Hawkins Delafield & Wood LLP
Draft No. 2: 4/24/2025
OFFERING MEMORANDUM DATED MAY [20], 2025
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In the opinion of Anzel Galvan LLP, Note Counsel, [Tax language to come]. See “TAX MATTERS” herein.
Ratings: See “RATINGS” herein
Not to Exceed $175,000,000 (Combined)
City of San José Financing Authority
Tax-Exempt Lease Revenue
Commercial Paper Notes, Series 1
City of San José Financing Authority
Taxable Lease Revenue
Commercial Paper Notes, Series 1-T
The City of San José Financing Authority, a joint exercise of powers authority duly organized and existing under the laws of the State of California (the “Authority”), is issuing its City of San José Financing Authority Tax-Exempt Lease Revenue Commercial Paper Notes, Series 1 and its City of San José Financing Authority Taxable Lease Revenue Commercial Paper Notes, Series 1-T (together, the “Series One Commercial Paper Notes”) in a maximum combined aggregate principal amount outstanding at any one time of up to $175,000,000, pursuant to that certain Trust Agreement dated as of January 1, 2004 between the Authority and Computershare Trust Company, National Association (as successor trustee to Wells Fargo Bank, National Association), as trustee (the “Trustee”), as amended and restated from time to time, including by the Eighth Supplement to Amended and Restated Trust Agreement, dated as May 1, 2025 (as so amended and as may further be amended, the “ Trust Agreement”), and that certain Issuing and Paying Agent Agreement dated as of January 1, 2004 between the Authority and Computershare Trust Company, National Association (as successor trustee to Wells Fargo Bank, National Association), as issuing and paying agent (the “Issuing and Paying Agent”), as amended and restated from time to time, including by the Third Amended and Restated Issuing and Paying Agent Agreement dated as of May 1, 2025 (as so amended and as may further be amended, the “Issuing and Paying Agent Agreement”). See “THE SERIES ONE COMMERCIAL PAPER NOTES” herein.
The Series One Commercial Paper Notes are authorized to be issued for the purpose of providing moneys to finance and refinance certain capital and working capital expenditures of the Authority and the City of San José (the “ City”), including capitalized interest, the costs of issuance of the Series One Commercial Paper Notes, certain ongoing fees of the Authority and the City with respect to the Series One Commercial Paper Notes, or any other lawful purpose of the City or the Authority if approved by the Au thority and the City Council of the City. See “THE SERIES ONE COMMERCIAL PAPER NOTES” herein.
The Authority has entered into a reimbursement agreement with TD Bank, N.A. (the “Bank”) pursuant to which the Bank has issued an irrevocable direct-pay letter of credit (the “Series One Letter of Credit”) for the account of the Authority supporting payment of principal of and interest on the Series One Commercial Paper Notes. See “THE SERIES ONE LETTER OF CREDIT” herein. Principal of and interest on the Series One Commercial Paper Notes are also payable from the proceeds of Series One Commercial Paper Notes issued to pay the principal of and interest on the Series One Commercial Paper Notes and, to the extent necessary, are also payable from Base Rental payments to be made by the City pursuant to that certain Sublease, dated as of January 1, 2004, by and between the Authority, as sublessor, and the City, as sublessee, as amended from time to time, including by the Eighth Amendment to Sublease dated as of May 1, 2 025 (as so amended and as may further be amended, the “Sublease”). See “THE SERIES ONE COMMERCIAL PAPER NOTES” herein.
If the Bank fails to make payment under the Series One Letter of Credit, neither the Authority nor the City make any representation, and no assurance can be given, that the Authority nor the City would have sufficient funds on hand and available to make the corresponding payment of principal and interest on the Series One Commercial Paper Notes. Prospective investors should therefore base their investment decisions, insofar as it relates to the creditworthiness of the Series One Commercial Paper Notes, solely on the credit of the Bank, rather than the Authority or the City. See also “THE SERIES ONE LETTER OF CREDIT BANK” herein.
THE SERIES ONE COMMERCIAL PAPER NOTES ARE SPECIAL OBLIGATIONS OF THE AUTHORITY PAYABLE SOLELY
FROM THE AMOUNTS PLEDGED THEREFOR IN THE TRUST AGREEMENT, INCLUDING BASE RENTAL PAYMENTS MADE BY
THE CITY PURSUANT TO THE SUBLEASE AND FROM AMOUNTS HELD BY THE TRUSTEE AND THE ISSUING AND PAYING AGENT IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE TRUST AGREEMENT. THE OBLIGATION OF THE CITY
TO PAY BASE RENTAL DOES NOT CONSTITUTE AN OBLIGATION OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE, OR HAS LEVIED OR PLEDGED, ANY FORM OF TAXATION. NEITHER THE SERIES ONE COMMERCIAL PAPER NOTES
NOR THE OBLIGATION OF THE CITY TO PAY BASE RENTAL PAYMENTS CONSTITUTES AN INDEBTEDNESS OF THE CITY, THE
STATE OF CALIFORNIA OR ANY OF ITS POLITICAL SUBDIVISIONS WITHIN THE MEANING OF THE CONSTITUTION OR LAWS OF THE STATE OF CALIFORNIA. THE AUTHORITY HAS NO TAXING POWER AND NO OBLIGATION TO PAY BASE RENTAL.
UNDER CERTAIN CIRCUMSTANCES, BASE RENTAL PAYMENTS MAY BE ABATED UNDER THE SUBLEASE.
The Series One Commercial Paper Notes have not been registered under the Securities Act of 1933, as amended, in reliance upon an exemption from registration contained in such law. Additionally, the Series One Commercial Paper Notes are exempt from the provisions of Securities Exchange Commission Rule 15c2-12, as amended. See “EXEMPTION FROM CONTINUING DISCLOSURE OBLIGATIONS” herein.
