TO: HONORABLE MAYOR
AND CITY COUNCIL
FROM: Maria Öberg
SUBJECT: Fiscal Year 2025-2026
Property Tax Levy for
General Obligation Bonds
DATE: July 21, 2025
Approved
Date:
7/21/25
COUNCIL DISTRICT: Citywide
RECOMMENDATION
Adopt a resolution establishing the Fiscal Year 2025-2026 property tax levy on all taxable property within the City of San José for the purpose of funding the City’s general obligation bonded indebtedness and to pay the respective administration fee to the County of Santa Clara.
SUMMARY AND OUTCOME
Approval of the recommendation will place the property tax levy on the Fiscal Year (FY) 2025-2026 tax roll, which will generate tax revenue sufficient to pay (i) when combined with other funds, debt service due in calendar year 2026 on the following series of general obligation (GO) Bonds issued by the City of San José (City):
• Series 2019 Bonds (Series 2019A-1, Series 2019B, and Series 2019C) 1, Series
2021A Bonds (the Series 2021 Bonds2) and Series 2025 Bonds (Series 2025A, Series 2025B and Series 2025C3 and, together with the Series 2019 and 2021 Bonds, the GO Bonds);
1 The Series 2019A-1 and Series 2019B Bonds were issued under Measure T (2018) authorization and Series 2019C Bonds and Series 2019D Bonds refunded all outstanding bonds issued under the Measure O (2000), Measure P (2000), and Measure O (2002) authorizations, and utilized then remaining unissued authorizations under Measure O (2000) and Measure O (2002). The Series 2019A-2 matured on September 1, 2019 and the Series 2019D Bonds matured on September 1, 2024. 2 The Series 2021C Bonds matured on September 1, 2021 and the Series 2021B Bonds matured on September 1, 2022.
3 The Series 2025C Bonds will mature on September 1, 2025 and will be fully paid from the premium resulting from the sale of the 2025A Bonds. No tax will be levied for the 2025C debt service.
COUNCIL AGENDA: 8/12/25
FILE: 25-801
ITEM: 3.7
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
and (ii) the annual administrative fee of the County of Santa Clara (County) for the respective tax roll collections for the GO Bonds (as defined above).
This action will result in the collection of approximately $50.4 million in secured tax collections and $1.7 million in unsecured tax collections which, when combined with approximately $8.6 million of cash balance remaining from prior year tax collections will be sufficient to pay $60.7 million in debt service due on the City’s GO Bonds, in March 2026 and September 2026 and the County’s $0.1 million annual administrative fee.
BACKGROUND
General Obligation Bond Measures
Measure O (2000) and Measure P (2000). At the City’s general election held on November 7, 2000, voters approved Measure O (2000), the San José Neighborhood Libraries Bond, that authorized the issuance of GO bonds not-to-exceed $211,790,000 and Measure P (2000), the San José Safe Parks Neighborhood Parks and Recreation Bond, that authorized the issuance of GO bonds not-to-exceed $228,030,000. The projects authorized to be funded by Measure O (2000) included the construction of new and expanded neighborhood library facilities; projects authorized to be funded by Measure P (2000) included construction of improvements to parks and recreational facilities. The remaining $5,905,000 authorized under Measure O (2000) for Library projects was issued under Series 2019C Bonds. There is no remaining authorization under Measure O (2000) or Measure P (2000).
Measure O (2002). At the City’s primary election held on March 5, 2002, voters approved Measure O (2002), the San José 911, Fire, Police, Paramedic, and Neighborhood Security Act, which authorized the issuance of GO bonds in the not-to- exceed amount of $159,000,000. The projects authorized to be funded by Measure O (2002) included the acquisition of property and construction of and improvements in various areas throughout the City to add and improve police stations, fire stations and training facilities, and create a state-of-the-art 911 communications facility. The remaining $3,325,000 authorized under Measure O (2002) for Public Safety projects was issued under Series 2019C Bonds.
Measure T (2018). At the City’s general election held on November 6, 2018, voters approved Measure T, Disaster Preparedness, Public Safety, and Infrastructure, that authorized the issuance of GO bonds in the not-to-exceed amount of $650,000,000 for the purpose of acquiring property for and constructing improvements to improve emergency and disaster response, repair deteriorating bridges vulnerable to earthquakes, repave streets and potholes in the worst condition, prevent flooding and water contamination, including the acquisition of land in the Coyote Valley for these purposes, and repair critical infrastructure, of which a total of $300,000,000 is dedicated to street repair.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
2025 General Obligation Bonds. On July 9, 2025, the City sold $209,570,000 of GO Bonds, Series 2025A (tax-exempt, in the amount of $181,740,000), Series 2025B (taxable, in the amount of $15,190,000) and Series 2025C (taxable, in the amount of $12,640,000), which constituted the third and final issuance of bonds under the Measure T authorization. Upon closing of the bonds on July 23, 2025, a portion of the proceeds of the Series 2025 Bonds were deposited in the debt service fund to pay a portion of the interest due on the 2025A Bonds and 2025B Bonds on March 1, 2026, and the principal and interest due on the 2025C bonds at maturity on September 1, 2025.
