COMPREHENSIVE ANNUAL DEBT REPORT
FOR FISCALYEAR 2021-2022
COMMITTEE AGENDA: 12/6/2022
ITEM: 3.7
FILE: CC 22-1795
Presenters:
Julia H. Cooper, Director
Qianyu Sun, Deputy Director – Debt & Treasury Management Item 3.7 Comprehensive Annual Debt Report
Prepared by the Finance Department
DEBT MANAGEMENT PROGRAM
DEBT ISSUANCE
DEBT ADMINISTRATION
FINANCIAL ADVISORY SERVICES
• Policy Objectives
Minimize debt service and issuance costs
Maintain access to cost-effective
borrowing
Achieve highest practical credit rating
Full and timely repayment of debt
Maintain full and complete financial
disclosure and reporting
Ensure compliance with Federal and State
laws
Assess financial impacts of significant City
projects
2 The chart excludes Multi-Family
Housing Revenue Bonds and
Pension, Other Post-
Employment Benefits (OPEB)
and other City liabilities.
T otal Outstanding Conduit
Housing Bonds are
$790,813,000.
3 OUTSTANDING DEBT ISSUED BY ALL AGENCIES
CSJ GO Bonds
$582,110,000
14.8%
CSJFA Bonds/CP Notes
$746,547,000
19.0%
Airport Revenue
Bonds/CP Notes
$1,081,137,000
27.5%
RWF Notes
$236,869,682
6.0%
Land-Secured Financing
$3,525,000
0.1%
Successor Agency Tax
Allocation Bonds
$1,287,630,000
32.7%
FY 2021-22 DEBT ISSUANCE
• Tax Revenue Anticipation Note (TRAN)
• General Obligation Bonds
• Lease Revenue Bonds (Fire Training Center and Central Service Yard) • Lease Revenue Taxable Refunding Bonds (Convention Center) • Lease Revenue Taxable Commercial Paper Notes (Clean Energy) • Subordinate Wastewater Notes (Regional Wastewater Facility) • Conduit Multi-family Housing Revenue Obligations (Multiple) T otal Issued: $877.3 million
4 FY 2022-23 COMPLETED/PLANNED ISSUANCE
• Tax Revenue Anticipation Note (TRAN)
• Wastewater Revenue Bonds (Regional Wastewater Facility) • Lease Revenue Commercial Paper Notes (Water Resources Administration and Operations Facility)
• Lease Revenue Commercial Paper Notes (Flood Recovery Projects) Estimated T otal : $621.4 million
5 VARIABLE RATE PROGRAMS
(OUTSTANDINGAS OF JUNE 30, 2022)
Bond Series Project Description Bank
Expiration
Date
Facility
Amount Outstanding
LETTERS OF CREDIT
Airport Series ABC
Airport Terminal Area
Improvement Program Bank of America 9/10/2024 $75,000,000 $34,112,000 City of San José Financing
Authority Various City Projects U.S. Bank 3/24/2025 $175,000,000 $66,947,000 R
EVOLVING LINE OF CREDIT
San José-Santa Clara
Regional Wastewater
Facility
Wastewater System and
Treatment Plant Projects Wells Fargo Bank 10/18/2023 $300,000,000 $236,869,682 R
EVOLVING CREDIT FACILITY
San José Clean Energy
Energy Power Provider
Contracts Barclays Bank PLC 11/27/2023 $65,000,000 $10,193,920 T
OTAL $615,000,000 $348,122,602
6 FY2021-22 MAJOR PROJECTS COMPLETED
• Letter of Credit extensions for Airport Commercial Paper Notes and City of San José Financing Authority Commercial Paper Notes
• Pension Obligation Bonds – City Council authorized the issuance of bonds to refund certain pension obligations. City filed a complaint for validation in November 2021.