Dealers for the Series One Commercial Paper Notes
Barclays Capital Inc. TD Securities (USA) LLC Morgan Stanley & Co. LLC
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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TABLE OF CONTENTS
INTRODUCTION ................................................................................................................................................ 1 THE SERIES ONE COMMERCIAL PAPER NOTES ........................................................................................ 1 Authorization and Certain Terms of the Series One Commercial Paper Notes ................................................ 1 The Series Two Commercial Paper Notes ........................................................................................................ 3 CITY OF SAN JOSE FINANCING AUTHORITY ............................................................................................. 3 CITY OF SAN JOSE ............................................................................................................................................ 4 THE SERIES ONE LETTER OF CREDIT .......................................................................................................... 4 The Series One Letter of Credit ........................................................................................................................ 4 The Series One Reimbursement Agreement ..................................................................................................... 5 SERIES ONE LETTER OF CREDIT BANK ...................................................................................................... 6 TAX MATTERS................................................................................................................................................... 7 LEGAL MATTERS .............................................................................................................................................. 8 CERTAIN RELATIONSHIPS ............................................................................................................................. 8 RATINGS ............................................................................................................................................................. 8 ABSENCE OF MATERIAL LITIGATION RELATING TO .............................................................................. 9 THE SERIES ONE COMMERCIAL PAPER NOTES ........................................................................................ 9 EXEMPTION FROM CONTINUING DISCLOSURE OBLIGATIONS ............................................................ 9 ADDITIONAL INFORMATION ......................................................................................................................... 9
APPENDIX A FORM OF NOTE COUNSEL OPINION
APPENDIX B BOOK-ENTRY SYSTEM
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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OFFERING MEMORANDUM
Not to Exceed $175,000,000 (Combined)
City of San José Financing Authority
Tax-Exempt Lease Revenue
Commercial Paper Notes, Series 1
City of San José Financing Authority
Taxable Lease Revenue
Commercial Paper Notes, Series 1-T
INTRODUCTION
This Offering Memorandum contains certain information regarding the City of San José Financing Authority Tax-Exempt Lease Revenue Commercial Paper Notes, Series 1 and the City of San José Financing Authority Taxable Lease Revenue Commercial Paper Notes, Series 1-T. Portions of the information contained herein and in the appendices attached hereto have been provided by the City, the Authority, the Bank and Note Counsel (each as defined herein). All references to the documents and other materials referenced herein do not purport to be complete or definitive, do not constitute summaries thereof, and are qualified in their entirety by reference to the provisions thereof. The information and expressions of opinion in this Offering Memorandum is subject to change without notice after the date hereof and shall not otherwise create any implication that there has been no change in the matters referred to in this Offering Memorandum since May [20], 2025. The information contained herein will not typically be distributed or updated upon each new sale of Series One Commercial Paper Notes.
Except as otherwise provided herein, capitalized terms used but not otherwise defined herein shall have the meanings ascribed thereto in the Trust Agreement (as defined herein), and if not defined therein, the Issuing and Paying Agent Agreement (as defined herein).
THE SERIES ONE COMMERCIAL PAPER NOTES
Authorization and Certain Terms of the Series One Commercial Paper Notes Authority for Issuance an
d Purpose. The City of San José Financing Authority (the “Authority”) is a joint exercise of powers authority duly organized and existing under and pursuant to Authority Formation Agreement (as defined herein ), and is authorized pursuant to Articles 1 through 4 (commencing with Section 6500) of Chapter 5 of Division 7 of Title 1 of the Government Code of the State of California to borrow money for the purpose, among other things, of financing and refinancing public capital improvements for the City. See also “CITY OF SAN JOSE FINANCING AUTHORITY” and “CITY OF SAN JOSE” herein.
The Authority ha s entered into a Trust Agreement dated as of January 1, 2004 between the Authority and Computershare Trust Company, National Association (as successor trustee to Wells Fargo Bank, National Association), as trustee (the “Trustee”), as amended and restated by an Amended and Restated Trust Agreement dated as of June 1, 2005, as supplemented and amended by the First Supplement to Amended and Restated Trust Agreement dated as of November 1, 2005, the Second Supplement to Amended and Restated Trust Agreement dated as of October 1, 2008, the Third Supplement to Amended and Restated Trust Agreement dated as of April 1, 2010, the Fourth Supplement to Amended and Restated Trust Agreement dated as of February 1, 2013, the Fifth Supplement to Amended and Restated Trust Agreement dated as of August 1, 2017, and the Sixth Supplement to Amended and Restated Trust Agreement dated as of August 1, 2018, the Seventh Supplement to Amended and Restated Trust Agreement, dated as of September 1, 2021, and the Eighth Supplement to Amended and Restated Trust Agreement, dated as May 1, 2025 (the “Eighth Supplement”) (as so amended and as may further be amended, the “Trust Agreement”), and an Issuing and Paying Agent Agreement dated as of January 1, 2004 between the Authority and Computershare Trust Company, National Association ( as successor trustee to Wells Fargo Bank, National Association), as issuing and paying agent (the “Issuing and Paying Agent ”), as amended and restated by the Second Amended and Restated Issuing and Paying Agent Agreement dated as of
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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February 1, 2013 and the Third Amended and Restated Issuing and Paying Agent Agreement dated as of May 1, 2025 (as so amended and as may further be amended, the “Issuing and Paying Agent Agreement”), pursuant to which the Authority is authorized to issue the following series of its commercial paper notes:
City of San José Financing Authority Tax- Exempt Lease Revenue Commercial Paper Notes, Series 1 (the “Series 1 Commercial Paper Notes”); and
City of San José Financing Authority Taxable Lease Revenue Commercial Paper Notes, Series 1-T (the “Series 1-T Commercial Paper Notes ” and, together with the Seri es 1 Commercial Paper Notes, the “Series One Commercial Paper Notes”).