The first and second tranche of bonds under the Measure T authorization sold in 2019 and 2021 totaled $440,430,000. Following the issuance of the 2025 Bonds, no principal amount remains unissued pursuant to the authorization under Measure T.
General Obligation Tax Levy
The GO Bonds are general obligations of the City. In accordance with all relevant provisions of law, including Chapter 14.28 of the San José Municipal Code, the City is obligated to levy ad valorem taxes upon all property within the City subject to taxation by the City without limitation of rate or amount (except with respect to certain personal property that is taxed at limited rates) for the payment of the GO Bonds and interest thereon. The City is obligated to direct the County to collect such ad valorem taxes in such amounts and at such times as is necessary to ensure the timely payment of debt service on the GO Bonds. Debt service payments on the GO Bonds are due each year on March 1 and September 1.
Section 1216 of the San José City Charter limits the outstanding GO Bond debt of the City to 15% of the total assessed value of all real and personal property within the city limits (debt limit). For FY 2025-2026, the total assessed value of taxable property, provided by the County, is approximately $266.8 billion, which results in a total debt limit of approximately $40.0 billion (total assessed value x 15% = debt limit). As of the date of this City Council meeting, the City has $706.8 million in GO Bond debt outstanding, representing 1.8% of the debt limit and a remaining debt margin of $39.3 billion (debt limit less outstanding GO Bond debt).
The amount of the ad valorem tax to be levied by the City to repay the GO Bonds is determined by the relationship between the assessed valuation of all taxable property in the city and the amount of annual debt service due on the GO Bonds, by dividing the amount of the annual debt service due on the GO Bonds by the assessed valuation.
Fluctuations in the annual debt service on the GO Bonds, caused by future GO bond issuances or redemptions of bonds and changes in the assessed value of taxable property in the city, cause the annual tax rate to vary each year. The amount of tax levied each year is reduced to reflect a credit for any remaining balance from prior year tax collections.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
For the County to place the City GO Bond tax levy on the FY 2025-2026 property tax bill, it is necessary for the City Council to adopt a resolution approving the tax rate for FY 2025-2026. The FY 2025-2026 tax rate is based on the debt service payable on March 1, 2026 and September 1, 2026. The City must submit this tax rate to the County each year in August of the applicable tax year. Any collections in excess of the amounts needed to make the debt service payments are used as credits in the calculation of the GO Bond tax levy rate for the following year.
Presented below is a summary of the City’s GO Bond issuances and outstanding balances.
City of San José
General Obligation Bonds
Issuance Amounts and Outstanding Balances
Issuance Amount Principal
Outstanding
as of
September 2,
2025 (4) Issuance
Final
Maturity Measure T
2019
Refunding
Series 2019A-1 9/1/2049 $140,360,000 $140,360,000 Series 2019A-2 (2) 9/1/2019 33,040,000 - Series 2019B 9/1/2027 66,500,000 40,200,000
Series 2019C (1) 9/1/2035 $158,185,000 148,955,000 Series 2019D (2) 9/1/2024 103,935,000 - Series 2021A 9/1/2051 151,210,000 142,270,000
Series 2021B (2) 9/1/2022 8,450,000 -
Series 2021C (2) 9/1/2021 40,870,000 -
Series 2025A 9/1/2055 181,740,000 181,740,000
Series 2025B 9/1/2031 15,190,000 15,190,000
Series 2025C (3) 9/1/2025 12,640,000 -
Total $650,000,000 $262,120,000 $668,715,000
(1) A portion of the 2019C Bonds funded remaining projects under Measure O (2000) in the amount of $5,905,000 and under Measure O (2002) in the amount of $3,325,000. (2) The Bond Series 2019A-2, Series 2019D, Series 2021B and Series 2021C matured and are fully redeemed.
(3) The Series 2025C Bonds will mature on September 1, 2025 and will not be levied on the FY2025-26 tax roll.
(4)
Outstanding balance is the remaining (unamortized principal) on the GO Bonds. The FY 2025-2026 Tax Levy is calculated based on principal and interest due on these bonds in March and September 2026.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
ANALYSIS
As of September 2, 2025, there will be $668,715,000 of GO Bonds principal outstanding. The total GO Bond debt service payments due in calendar year 2026 is $60,688,913, which includes the principal and interest as shown in the table below.