• Request for Qualifications and Proposals – selected underwriters for CSJFA Lease Revenue Bonds 2022A and a pool for Regional Wastewater Facility • Request for Bank Commitments (TRAN funding)
• Redemption of Special Assessment Bonds – Series 24Q (Hellyer-Piercy) and Special Tax Bonds, Community Facility District 1 (Capitol Expressway Auto Mall) 7 FY2021-22 HOUSING TRANSACTIONS
TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARINGS Hearing
Date Project Issue Date
Issuance
Amount Issuer
11/2/2021 Vitalia (formerly Bascom Apartments) 1/28/2022 $35,672,716 City of San José 11/2/2021 Mariposa Place 1/28/2022 $31,341,010 City of San José 3/28/2022 McEvoy Apartments1 Not Issued due to cost increases. Allocation returned May 2022. 3/28/2022 Algarve Apartments1 Not Issued due to cost increases. Allocation returned August 2022. 8/10/2021 425 Auzerais Apartments 10/21/2021 $42,017,597 California Municipal Finance Authority 8 GENERAL OBLIGATION (GO) BOND RATINGS
(AS OF NOVEMBER 2022)
• City continues to maintain high general obligation credit ratings of Aa1, AA+/Stable, and AAA from Moody's Investors Service, Standard & Poors Global Ratings and Fitch Ratings, respectively
City’s GO ratings higher than State of California (Aa2, AA-and AA) County of Santa Clara GO bonds are rated (Aa1, AAA, AA+) 9 GENERAL OBLIGATION RATINGS COMPARISON
(10TH LARGEST CITIES AS OF NOVEMBER 8, 2022)
RATING RANK CITY MOODY’S STANDARD & POORS FITCH
1 San Antonio Aaa AAA AA+
2 (tie) San José Aa1 AA+ AAA
2 (tie) Phoenix Aa1 AA+ AAA
4 Los Angeles Aa2 AA AAA
5 San Diego Aa2 AA AA
6 (tie) New York Aa2 AA AA-
6 (tie) Houston Aa3 AA AA
8 Dallas A1 AA- AA
9 Philadelphia A2 A A
10 Chicago Baa3 BBB+ BBB
10 OTHER CREDIT RATINGS
(AS OF NOVEMBER 2022)
Moody’s Standard & Poors Fitch KBRA
LEASE REVENUE BONDS1
2013B, 2020A, 2021A Aa2 AA AA N/A
2020B Aa3 AA AA- N/A
2022A Aa3 AA AA N/A
Rating Outlook Stable Stable Stable N/A
NORMAN Y. MINETA SAN JOSÉ INTERNATIONAL AIRPORT2
2014ABC, 2017A, 2021ABC A2 A2 A N/A
SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY (SARA)
Senior Tax Allocation Not Rated AA AA N/A
Subordinate Tax Allocation Not Rated AA- AA- N/A
REGIONAL WASTEWATER FACILITY
2022B (Climate Certified – Green Bonds) Not Rated AAA AAA AAA 11 1 Moody's and Fitch determines its lease revenue bond ratings, in part, based on "essentiality" of leased asset. Bonds tied to an essential asset such as City Hall carry a higher rating (Aa2, AA) than bonds tied to a less essential asset such as the Ice Centre (Aa3, AA-). The Convention Center bonds are rated Aa3 and AA, respectively.
2 Standard & Poors upgraded the Airport bonds from A- to A2 in June 2022.
FY2022-23 MAJOR PROJECTS
(COMPLETED/ANTICIPATED)
• Tax Revenue Anticipation Notes $275 million
• Community Facilities Districts #6 and #10 Special Tax Bonds Redemption • CSJFA Wastewater Revenue Bonds $300 million
• San José Clean Energy Credit Facility up to $250 million • CSJFA Commercial Paper Notes – $40 million for a Water Resources Administration and Operations Facility
• CSJFA Commercial Paper Notes – $6.4 million for flood recovery project • Multifamily Housing Projects (tentatively Tamien, the Charles, 1860 Alum Rock and 777 West San Carlos)
• Various Requests for Proposals
12 SUMMARY
• The Debt Management Unit continues to be highly active in the areas of issuance, administration and financial advisory services. • Maintaining a strong and dedicated debt management program protects the City’s financial interests, credit ratings, and long-term management of debt compliance to minimize financial penalties. • Failure to comply with regulatory requirements may result in significant penalties.
13 RECOMMENDATION
Accept the Comprehensive Annual Debt Report for the City of San José for Fiscal Year 2021-2022.
14 QUESTIONS
Julia H. Cooper, Director
Qianyu Sun, Deputy Director – Debt & Treasury Management