FIRST QUARTER FINANCIAL REPORT
FISCALYEAR 2025-2026
Public Safety, Finance and
Strategic Support Committee
Prepared by the Finance Department
December 4, 2025
COMMITTEE AGENDA: DECEMBER 4, 2025
ITEM: (C)2.
FILE: CC 25-155
ATTACHMENTA
FIRST QUARTER
DEBT MANAGEMENT REPORT
FISCAL YEAR 2025-2026
2 FY2025-26 Debt Issuance: $491.85 Million
3 ALL OUTSTANDING DEBT: $4.42 BILLION
(CITY AND ALL AGENCIES)
*YTD Debt Issuance
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
Annual Debt Issuance
($ million)
Outstanding Debt
($ million)
Fiscal Year Ended June 30
City and Related Entity Debt Outstanding Conduit Debt Outstanding Annual Debt Issuance 4 DIRECT OUTSTANDING DEBT: $3.58 BILLION
(EXCLUDING MULTIFAMILY HOUSING REVENUE BONDS)
CSJ GO Bonds,
$668,715,000, 18.67%
CSJFA Bonds/ CP Notes,
$680,487,000, 19.00%
Airport Revenue Bonds/ CP,
$1,010,623,864, 28.21%
Wastewater Revenue Bonds/ RWF
Notes, $350,347,862, 9.78%
Successor Agency Tax Allocation
Bonds, $872,160,000, 24.35%
DEBT ISSUANCE
5 • On July 23, 2025, the City issued $209.6 million of City of San José General Obligation Bonds, Series 2025ABC. • On August 1, 2025, $50.0 million was drawn on the Wastewater Facility Credit Agreement. • On August 19, 2025, CSJFA issued $47.8 million Lease Revenue Bonds, Series 2025A. • During the quarter, multifamily housing revenue bonds were issued for three projects (Arcade, 525 N. Capital and La Moraga) in an aggregate amount of $184.5 million.
RATINGS UPDATE
• In June, Moody’s, S&P, and Fitch assigned Aa1/AA+/AAA ratings to the City of San José General Obligation (GO) Bonds, Series 2025ABC (issued in July) and Aa2/AA/AA ratings to CSJFA Lease Revenue Bonds, Series 2025A (issued in August), both with a stable outlook. • In September, Fitch Ratings confirmed a “Review No Action” and maintained the current ratings of “AAA” with a stable outlook on Wastewater Revenue Bonds, Series 2022B.
• In September, Moody’s Ratings maintained an ‘A2’ rating with a stable outlook on San José Mineta International Airport bonds. 6 FIRST QUARTER
INVESTMENT MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
7 INVESTMENT POLICY
(COUNCIL POLICY 1-12)
• Investments meet the requirements of the City’s Investment Policy and conform with California Government Code section 53601 • Authorized investments are only highly-rated fixed income securities • Investment Policy is reviewed annually and was last adopted by resolution of the City Council on March 11, 2025
• Investment Program is audited semi-annually for compliance purposes 8 INVESTMENT OBJECTIVES & REPORTING
• Manage investments to meet the City’s Investment Policy objectives:
▪ Safety
▪ Liquidity
▪ Yield
• Quarterly reports are available to the public
▪ On-line
▪ In PSFSS Committee agenda packets
▪ In City Council agenda packets (for acceptance)
9 PORTFOLIO PERFORMANCE SUMMARY
Size of Total Portfolio $2,604,930,030
Earned Interest Yield 4.025%
Weighted Average Maturity 669 days
Fiscal Year-to-Date Net Income Recognized $27,107,542
Exceptions to the City Investment Policy this Quarter None 10 Total Investment Portfolio:
$2,604,930,030
11 PORTFOLIO INVESTMENTS
U.S. Treasury 345,235,402
13.3%
U.S. Agency
799,920,455 30.7%
Supranationals
117,439,706 4.5%
Commercial Paper
24,531,771 0.9%
Corporate Notes
553,292,644 21.2% Asset Backed Securities
13,754,679 0.5%
Muni Bonds
291,569,882 11.2%
Mortgage
Backed
Securities
242,509,555
9.3%
JPAP 175,105,517
6.7%
LAIF
41,570,419 1.6%
The $366 million in the General Fund
presented includes $157,401,983 of
General Fund monies, as well as
$208,173,340 in other, separately
tracked general funds, such as the
Depositor Fund, Developer Fees and
other smaller funds and reserves.