The Series One Commercial Paper Notes are authorized to be issued for the purpose of providing moneys to finance and refinance certain capital and working capital expenditures of the Authority and the City, including capitalized interest, the costs of issuance of the Series One Commercial Paper Notes, certain ongoing fees of the Authority and the City with respect to the Series One Commercial Paper Notes , or any other lawful purpose of the City or the Authority if approved by the Authority and the City Council.
Certain Terms. Principal of and interest on the Series One Commercial Paper Notes are supported by the Series One Credit Facility (defined below). See “THE SERIES ONE LETTER OF CREDIT ” herein.
Principal of and interest on the Series One Commercial Paper Notes are also payable from the proceeds of the Series One Commercial Paper Notes issued to pay the principal of and interest on the Series One Commercial Paper Notes and, to the extent necessary, are also payable from Base Rental payments to be made by the City pursuant to a Sublease, dated as of January 1, 2004, by and between the Authority, as sublessor, and the City, as sublessee, as amended by a First Amendment to Sublease dated as of June 1, 2005, a Second Amendment to Sublease dated as of November 1, 2005, a Third Amendment to Sublease dated as of March 1, 2011, a Fourth Amendment to Sublease dated as of February 1, 2013, a Fifth Amendment to Sublease dated as of November 1, 2015, a Sixth Amendment to Sublease dated as of August 1, 2018, a Seventh Amendment to Sublease dated as of September 1, 2021, and an Eighth Amendment to Sublease dated as of May 1, 2025 (as so amended and as may further be amended, the “Sublease”).
Pursuant to the Trust Agreement, the Series One Commercial Paper Notes are authorized in a maximum combined aggregate principal amount outstanding at any one time of up to $175,000,000. Under the Trust Agreement, the Issuing and Paying Agent may not cause the issuance of Series One Commercial Paper Notes unless the Authority has certified to the Issuing and Paying Agent that the Series One Credit Facility will, upon the issuance of such Series One Commercial Paper Notes, be in an amount sufficient to pay the principal of all outstanding Series One Commercial Paper Notes and interest thereon at the rates then in effect with respect to the Series One Commercial Paper Notes through the maturity dates thereof. The Series One Commercial Paper Notes are permitted to be issued in denominations of $100,000 and integral multiples of $1,000 in excess thereof in book-entry form through the book- entry system of the Depository Trust Company, New York, New York (“DTC”). See APPENDIX B – “BOOK ENTRY SYSTEM.” The Series One Commercial Paper Notes shall bear interest at an annual rate not in excess of 10% per annum and have a purchase price of 100% of the principal amount thereof. Interest on the Series One Commercial Paper Notes is payable on their respective maturity dates.
The Series One Commercial Paper Notes will mature not more than 270 days after their respective dates of issuance, and in no event later than the five days prior to the expiration of the Credit Facility on [May 20, 2030] unless the Authority shall have arranged for an Alternate Credit Facility or the termination date of the Series One Credit Facility shall have been extended.
“Alternate Credit Facility ” means an irrevocable letter of credit, a line or lines of credit, a noncancellable insurance policy or other credit facility provided by an alternate credit provider to facilitate the payment of the Series One Commercial Paper Notes in accordance with the applicable provisions of the Trust Agreement, as such alternate credit facility may be amended or supplemented from time to time.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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“Series One Credit Facility ” means, as more fully described below under the caption “ THE SERIES ONE LETTER OF CREDIT,” that certain irrevocable direct-pay letter of credit issued by TD Bank, N.A. (the “Bank”) pursuant to the Series One Reimbursement Agreement (as defined below), and as it may be amended, modified or revised (the “Series One Letter of Credit”), and upon the issuance of any Alternate Credit Facility for the Series One Commercial Paper Notes, such Alternate Credit Facility. “Series One Reimbursement Agreement ” means the Letter of Credit and Reimbursement Agreement dated as of May 1, 2025, among the Authority, the City and the Bank, as the same may be amended, supplemented or otherwise modified from time to time.
THE SERIES ONE COMMERCIAL PAPER NOTES ARE SPECIAL OBLIGATIONS OF THE
AUTHORITY PAYABLE SOLELY FROM THE AMOUNTS PLEDGED THEREFOR IN THE TRUST
AGREEMENT, INCLUDING BASE RENTAL PAYMENTS MADE BY THE CITY PURSUANT TO THE
SUBLEASE AND FROM AMOUNTS HELD BY THE TRUSTEE AND THE ISSUING AND PAYING AGENT IN CERTAIN FUNDS AND ACCOUNTS ESTABLISHED UNDER THE TRUST AGREEMENT.
THE OBLIGATION OF THE CITY TO PAY BASE RENTAL DOES NOT CONSTITUTE AN OBLIGATION
OF THE CITY FOR WHICH THE CITY IS OBLIGATED TO LEVY OR PLEDGE, OR HA S LEVIED OR PLEDGED, ANY FORM OF TAXATION. NEITHER THE SERIES ONE COMMERCIAL PAPER NOTES
NOR THE OBLIGATION OF THE CITY TO PAY BASE RENTAL PAYMENTS CONSTITUTES AN
INDEBTEDNESS OF THE CITY, THE STATE OF CALIFORNIA OR ANY OF ITS POLITICAL
SUBDIVISIONS WITHIN THE MEANING OF THE CONSTITUTION OR LAWS OF THE STATE OF CALIFORNIA. THE AUTHORITY HAS NO TAXING POWER AND NO OBLIGATION TO PAY BASE RENTAL. UNDER CERTAIN CIRCUMSTANCES, BASE RENTAL PAYMENTS MAY BE ABATED UNDER THE SUBLEASE.
