DEBT MANAGEMENT POLICY REVISION
COUNCIL POLICY 1-15
MARIA ÖBERG, DIRECTOR OF FINANCE
QIANYU SUN, DEPUTY DIRECTOR OF FINANCE – DEBT AND TREASURY
MANAGEMENT
CITY COUNCIL/CSJFA/SARA AGENDA: MARCH 11, 2025
ITEM: 1
FILE: 25-257
DEBT MANAGEMENT POLICY
• The Debt Management Policy sets forth certain debt management objectives and establishes overall parameters for issuing and administering debt that the City and Covered Entities are financially obligated and responsible • Last revised in March 2023
• Proposed Policy changes need to be approved by City Council, City ofSan José Financing Authority Board, and Successor Agency to theRedevelopment Agency Board
2 BACKGROUND
• The City Council approved certain documents in connection with the issuance and sale of California Community Choice Financing Authority Clean Energy Project Revenue Bonds, Series 2025E on October 8, 2024. • The bond sale ($1.24 billion) was successfully closed on November 4, 2024, providing over 12% saving annually or a total saving of over $66 million during the initial eight-year term.
• It is prudent to establish general guidelines and consistent process for future bond issuance.
3 ADDITION OF ENERGY PREPAY
• The City assigns certain rights and obligations under power purchase agreements to a prepay counterparty.
• The conduit issuer, like CCCFA, issues tax-exempt bonds and applies the bond proceeds towards the prepayment and delivers the prepaid energy to the City at a discount.
• Bonds may be issued up to 30-year term, subject to mandatory tender at the end of initial term (7-10 years from the initial bond issuance). • 5% minimum annual savings during the initial term
• Energy prepay bonds are special limited obligations of conduit issuer, payable solely from the trust estate related to the bonds. Investors of the bonds have no recourse to the City.
4 RECOMMENDATION
1) Accept the report and approve the proposed revisions to theCouncil Policy 1- 15, City of San José Debt Management Policy
2) Adopt the amended policy by resolution of the City Council, City ofSan José Financing Authority Board, and Successor Agency Board.
5