Presenters:
Drew Corbett, Acting Director of Finance
Qianyu Sun, Deputy Director of Finance, Debt and Treasury Management
COMPREHENSIVE
ANNUAL DEBT
REPORT
City Council
December 10, 2024
Item 3.6
DEBT MANAGEMENT PROGRAM
Debt Issuance
Debt
Administration
Financial
Advisory
2 Policy Objectives
Minimize debt service and issuance costs
Maintain access to cost-effective
borrowing
Achieve the highest practical credit rating
Full and timely repayment of debt
Maintain full and complete financial
disclosure and reporting
Ensure compliance with applicable
Federal and State laws
Assess the financial impacts of significant
City projects
OUTSTANDING DEBT ISSUED BY ALL AGENCIES
3 The chart excludes Multi-
Family Housing Revenue Bonds
and Pension, Other Post-
Employment Benefits (OPEB)
and other City liabilities.
As of June 30, 2024, total
outstanding conduit Housing
Bonds are $770.3 million.
CSJ GO Bonds
$522.8
14.5%
CSJFA Lease Revenue
Bonds/CP Notes
$639.0
17.7%
Airport Revenue
Bonds/CP
$1,048.4
29.1%
SARA TABs
$1,086.7
30.2%
CSJFA Wastewater
Revenue Bonds/ RWF
Notes
$304.5
8.5%
Balance as of June 30, 2024: $3,601,388,219
(dollars shown below in millions)
VARIABLE RATE PROGRAMS
(OUTSTANDING AS OF JUNE 30, 2024)
4 Bond Series Project Description Bank
Authorized
Amount Outstanding
Expiration
Date
LETTERS OF CREDIT
Airport CP Series ABC Airport T erminal Area
Improvement Program
Bank of America,
N.A. $75,000,000 $27,728,000 9/10/2026
City of San José Financing
Authority CP Various City Projects U.S. Bank, N.A. 175,000,000 5,967,000 3/24/2025
REVOLVING LINE OF CREDIT
San José-Santa Clara
Regional Wastewater
Facility
Wastewater System and
Treatment Plant Projects
Wells Fargo Bank,
N.A. $200,000,000 $40,098,000 10/16/2026
R
EVOLVING CREDIT FACILITY
San José Clean Energy
Letter of Credit
Energy Power Provider
Contracts
JPMorgan Chase
Bank, N.A. $250,000,000 $29,729,000 2/17/2028
T
OTAL $700,000,000 $103,522,000
FY 2023-2024 DEBT ISSUANCE
• CSJFA Lease Revenue CP Notes
• CSJFA Subordinate Wastewater Revenue Notes
• CSJ Airport Subordinated Commercial Paper (CP) Notes (Non-AMT) • Conduit Multi-family Housing Revenue Obligations:
Dry Creek Crossing
Parkmoor Community Apartments
T otal Issued: $137.2 million
5 FY2023-2024 MAJOR PROJECTS COMPLETED
6 • Professional services contracts for municipal advisors • Credit ratings for San José Clean Energy (SJCE)
• Requests for Proposal (RFP) and selection of vendors
Arbitrage Rebate, Private Activity and SB 1029 consulting services Special Tax Consultant services
Market Absorption Consultant services
FY2023-2024 HOUSING TRANSACTIONS
TAX EQUITY AND FISCAL RESPONSIBILITY ACT (TEFRA) HEARINGS 7 GENERAL OBLIGATION (GO) BOND RATINGS
(AS OF OCTOBER 2024)
8 • City continues to maintain high general obligation credit ratings of Aa1, AA+, and AAA from Moody's Investors Service (Moody’s), Standard & Poor’s Global Ratings (S&P) and Fitch Ratings (Fitch), respectively with stable outlooks.
City’s GO ratings are higher than the State of California: Aa2, AA- and AA from Moody’s, S&P and Fitch, respectively
County of Santa Clara(1) GO bonds are rated at AAA by both S&P and Fitch. (1) Moody’s does not currently rate Santa Clara County’s General Obligation Bonds but maintains an Issuer rating of Aa1.
GENERAL OBLIGATION RATINGS COMPARISON
(THIRTEEN LARGEST CITIES BY POPULATION AS OF OCTOBER 31, 2024) 9 1 San Antonio Aaa AAA AA+
2 (tie) San José Aa1 AA+ AAA
2 (tie) Phoenix Aa1 AA+ AAA
2 (tie) Austin Aa1 AAA AA+
5 Los Angeles Aa2 AA AAA
6 San Diego Aa2 AA AA+
7 (tie) New Y ork Aa2 AA AA
7 (tie) Jacksonville Aa2 AA AA
9 (tie) Houston Aa3 AA AA
9 (tie) Fort Worth Aa3 AA AA
11 Dallas A1 AA- AA
12 Philadelphia A1 A A+
13 Chicago Baa3 BBB+ A-
OTHER CREDIT RATINGS
(AS OF NOVEMBER 2024)
10 Moody’s Standard & Poors Fitch KBRA
SAN JOSÉ CLEAN ENERGY1
Initial ratings for San José Clean Energy A2 A N/A N/A
LEASE REVENUE BONDS2
2013B, 2020A, 2021A Aa2 AA AA N/A
2020B Aa3 AA AA- N/A
2022A Aa3 AA AA N/A
San José Mineta International Airport
2014ABC, 2017A, 2021ABC A2 A 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 WASTEWA TER FACILITY
2022B (Climate Certified – Green Bonds) Not Rated AAA AAA AAA 1 No bonds outstanding.
2 Moody's and Fitch determine their lease revenue bond ratings, in part, based on the "essentiality" of the 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.
FY 2024-2025 DEBT ISSUANCE
Status Debt Amount
Completed
CSJ Airport Revenue Bonds, 2024A $76.4 million
CCCFA Clean Energy Project Revenue Bonds, 2024E
(conduit issuance by CCCFA)
$1,243.2 million
Planned
CSJFA Lease Revenue CP Notes $32.0 million
CSJFA Subordinate Wastewater Revenue Notes $40.0 million CSJ Airport Subordinate CP Notes $0.9 million
Conduit Multifamily Housing Revenue Bonds $210.0 million T o Be Evaluated
General Obligation Bonds (Measure T) TBD
Tax and Revenue Anticipation Notes TBD
11 FY2024-2025 MAJOR PROJECTS
12 • Renewal of CSJFA Lease Revenue Commercial Paper Letter of Credit • Debt Management Software RFP
• Formation of Berryessa Community Facilities District
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 resulting in lower borrowing cost. • Ensure compliance with regulatory requirements including local, state and federal.
13 RECOMMENDATION
Accept the Comprehensive Annual Debt Report for the City of San José for Fiscal Year 2023-24.
14 QUESTIONS
Drew Corbett, Acting Director of Finance
Qianyu Sun, Deputy Director of Finance, Debt and Treasury Management