The Series Two Commercial Paper Notes
The Trust Agreement also provides for the City of San José Financing Authority Tax- Exempt Lease Revenue Commercial Paper Notes, Series 2 and City of San José Financing Authority Taxable Lease Revenue Commercial Paper Notes, Series 2-T (collectively, the “Series Two Commercial Paper Notes” ). Prior to May [20], 2025, the Series Two Commercial Paper Notes were outstanding and supported by an irrevocable direct- pay letter of credit (the “U.S. Bank Letter of Credit”) pursuant to that certain Letter of Credit and Reimbursement Agreement dated as of Febru ary 1, 2013, among the Authority, the City and U.S. Bank National Association (“U.S. Bank”), as amended from time to time, with an expiration date of June 20, 2025. On [_____ __], 2025, U.S. Bank provided notice to the Issuing and Paying Agent not to authenticate and deliver any additional Series Two Commercial Paper Notes supported by the U.S. Bank Letter of Credit and instructing the Issuing and Paying Agent to make the final drawing under the U.S. Bank Letter of Credit and notifying the Issuing and Paying Agent that the U.S. Bank Letter of Credit would terminate on May [20], 2025. The Authority made a final draw under the U.S. Bank Letter of Credit and the U.S. Bank Letter of Credit was subsequently terminated on May [20], 2025. As provided in the Eighth Supplement, as of May [20], 2025, no credit facility has been delivered with respect to the Series Two Commercial Paper Notes, and no Series Two Commercial Paper Notes may be issued on and after such date. The Series Two Commercial Paper Notes are n ot being offered pursuant to this Offering Memorandum.
CITY OF SAN JOSE FINANCING AUTHORITY
The Authority was formed pursuant to a Joint Exercise of Powers Agreement, dated December 8, 1992 (the “Authority Formation Agreement”), by and between the City and the former Redevelopment Agency of the City of San José (the “Agency ”), and is qualified to issue the Series One Commercial Paper Notes under the Trust Agreement and the Issuing and Paying Agent Agreement. As a result of changes to the Community Redevelopment Law, the Agency was dissolved on February 1, 2012, and the City, pursuant to the change s in the Community Redevelopment Law, acts as the successor agency to the Agency (the “Successor Agency”). The
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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Authority, the Successor Agency and the City are each separate and distinct legal entities, and the debts and obligations of one such entity are not the debts or obligations of the other entities.
CITY OF SAN JOSE
The City is the thirteenth largest city in the United States and the third largest city in California (the “State”) with a J anuary 1, 2024 population estimate at 969,491, according to the California Department of Finance. The territory of the City encompasses approximately 180 square miles. Located at the southern end of the San Francisco Bay, the City is the county seat of the County of Santa Clara.
The City is governed by the City Council, consisting of a Mayor and ten other council members. The Mayor is elected at large for a four- year term. Council members are elected by district for staggered four -year terms. The Mayor and the council members are limited to two consecutive four-year terms. The City is a charter city, which means the City, through its charter (the “ Charter”), may regulate municipal affairs, subject only to restrictions and limitations provided in the Charter. In matters other than municipal affairs or in matters of statewide concern, the City is subject to State law.
The City Council appoints the City Manager who is responsible for the operation of all municipal functions except the offices of City Attorney, City Clerk, City Auditor and Independent Police Auditor. The officials heading these offices are appointed by the City Council and carry out the policies set forth by the City Council.
The City provides a full range of services contemplated by statute or charter, including those functions delegated to cities under State law. These services are organized in five key lines of business—Community and Economic Development, Environmental and U tility Services, Neighborhood Services, Public Safety, Transportation and Aviation Services and Strategic Support.
THE SERIES ONE LETTER OF CREDIT
The following are summaries of certain provisions of the Series One Letter of Credit and the Series One Reimbursement Agreement. The following summaries do not purport to be full and complete statements of the provisions of the Series One Letter of Credit or the Series One Reimbursement Agreement , which documents should be read in full for a complete understanding of all the terms and provisions thereof. Copies of the Series One Letter of Credit and the Series One Reimbursement Agreement (in their current form) may be obtained from the City.
In addition to the foregoing, the Authority has agreed in the Trust Agreement to maintain the Series One Credit Facility for the Series One Commercial Paper Notes while the Series One Commercial Paper Notes remain outstanding provided that the Authority may replace the Series One Credit Facility upon 30 days prior written notice to the Dealer s, the Trustee and the Issuing and Paying Agent so long as the replacement of the Credit Facility does not result in a downgrade or withdrawal of the then current ratings on the Series One Commercial Paper Notes, evidenced by a written notification from a Rating Agency, and provided that the Authority provides 15 days’ notice to noteholders of a substitution of a Letter of Credit.
The Series One Letter of Credit
The following is a summary of certain provisions of the Series One Letter of Credit. This summary is not to be considered a full statement of the terms of either of the Letters of Credit and accordingly is qualified by reference thereto and is subject to the full text thereof. Except as otherwise defined herein, capitalized terms used in this Offering Memorandum without definition have the respective meanings set forth in the applicable Letters of Credit.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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Pursuant to the Series One Reimbursement Agreement, the Bank has issued an irrevocable direct -pay letter of credit, at the request and for the account of the Authority and the City, in favor of the Issuing and Paying Agent with respect to the Series One Commercial Paper Notes, in the maximum available amount of $187,945,205 (the “Stated Amount”), which may be drawn upon from time to time in respect of the principal and actual interest accrued on the Series One Commercial Paper Notes. The Stated Amount of the Series One Letter of Credit is subject to reductions and reinstatements as provided therein. The Series One Letter of Credit is available only with respect to the Series One Commercial Paper Notes. Drawings by the Issuing and Paying Agent under the Series One Letter of Credit will reduce the amounts available for subsequent drawings under such Letter of Credit, subject to reinstatement as provided in the Series One Letter of Credit. All drawings under the Series One Letter of Credit will be paid with the Bank’s own funds and will not be paid directly or indirectly from funds or collateral on deposit with or for the account of, or pledged with or for the account of, the Bank by the Authority. The Bank will seek reimbursement for payments made pursuant to drawings under the Series One Letter of Credit only after such payments have been made.
