1 June 17, 2025
City Council/SJFA Agenda Item 1
City Council Agenda Item 3.5
City of San José Financing Authority
Lease Revenue Refunding Bonds, Series 2025A
City of San José
General Obligation Bonds, Series 2025ABC
Maria Öberg, Director of Finance
Qianyu Sun, Deputy Director of Finance – Debt and Treasury Management
• Proceeds of the Series 2025A Bonds will
• Prepay $20.7 million of CP
• Provide $11.3 million of new money to fund construction of a new Administration and Operations Building for the Water Resources Division
• Refund $20.7 million outstanding Lease Revenue Refunding Bonds, Series 2013B
• The portion for the building will amortize on a level debt service basis, while refunding of 2013B Bonds will provide level savings versus the refunded bonds
2 LEASE REVENUE BONDS OVERVIEW
SOURCES* TOTAL
Par Amount $ 48,325,000
Net Premium 3,316,035
Release from 2013B Reserve Account 2,047,837
Total Sources $ 53,688,872
USES* TOTAL
Commercial Paper Redemption $ 20,700,000 Construction Fund 11,300,000
Deposit to Series 2013B Escrow Fund 20,945,278
Issuance Costs 743,594
Total Uses $ 53,688,872
0 1
2 3
4 $ in Millions
Fiscal Year ending June 30
2025A Debt Service by Purpose
Refunding Muni Water Building
*Preliminary, subject to change.
LEASE REVENUE BONDS STRUCTURE
3 Leased Property • If 2013B Bonds are refunded, Civic Center Garage and Muni Water Building, with Civic Center Garagereleased when Muni Water Building is certified for use and occupancy
• If 2013B Bonds are not refunded, Animal Shelter, Fire Station #1, and Muni Water Building, with Animal Shelter and Fire Station #1released when Muni Water Building is certified for use and occupancy Substitution of Assets Substitution is permitted so long as the estimated value of the Substitute Property is at least equal to the par amount of Bonds outstanding and Lease Payments do not exceed the fair rental value of the Substitute Property
Additional Bonds May be issued by Supplemental Indenture, so long as the estimated fair value of the Leased Property is equal to the aggregate principal amount of Bonds outstanding
No Reserve Accounts The Series 2025A Bonds will not be secured by a Reserve Account
GO BONDS MEASURE T
4 • Voter-approved in November 2018 for $650 million bond authorization • Approved projects include emergency and disaster response, bridges and pavement repair and maintenance, flood prevention, clean water, public safety, and other critical infrastructure needs
• $421.4 million of previously issued bond proceeds have been spent Series Issued Proposed To t a l
Series 2019 $239,900,000 $239,900,000
Series 2021 $200,530,000 $200,530,000
Series 2025 $209,570,000 $209,570,000
To t a l $440,430,000 $209,570,000 $650,000,000
• Issue $209.6 million
remaining authorization for
Measure T projects:
$159.0 million for bridges
and pavement
maintenance
$28.9 million for Public
Safety – fire stations and
police department
$15.7 million for Storm
Sewer
$6.0 million for Park and
Community Facilities /
Emergency Shelters
5 GO BONDS OVERVIEW
Aggregate GO Bond Debt Service
BOND RATINGS
6 The City continues to be one of the highest rated large cities in the nation and anticipates to affirm the current ratings with stable outlooks.
Moody’s S&P Fitch
GO Bonds Aa1 AA+ AAA
Lease Revenue Bonds Aa2 AA AA
IMPORTANCE OF DISCLOSURE
7 • Key Points to Remember:
Issuers of municipal securities have an obligation to ensure that information contained in their disclosure documents is accurate and complete in all material respects. Proper disclosure allows investors to understand and evaluate the financial health of the local municipality in which they invest
• Section 17(a) of the Securities Act of 1933 prohibits fraud in the offer or sale of securities • Section 10(b) of the Securities and Exchange Act of 1934 prohibits fraud in the purchase or sale of securities
• SEC Rule 10(b)(5) prohibits
Making any untrue statement of material fact
Omitting to state a material fact in the offer or sale of securities A fact is material if there is a substantial likelihood that its disclosure would be considered significant by a reasonable investor
REVIEWING THE OFFICIAL STATEMENTS
8 • The Official Statements provide material information on the purpose of the bonds, financing plan, source of repayment, security for the GO and lease revenue bonds, and certain risk factors, in addition to other information to help a reasonable investor to decide whether to buy or sell the bonds.
• Appendix A – financial, economic and demographic information about the City
• Appendix B – detailed information of the City's two retirement plans • Appendix E – Continuing Disclosure Certificate for 2025 Bonds • Elected officials not expected to be “fact checkers”
ELECTED OFFICIALS’ RESPONSIBILITY
• After review of the document, consider the following elements:
Have identified material risks and events been brought to the attention of staff, bond counsel and other professionals?
Have such risks and events been disclosed, and if not, what is the rationale for the non-disclosure?
• If any Councilmember or Authority Board member has any personal knowledge that any of the material information in the Official Statement is or may be false or misleading or that material information has been omitted, the Councilmember/Authority Board member must raise these issues prior to approval of the distribution of the document. • Council/Authority approval of Bond Documents and Preliminary Official Statement is consistent with good disclosure practices. 9 FINANCING SCHEDULE
• June 23: Receive Credit Ratings
• June 25: Post 2025ABC GO Bonds
POS
• July 8: Price 2025ABC GO Bonds
• July 22: Close 2025ABC GO
Bonds
• July 28: Post 2025A LRBs POS
• August 12: Price 2025A LRBs
• August 26: Close 2025A LRBs
10 June 2025
Su M Tu W Th F Sa
1 2 3 4 5 6 7
8 9 10 11 12 13 14
15 16 17 18 19 20 21
22 23 24 25 26 27 28
29 30
July 2025
Su M Tu W Th F Sa
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31
August 2025
Su M Tu W Th F Sa
1 2
3 4 5 6 7 8 9
10 11 12 13 14 15 16
17 18 19 20 21 22 23
24 25 26 27 28 29 30
31 COUNCIL/SJFA AGENDA ITEM 1 RECOMMENDATIONS
Conduct a public hearing approving issuance of 2025A Bonds in part for the financing of public improvements for the Muni Water Building Project.
Adopt a resolution authorizing and approving the issuance and sale by the Authority for Lease Revenue Bonds, Series 2025A in the principal amount not to exceed $53,000,000 to finance and refinance certain public capital improvements of the City, approving and authorizing the execution and delivery by the City of a Site Lease, a Lease Agreement, a Continuing Disclosure Certificate, and authorizing the distribution of an Official Statement in connection with the offering and sale of such bonds and authorizing the execution of necessary documents and certificates and related actions.
Under both the Debt Management Policy and SanJosé Municipal Code Section 4.34.200, approval of theissuance of the lease revenue bonds requires a two-thirds vote by the City Council (8 votes).
11 COUNCIL AGENDA ITEM 3.5 RECOMMENDATION
• It is recommended that the City Council:
Adopt a resolution authorizing the issuance and sale of general obligation bonds in an aggregate principal amount not to exceed $209,570,000, authorizing and directing the execution of a Fiscal Agent Agreement and Continuing Disclosure Certificate,
authorizing the distribution of an Official Statement in connection with the offering of such bonds and authorizing the execution of necessary documents and certificates and related actions. 12