City of San José
General Obligation Bonds
Debt Service – Tax Levy Requirements
(A) (B) (A - B)
Issuance
Final
Maturity
Debt Service
Due Calendar
Year 2026
Cash on Hand
Applied to Calendar
Year 2026 Debt
Service1
Net Debt
Service for Tax
Levy
Series 2019A-1 9/1/2049 $7,018,000 $1,261,954 $5,756,046 Series 2019B 9/1/2027 23,462,760 4,218,999 19,243,761 Series 2019C 9/1/2035 7,447,750 1,339,231 6,108,519
Series 2021A 9/1/2051 9,898,500 1,779,917 8,118,583
Series 2025A 9/1/2055 10,046,183 5,561 10,040,623
Series 2025B 9/1/2030 2,815,720 30,505 2,785,215
Total $60,688,913 $8,636,166 $52,052,747
County Administrative Fee 0.25% 130,132
Total GO Bonds Debt Service to be Levied $52,182,879
1 Cash on Hand (Fund 498) as of July 1, 2025, includes supplementary property tax revenue, which includes new construction and reassessed properties. Issuance premium from Series 2025 Bonds will be deposited to the debt service funds when bonds close on July 23, 2025.
The tax rate levy is calculated based on the total debt service due, net of funds on hand, plus the County administrative fee which for FY 2025-2026 totals $52,182,879. Due to the timing of receipt of property tax revenues, debt service payments due in calendar year 2026 are placed on the property tax roll for FY 2025-2026.
The secured tax rate for FY 2025-2026 is determined based on the City’s total assessed valuation on property in the City for FY 2025-2026; the unsecured tax rate is the prior fiscal year’s secured tax rate (i.e., FY 2024-2025). The unsecured taxes are ad valorem property taxes assessed to the owner of record as of January 1 of each year. The unsecured property tax is applied to personal property such as furniture, fixtures, machinery and equipment, and luxury items such as boats, jet skis, and planes; unsecured taxes are not secured by real property such as land. The Office of the County Controller-Treasurer has confirmed the secured and unsecured assessed valuations for FY 2025-2026 as shown in the tables below.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
City of San José
General Obligation Bonds
FY 2025-26 Tax Rate Calculation
Total GO Bonds Debt Service to be
Levied (1)
$52,182,879
FY 2025-26 Unsecured Tax Roll Collections (Estimated)
(A) FY 2024-25 Secured Tax Rate (2) 0.01570%
(B) 5-Year Average Collection Rate for Unsecured Property (2) 98.232% (C) FY 2025-26 Unsecured Property Assessed Value (2) 11,243,201,917
(A) x (B) x (C) = Estimated Unsecured Tax Roll Revenue (1,733,974)
Remaining GO Bonds Debt Service to be Levied $50,448,905
FY 2025-26 Secured Tax Roll Collections (Estimated)
(D) Remaining GO Bonds Debt Service to be Levied $50,448,905 (E) FY 2025-26 Secured Property Assessed Value (2) 255,509,428,472
(D) / (E) = Estimated Secured Tax Roll Rate
(Rounded and per $100 in assessed value) 0.01970
(1) Net of funds on hand
(2) Controller-Treasurer, Property Tax Division, County of Santa Clara, July 2025.
City of San José
Total Assessed Valuation
FY 2025-26
Types of Property (1)
Net Assessed Value (1)
Tax Rate
(per $100 in assessed value)
Secured $ 255,509,428,472 0.01970
Unsecured 11,243,201,917 0.01570
Total $ 266,752,630,389
(1) Provided by the County’s Controller-Treasurer.
This action will result in the collection of approximately $50.4 million in secured tax collections and $1.7 million in unsecured tax collections which, when combined with approximately $8.6 million of cash balance remaining from prior year tax collections, will be sufficient to pay $60.7 million in debt service due on the City’s GO Bonds, in March 2026 and September 2026 and the County’s $0.1 million annual administrative fee.
For FY 2025-2026, the City will levy approximately $20 per $100,000 of assessed value, or $145 on a single-family and condominium of an assessed valuation of approximately $736,000
4. 4 Per the Santa Clara County Assessor’s 2024-25 Annual Report (p. 44), the average assessed value for a single-family condominium home in San José is $735,993.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
EVALUATION AND FOLLOW-UP
This action places the property tax levy required for funding the City’s GO Bond indebtedness and the County’s administrative fee on the tax roll for FY 2025-2026 and requires no follow-up by the City Council.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office and the City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the August 12, 2025 City Council meeting. As described above, the voters authorized four separate GO Bond programs in 2000 (Measures O and P), 2002 (Measure O), and 2018 (Measure T).
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
CEQA
Not a Project, File No. PP17-004, Government Funding Mechanism or Fiscal Activity with no commitment to a specific project which may result in a potentially significant physical impact on the environment.
PUBLIC SUBSIDY REPORTING
This item does not include a public subsidy as defined in section 53083 or 53083.1 of the California Government Code or the City’s Open Government Resolution.
HONORABLE MAYOR AND CITY COUNCIL
July 21, 2025
Subject: Fiscal Year 2025-2026 Property Tax Levy for General Obligation Bonds
/s/
Maria Öberg
Director of Finance
For questions, please contact Qianyu Sun, Deputy Director of Finance – Debt and Treasury Management at [email protected] or (408) 535-7832.