The Series One Letter of Credit shall terminate upon the date (the “Letter of Credit Termination Date”) which is the earliest of (i) the later of the date on which the Bank receives a specified written notice from the Issuing and Paying Agent that an Alternate Credit Facility has been substituted for the Series One Letter of Credit in accordance with the Trust Agreement or the effective date of any such Alternate Credit Facility, (ii) the date on which the Bank receives a specified written notice from the Issuing and Paying Agent that there are no longer any Series One Commercial Paper Notes Outstanding within the meaning of the Trust Agreement and that the Issuing and Paying Agent elects to terminate such Letter of Credit, or (iii) 5 P.M. (New York City time) on [May 20, 2030] Stated Expiration Date (the “Stated Expiration Date ”), or (iv) the earlier of (a) the 15th calendar day after the date on which the Issuing and Paying Agent receives the Final Drawing Notice, and (b) the date on which the Drawing resulting from the delivery of the Final Drawing Notice is honored thereunder. The Stated Expiration Date of the Series One Letter of Credit may be extended as provided in the Series One Reimbursement Agreement.
The City and the Authority may also request the Bank to decrease the Stated Amount of t he Letter of Credit from time to time prior to the Letter of Credit Termination Date. Upon receipt of such request including a certification by the City and the Authority that upon such reduction the Stated Amount of the Series One Letter of Credit will not be less than the principal amount of all outstanding Series One Commercial Paper Notes plus an interest coverage amount equal to the sum of the products of the principal amount of the Series One Commercial Paper Note supported by the Series One Letter of Credit times the maximum interest rate of 10% per annum borne by the Series One Commercial Paper Note, divided by 365, times the number of days from the date of issuance of the Series One Commercial Paper Note to and including the maturity date of the Series One Commercial Paper Note, the Bank will notify the Issuing and Paying Agent by means of a specified notice, thereby reducing the Stated Amount of the Series One Letter of Credit on the specified decrease date.
The Series One Reimbursement Agreement
The following is a summary of certain provisions of the Series One Reimbursement Agreement . This summary is not to be considered a full statement of the terms of the Series One Reimbursement Agreement and accordingly is qualified by reference thereto and is subject to the full text thereof. Except as otherwise defined herein, capitalized terms used in this Offering Memorandum without definition have the respective meanings set forth in the Series One Reimbursement Agreement.
The Authority, the City and the Bank have entered into the Series One Reimbursement Agreement.
Among other things, the Series One Reimbursement Agreement provides for (a) the repayment to the Bank of all draws made under the Series One Letter of Credit, together with specified interest thereon; (b) the payment or reimbursement to the Bank of certain specified fees, costs and expenses; (c) affirmative and negative covenants to be observed on the part of the Authority and the City; and (d) certain indemnification obligations on the part of the Authority and the City. The Bank will also have certain rights and remedies upon the occurrence and continuance of specified events of default in the Series One Reimbursement Agreement, including the
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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ability, by notice to the Authority and the Issuing and Paying Agent (i) to deliver a notice to the Issuing and Paying Agent (a “No-Issuance Notice”) requiring the Issuing and Paying Agent to cease authenticating Series One Commercial Paper Notes unless and until such No- Issuance Notice is rescinded, (ii) to deliver a notice to the Issuing and Paying Agent (a “ Final Drawing Notice ”) requiring the Issuing and Paying Agent to cease authenticating Series One Commercial Paper Notes unless and until such No- Issuance Notice is rescinded, instructing the Issuing and Paying Agent to make the final drawing under the Letter of Credit to provide for the payment of Series 1 Notes issued in accordance with the Issuing and Paying Agent Agreement and the Trust Agreement that are both outstanding on the date thereof and maturing or are thereafter to mature, and causing the Letter of Credit Termination Date of the Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Issuing and Paying Agent, (iii) to declare the applicable Revolving Note, in whole or in part, all or some advances, as well as any other reimbursement obligations under the Series One Reimbursement Agreement and all interest thereon to be a default advance under the Series One Reimbursement Agreement due and payable in the manner set forth therein, or (iv) to take any other action permitted by law.
Upon any action by the Bank, as contemplated in the foregoing clause (i), the Stated Amount shall be permanently reduced upon, and by the amount of, each drawing under the Series One Letter of Credit following the occurrence of an Event of Default. Upon any action by the Bank, as contemplated in the foregoing clause (ii), the Letter of Credit Termination Date of the Letter of Credit to occur on the fifteenth (15) calendar day after the date of receipt thereof by the Issuing and Paying Agent. Notwithstanding the foregoing, the occurrence of an Event of Default shall not affect the Bank’s obligations under the Series One Letter of Credit with respect to the Series One Commercial Paper Notes that are outstanding at the time of the occurrence of such Event of Default, and the Issuing and Paying Agent shall continue to have the right to draw under the Series One Letter of Credit to pay the principal of and accrued interest on maturing Series One Commercial Paper Notes that are outstanding at the time of the occurrence of such Event of Defa ult. No failure on the part of the Bank to exercise, and no delay in exercising, any right under the Series One Reimbursement Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right under the Series One Reimbursement Agreement preclude any other or further exercise thereof or the exercise of any other right. No notice to or demand on the Authority or the City in any case shall entitle the Authority or the City to any other or further notice or demand in similar or other circumstances or const itute a waiver of the right of the Bank to any other or further action in any circumstances without notice or demand. The remedies provided in the Series One Reimbursement Agreement are cumulative and not exclusive of any remedies provided by law.
