cash Provided by Operating Activities
$ 88,857
See accompanying notes.
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THE CITY OF CARMEL LOCAL PUBLIC IMPROVEMENT BOND BANK
NOTES TO FINANCIAL STATEMENTS
December 31, 2016
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. The financial statements reflect the activity of the
Bond Bank from its inception on January 4, 2016 through December 31, 2016.
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: The Bond Bank considers all cash on hand and money market deposits with original
maturities of three months or less to be cash equivalents.
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NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Investments:All investments are reflected at fair value in accordance with GASB pronouncements, 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 statement 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/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, 2016.
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 May 24, 2017, 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, 2016, are summarized as follows:
Cost Fair Value
Cash and equivalents:
Money market funds $ 56,540 $ 56,540
Cash 89,096 89,096
Investments:
Certificates of deposit 11,377,000 11,377,000
Total Deposits and Investments $11,522,636 $11,522,636
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.
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NOTE 2 - DEPOSITS AND INVESTMENTS (CONTINUED)
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, 2016, the Bond Bank had the following investments and maturities:
Investment Maturities (in Years)
More
Than
Investment Type Fair Value Less Than 1 1-56-1010
Money market funds $ 56,540$ 56,540
Certificates of deposit 11,377,000 9,461,000 $1,916,000
$ 11,433,540$ 9,517,540 $1,916,000
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, 2016:
Credit Ratings S&P Fitch Moody’s Fair Value
Money market funds AAAm AAAmf Aaa-mf $56,540
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, 2016:
Lake City Bank Public Funds CD 58%
United Fidelity Bank Public Funds CD 29%
BMO Harris Bank Public Funds CD 8%
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.
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NOTE 3 - FAIR VALUE MEASUREMENTS (CONTINUED)
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. Also
included in Level 3 are assets measured using a practical expedient that can never be redeemed at the
practical expedient.
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, 2016.
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.
Certificates of Deposit:Determined by discounting the related cash flows on current yields of similar
investments with comparable durations considering the credit-worthiness of the issuer.
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, 2016:
Level 1 Level 2 Total
Assets
Cash Equivalents:
Money Market Fund Shares $56,540 $ 56,540
Investments:
Certificates of Deposit $11,377,000 11,377,000
Total Assets at Fair Value $56,540 $11,377,000 $11,433,540
At December 31, 2016, the Bond Bank had no other assets and no liabilities that are measured at fair value on a
recurring basis.
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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, 2016, are as follows:
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%. $214,455,000
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%. 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%. 54,165,000
298,340,000
Plus: Unamortized premium 51,191,326
349,531,326
Less: Current Portion of Loans Receivable (3,655,000)
Long-term Portion of Loans Receivable $345,876,326
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, 2016, are summarized as follows:
Multipurpose Bonds, Series 2016, maturing January 15, 2017 to 2036,
with interest ranging from 2% to 5%. $214,455,000
Taxable Special Program Bonds, Series 2016, maturing January 15, 2020
to 2041, with interest ranging from 1.576% to 3.762%. 29,720,000
Special Program Bonds, Series 2016, maturing June 1, 2017 to 2028,
with interest ranging from 3% to 5%. 53,735,000
297,910,000
Plus: Unamortized premium 51,614,547
349,524,547
Less: Current Portion of Bonds Payable (3,505,000)
Long-term Portion of Bonds Payable $346,019,547
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.
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NOTE 5 - BONDS AND NOTES PAYABLE (CONTINUED)
Scheduled principal payments due on bonds payable outstanding at December 31, 2016, are summarized as
follows:
Payable In Principal Interest Debt Service
2017 $ 3,505,000 $ 15,647,501 $ 19,152,501
2018 4,890,000 13,495,022 18,385,022
2019 6,970,000 13,263,697 20,233,697
2020 9,000,000 12,908,709 21,908,709
2021 9,795,000 12,521,218 22,316,218
2022-2026 69,420,000 55,072,706 124,492,706
2027-2031 93,400,000 35,250,270 128,650,270
2032-2036 92,745,000 13,262,422 106,007,422
2037-2041 8,185,000 789,361 8,974,361
297,910,000 172,210,906 470,120,906
Plus: Unamortized premium on bonds 51,614,547 51,614,547
$349,524,547 $172,210,906 $521,735,453
The Bond Bank's bonds payable rollforward schedule at December 31, 2016, is summarized as follows:
Total Additions 2016 $297,910,000
Total Deductions 2016
Outstanding Debt 297,910,000
Add: Change In Unamortized Premium 51,614,547
Total Outstanding Debt at December 31, 2016 $349,524,547
Bond Series 2016 – Issuance #1 ($214,455,000) was used to acquire qualified obligations of the City of Carmel in
the amount of $18,362,000, acquire qualified obligations of City of Carmel Redevelopment Authority in the
amount of $165,373,000, and acquire qualified obligations of the City of Carmel Storm Water District in the
amount of $30,720,000. A portion of the purchase price of the Qualified Obligations was applied to payment of
capitalized interest on the bonds, together with the cost of issuance of the Qualified Obligations and certain
related expenses.
Bond Series 2016 – Issuance #2 ($29,720,000) was used to acquire qualified obligations of the City of Carmel
Redevelopment District in the amount of $18,830,000 for City Center II Projects and acquire qualified obligations
of the City of Carmel Redevelopment Authority in the amount of $10,890,000 for Midtown Phase 1A Projects. A
portion of the purchase price of the Qualified Obligations was applied to payment of capitalized interest on the
bonds, together with the cost of issuance of the Qualified Obligations and certain related expenses.
Bond Series 2016 – Issuance #3 ($53,735,000) was used to purchase the City of Carmel, Indiana, Junior
Waterworks Revenue Bonds of 2008, fund the Bond Bank Reserve Requirement of the Bond Bank Reserve
Account, and pay the costs of issuance of the Series 2016 Bonds, together with the related expenses.
NOTE 6 - CONCENTRATION OF CREDIT RISK
The Bond Bank has loans to qualified entities, all of whom are located in Carmel, Indiana.
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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
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 (the Bond Bank), which comprise the statement of net position as
of December 31, 2016, 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 May 24, 2017.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered Bond Bank’s internal
control over financial reporting (internal control) to determine the 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 Bond Bank’s internal control. Accordingly,
we do not express an opinion on the effectiveness of Bond Bank’s internal control.
Adeficiency 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.
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Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Bond Bank’s financial statements are free
of 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 determination of financial statement amounts. 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 solelyto 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
May 24, 2017
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