SERIES ONE LETTER OF CREDIT BANK
The following information concerning the Bank has been provided by representatives of the Bank and has not been independently confirmed or verified by the Dealer s, the Authority, or the City. No representation is made herein as to the accuracy or adequacy of such information or as to the absence of material adverse changes in such information subsequent to the date hereof, or that the information given below or incorporated herein by reference is correct as of any time subsequent to its date. [Updated language in early-May]
TD Bank, N.A. is a national banking association organized under the laws of the United States, with its main office located in Wilmington, Delaware. The Bank is an indirect, wholly owned subsidiary of The Toronto-Dominion Bank ( “TD”) and offers a full range of banking services and products to individuals, businesses and governments throughout its market areas, including commercial, consumer and trust services and indirect automobile dealer financing. The Bank operates banking offices in Connecticut, Delaware, the District of Columbia, Florida, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, North Carolina, New York, Pennsylvania, Rhode Island, South Carolina, Vermont and Virginia. As of December 31, 2024, the Bank had consolidated assets of $372.7 billion, consolidated deposits of $297.2 billion and stockholder's equity of $46.5 billion, based on regulatory accounting principles.
Additional information regarding the foregoing, and the Bank and TD, is available from the filings made by TD with the U.S. Securities and Exchange Commission (the “ SEC”), which filings can be inspected and
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549, at prescribed rates. In addition, the SEC maintains a website at http://www.sec.gov, which contains reports, proxy statements and other information regarding registrants that file such information electronically with the SEC.
The information concerning TD and the Bank contained herein is furnished solely to provide limited introductory information and does not purport to be comprehensive. Such information is qualified in its entirety by the detailed information appearing in the documents and financial statements referenced herein.
The Series One Letter of Credit has been issued by the Bank and is the obligation of the Bank and not TD.
The Bank will provide copies of the publicly available portions of the most recent quarterly Call Report of the Bank delivered to the Comptroller of the Currency, without charge, to each person to whom this document is delivered, on the written request of such person. Written requests should be directed to:
TD Bank, N.A.
1701 Route 70 East
Cherry Hill, New Jersey 08034
Attn: Corporate and Public Affairs
Information regarding the financial condition and results of operations of the Bank is contained in the quarterly Call Reports of the Bank delivered to the Comptroller of the Currency and available online at https://cdr.ffiec.gov/public. General information regarding the Bank may be found in periodic filings made by TD with the SEC. TD is a foreign issuer that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare certain filings with the SEC in accordance with the disclosure requirements of Canada, its home country.
Canadian disclosure requirements are different from those of the United States. TD’s financial statements are prepared in accordance with International Financial Reporting Standards, and may be subject to Canadian auditing and auditor independence standards, and thus may not be comparable to financial statements of United States companies prepared in accordance with United States generally accepted accounting principles.
The delivery hereof shall not create any implication that there has been no change in the affairs of TD or the Bank since the date hereof, or that the information contained or referred to in this Appendix A is correct as of any time subsequent to its date.
NEITHER TD NOR ANY OTHER SUBSIDIARY OF TD OTHER THAN THE BANK IS OBLIGATED TO MAKE PAYMENTS UNDER THE SERIES ONE LETTER OF CREDIT.
The Bank is responsible only for the information contained in this section of the Offering Memorandum and did not participate in the preparation of, or in any way verify the information contained in, any other part of the Offering Memorandum. Accordingly, the Bank assumes no responsibility for and makes no representation or warranty as to the accuracy or completeness of information contained in any other part of the Offering Memorandum.
TAX MATTERS
In the opinion of Anzel Galvan LLP, Note Counsel, [Tax language to come].
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LEGAL MATTERS
Anzel Galvan LLP, Note Counsel, rendered the legal opinion described in “TAX MATTERS” above, the form of which is set forth in APPENDIX A hereto. Bond Counsel is not passing upon and undertakes no responsibility for the accuracy, completeness or fairness of the information contained in this Offering Memorandum.
Upon the issuance of the Series One Letter of Credit and the entering into the Series One Reimbursement Agreement, outside counsel to the Bank delivered its opinion relating to such Letters of Credit and Reimbursement Agreement.
CERTAIN RELATIONSHIPS
[Distribution language under review]
Morgan Stanley & Co. LLC, one of the Dealers of the Series One Commercial Paper Notes, has entered into a retail distribution arrangement with its affiliate, Morgan Stanley Smith Barney LLC. As part of the distribution arrangement, Morgan Stanley & Co. LLC may distribute securities to retail investors through the financial network of Morgan Stanley Smith Barney LLC. As part of this arrangement, Morgan Stanley & Co.
LLC may compensate Morgan Stanley Smith Barney LLC for its efforts with respect to the Series One Commercial Paper Notes.
TD Securities (USA) LLC (“TD Securities”), one of the Dealers of the Series One Commercial Paper Notes, has entered into two negotiated dealer agreements (the “TD Dealer Agreements”) with Charles Schwab & Co., Inc. (“CS&Co.”) and InvestorLink Capital Markets, LLC (“ICM”). These agreements allow CS&Co. and ICM to provide for the retail distribution of certain securities offerings, including the Series One Commercial Paper Notes at original issue prices. Pursuant to the TD Dealer Agreements, CS&Co. and ICM may purchase Series One Commercial Paper Notes from TD Securities at the original issue prices less a negotiated portion of the selling concessions applicable to any of the Series One Commercial Paper Notes that CS&Co. or ICM sells. [TD Securities is a subsidiary of TD Bank N.A., the provider of the Series One Letter of Credit for the Series One Commercial Paper Notes.] [To be confirmed]
RATINGS
S&P Global Ratings, Moody’s Ratings, and Fitch Ratings has assigned its ratings of “[__]”, “[__]” and “[__],” respectively, to the Series One Commercial Paper Notes. Such ratings reflect only the views of each respective rating agency, and an explanation of the significance of such ratings, and any outlook associated with such ratings, may be obtained only from t he respective rating agency. The Bank furnished certain information to such rating agencies regarding the Bank and the Series One Letter of Credit. In addition, the Authority furnished to such rating agencies certain information and materials regarding the Series One Commercial Paper Notes.
There is no assurance such ratings will continue for any given period or that they will not be revised downward or withdrawn entirely by the rating agencies, if in the judgment of such rating agencies, circumstances so warrant and, therefore, any prospective purchaser should confirm the ratings prior to purchasing the Series One Commercial Paper Notes. Any such change in or withdrawal of such ratings could have an adverse effect on the market price of the Series One Commercial Paper Notes. The above ratings are not recommendations to buy, sell or hold the Series One Commercial Paper Notes. Neither the Authority nor the City has undertaken to provide notice to the holders of the Series One Commercial Paper Notes of any change in the ratings on the Series One Commercial Paper Notes.
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ABSENCE OF MATERIAL LITIGATION RELATING TO
THE SERIES ONE COMMERCIAL PAPER NOTES
There is no action, suit, proceeding, inquiry or investigation, at law or in equity, before or by any court, government agency, public board or body pending or, to the best of the knowledge of the Authority or the City after reasonable investigation, threatened in writing with proper service having been accomplished any way (i) seeking to restrain or enjoin the issuance, sale or delivery of any of the Series One Commercial Paper Notes or (ii) challenging the validity of the Series One Commercial Paper Notes.
EXEMPTION FROM CONTINUING DISCLOSURE OBLIGATIONS
The Series One Commercial Paper Notes are exempt from the continuing disclosure requirements of Securities Exchange Commission Rule 15c2-12 , as amended , and neither the Authority nor the City has undertaken to provide any secondary market information regarding the Series One Commercial Paper Notes.
The Authority and the City file official statements and continuing disclosure reports and notices with respect to certain of their outstanding bonds and notes with the Municipal Securities Rulemaking Board (the “MSRB”).
Such filings may be accessed through the Electronic Municipal Market Access ( “EMMA”) website of the MSRB, currently located at https://emma.msrb.org. Neither such website nor the information contained therein (including such filings) are incorporated by reference herein.
ADDITIONAL INFORMATION
The information and expressions of opinion in this Offering Memorandum are subject to change without notice, and neither the delivery thereof nor the delivery of this Offering Memorandum shall, under any circumstances, create any implication that there has been no change in the affairs of the Authority or the City or such information or expressions of opinion since the date hereof.
No dealer or other person has been authorized by the Authority or the City to give any information or to make any representations other than those contained in this Offering Memorandum, and if given or made, such other information or representations must not be relied upon as having been authorized by the Authority or the City.
The Dealers have provided the following sentence for inclusion in this Offering Memorandum. The Dealers have reviewed the information in this Offering Memorandum in accordance with, and as part of, their responsibility to investors under the federal securities law as applied to the facts and circumstances of this transaction, but the Dealers do not guarantee the accuracy or completeness of such information.
For general information with respect to the City’s operations and financial condition, reference is made to the City’s Annual Comprehensive Financial Report ( “ACFR”) for the fiscal year June 30, 2024. The City’s ACFR for the fiscal year ended June 30, 2024 is available on the “Reports” tab of the Department of Finance’s page on the City’s website: http://www.sanjoseca.gov/. Requests for a copy of the ACFR or additional information should be directed to:
City of San José
c/o Finance Department – Debt Management
200 East Santa Clara Street, 13th Floor
San José, California 95113-1905
Phone: (408) 535-7010
E-mail: [email protected]
If you require additional information or have any questions, please call or write to the Dealers at the following addresses:
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Barclays Capital Inc.
745 7th Avenue, 2nd Floor
New York, New York 10019
Attention: Municipal Short Term Desk
Phone: (212) 528-1011
Facsimile: (646) 758-1870
E-mail: [email protected]
Morgan Stanley & Co. LLC
[Contact info to come]
TD Securities (USA) LLC
[Contact info to come]
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.
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APPENDIX A
FORM OF NOTE COUNSEL OPINION
[To come]
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APPENDIX B
BOOK-ENTRY SYSTEM
The information concerning The Depository Trust Company (“DTC”), New York, New York, and DTC’s book entry system has been obtained from DTC and the Dealers take no responsibility for the completeness or accuracy thereof. The Dealers cannot and do not give any assurances that DTC, Direct Participants (as defined herein), or Indirect Participants (as defined herein) will distribute to the Beneficial Owners (as defined herein) (a) payments of interest, principal or premium, if any, with respect to the Series One Commercial Paper Notes, (b) certificates representing ownership interest in or other confirmation or ownership interest in the Series One Commercial Paper Notes, or (c) redemption or other notices sent to DTC or Cede & Co., its nominee, as the registered owner of the Series One Commercial Paper Notes , or that they will so do on a timely basis, or that DTC, Direct Participants or Indirect Participants will act in the manner described herein. The current “Rules” applicable to DTC are on file with the Securities and Exchange Commission and the current “ Procedures” of DTC to be followed in dealing with DTC Participants are on file with DTC.
DTC acts as securities depository for the Series One Commercial Paper Notes . The Series One Commercial Paper Notes are issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or such other name as may be requested by an authorized representative of DTC. One fully-registered security certificate is issued for each maturity of the Series One Commercial Paper Notes, each in the aggregate principal amount of such maturity, and is deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “ clearing corporation ” within the meaning of the New York Uniform Commercial Code, a “clearing organization” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934. DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non- U.S. equity issues, corporate and municipal debt issues, and money market instruments (from over 100 countries) that DTC’s participants (“Direct Participants”) deposit with DTC. DTC also facilitates the post- trade settlement among Direct Participants of sales and other securities transactions in deposited securities, through electronic computerized book-entry transfers and pledges between Direct Participants’ accounts. This eliminates the need for physical movement of securities certificates. Direct Participants include both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ( “DTCC”). DTCC is the holding company for DTC, National Securities Clearing Corporation and Fixed Income Clearing Corporation, all of which are registered clearing agencies. DTCC is owned by the users of its regulated subsidiaries. Access to the DTC system is also available to others such as both U.S. and non- U.S. securities brokers and dealers, banks, trust companies, and clearing corporations that clear through or maintain a custodial r elationship with a Direct Participant, either directly or indirectly (“Indirect Participants”). DTC has a Standard & Poor’s rating of AA+.
The DTC Rules applicable to its Participants are on file with the Securities and Exchange Commission. More information about DTC can be found at www.dtcc.com. The information set forth on such websites is not incorporated herein by reference.
Purchases of the Series One Commercial Paper Notes under the DTC system must be made by or through Direct Participants, which receive a credit for the Series One Commercial Paper Notes on DTC’s records. The ownership interest of each actual purchaser of each Commercial Paper Note (“Beneficial Owner”) is in turn recorded on the Direct and Indirect Participants’ records. Beneficial Owners do not receive written confirmation from DTC of their purchase. Beneficial Owners are, however, expected to receive written confirmations providing details of the transaction, as well as periodic statements of their holdings, from the Direct or Indirect Participant through which the Beneficial Owner entered into the transaction. Transfers of ownership interests in the Series One Commercial Paper Notes are accomplished by entries made on the books of Direct and Indirect Participants acting on behalf of Beneficial Owners. Beneficial Owners do not receive
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certificates representing their ownership interests in the Series One Commercial Paper Notes, except in the event that use of the book-entry system for the Series One Commercial Paper Notes is discontinued.
To facilitate subsequent transfers, all Series One Commercial Paper Notes deposited by Direct Participants with DTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the Series One Commercial Paper Notes with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of the Series One Commercial Paper Notes; DTC’s records reflect only the identity of the Direct Participants to whose accounts such Series One Commercial Paper Notes are credited, which may or may not be the Beneficial Owners. The Direct and Indirect Participants will remain responsible for keeping account of their holdings on behalf of their customers.
The conveyance of notices and other communications by DTC to Direct Participants, by Direct Participants to Indirect Participants, and by Direct Participants and Indirect Participants to Beneficial Owners are governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time. Beneficial Owners of the Series One Commercial Paper Notes may wish to take certain steps to augment the transmission to them of notices of significant events with respect to the Series One Commercial Paper Notes, such as redemptions, tenders, defaults, and proposed amendments to the Commercial Paper Note documents. For example, Beneficial Owners of the Series One Commercial Paper Notes may wish to ascertain that the nominee holding the Series One Commercial Paper Notes for their benefit has agreed to obtain and transmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to provide their names and addresses to the registrar and request that copies of notices be provided directly to them.
Payments of principal of and interest on the Series One Commercial Paper Notes must be made to Cede & Co., or such other nominee as may be requested by an authorized representative of DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of funds and corresponding detail information from the Authority or the Issuing and Paying Agent, on payable dates in accordance with their respective holdings shown on DTC’s records. Payments by Participants to Beneficial Owners are governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and are the responsibility of such Participant and not of DTC (nor its nominee), the Issuing and Paying Agent, or the Authority, subject to any statutory or regulatory requirements as may be in effect from time to time. Payment of principal of, premium, if any, and interest evidenced by the Series One Commercial Paper Notes to Cede & Co. (or such other nominee as may be requested by an authorized representative of DTC) is the responsibility of the Authority or the Issuing and Paying Agent, disbursement of such payments to Direct Participants is the responsibility of DTC, and disbursement of such payme nts to the Beneficial Owners is the responsibility of Direct and Indirect Participants.
None of the Authority, the Dealers, the Issuing and Paying Agent, nor the Banks can give any assurances that DTC, Direct Participants, Indirect Participants or others will distribute payments of principal of and interest on the Series One Commercial Paper Notes paid to DTC or its nominee, as the registered Owner, or any notice, to the Beneficial Owners or that they will do so on a timely basis or that DTC will serve and act in a manner described in this Offering Memorandum.
DTC may discontinue providing its services as depository with respect to the Series One Commercial Paper Notes at any time by giving reasonable notice to the Authority or the Issuing and Paying Agent. Under such circumstances, in the event that a successor depository is not obtained, Commercial Paper Note certificates are required to be printed and delivered.
The Authority may decide to discontinue use of the system of book- entry transfers through DTC (or a successor securities depository). In that event, Commercial Paper Note certificates will be printed and delivered.
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In the event that the book-entry system is discontinued as described above, the requirements of the Trust Agreement will continue to apply. The foregoing information concerning DTC and DTC’s book- entry system has been provided by DTC, and none of the Authority, the Dealers, the Issuing and Paying Agent, nor the Banks take any responsibility for the accuracy thereof.
DRAFT--Contact the Office of the City Clerk at (408) 535-1260 or [email protected] for final document.