12 INVESTMENTS BY FUND
Internal Services Fund
$21,631,831
Airport
$400,526,986
Capital Projects
$59,555,848
Debt Service
$64,254,568
Development Fees
$67,456,035
General Fund
$365,575,323
Muni Water
$47,204,020
Parking
$30,490,927 Housing
$292,932,639
Special Revenue
Funds
$421,047,601
Wastewater
$469,868,078
Trust & Agency
$5,141,894
SJ Clean Energy
$366,665,576
GENERAL FUND BALANCE
• The General Fund balances decreased by $415 million during the quarter and ended with a balance of $366 million as of September 30, 2025. This decrease is attributed to the prefunding of employer retirement contributions towards Police and Fire Retirement Plan Tier 1 pension and other post-employment benefit in July 2025 and debt service payments in August 2025. General Fund cash balances usually peak during the months of January and June, when the bulk of property taxes are received, and decline in the summer months due to retirement prefunding, debt service payments, and operational expenditures. • Projected investment maturities, cash, and revenues are sufficient to cover anticipated expenditures for the next six months.
13 14
COMPARISON OF CASH BALANCES
(BY SELECT FUNDS)
The following graph compares
monthly balances of the five largest
City funds as reported by FMS.
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1000
Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dollars in millions
General Fund Wastewater Airport Housing Special Revenue Fund • City refers to City's Portfolio, and
the yield data are month-end
weighted average yields.
• LAIF refers to the State of CA
Local Agency Investment Fund and
yield data are average monthly
effective yields.
• BAML refers to Bank of America
Merrill Lynch 1-3 Year AAA-A US
Corporate & Government Index
and yield data are rolling 2-year
effective yield.
15 BENCHMARK COMPARISONS
0.00 0.50
1.00 1.50
2.00 2.50
3.00 3.50
4.00 4.50
5.00 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Yield (%)
City LAIF BAML
Yield WAM
BAML: 4.424% 679
LAIF: 4.212% 254
CITY: 4.022% 669
INVESTMENT STRATEGY
• Continue matching known expenditures with suitable investments within the 24-month horizon
• Extend a portion of the portfolio beyond two-year term, when appropriate, to provide income and structure to the portfolio • Maintain the diversification of the portfolio
• Focus on core objectives of safety, liquidity, and yield 16 FIRST QUARTER
REVENUE MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
17 REVENUE MANAGEMENT PROGRAMS
• Finance Department Revenue Management focuses on collecting all outstanding receivables, with an emphasis on reducing delinquent accounts and enhancing revenue compliance, through four primary collection programs:
▪ Accounts Receivable
▪ Business Tax
▪ Compliance and Monitoring
▪ Utility Billing
• Efforts may span several reporting periods, and actual collections are reported as funds are received by the City.
18 Total Revenue: $4.558B
Source: 2024-25 City Manager’s
Budget Office Annual Report
(Graph is updated annually)
19 REVENUE MANAGEMENT PORTFOLIO
FY 2024-25 REVENUE ($ IN MILLIONS)
Lodging Taxes and
Fees
$60.7M
4.2%
Franchise Fees
$58.5M
4.0%
Utility Users Tax
$139.9M
9.7%
Telephone Line Tax
$22.0M
1.5%
Real Property
Transfer Tax
$47.7M
3.3%
Sales Tax
$331.4M
22.9%
Misc.
Billing
$182.4M
12.6%
Business Taxes
$87.7M
6.1%
Utility Billings
$517.9M
35.8%
Revenue
Management
$1.4B
Citywide Revenue
(excluding Revenue
Management)
$3.1B
Includes invoices billed through the
Business Tax System, the centralized
Accounts Receivable system (RevQ),
and the Utility Billing System.
(Graph is updated annually)
20 INVOICING AND PAYMENTS
FIVE-YEAR HISTORY (FY 2020-21 TO FY 2024-25)
96.1% 96.2% 95.4% 94.0% 96.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
$-
$100
$200
$300
$400
$500
$600
$700
$800
FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25
In Millions
Payments Outstanding Percentage Collected
21 OUTSTANDING RECEIVABLES
THREE-YEAR HISTORY (FY 2022-23 Q2 TO FY 2025-26 Q1)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$-
$20
$40
$60
$80
$100
$120
22-23
Q2
22-23
Q3
22-23
Q4
23-24
Q1
23-24
Q2
23-24
Q3
23-24
Q4
24-25
Q1
24-25
Q2
24-25
Q3
24-25
Q4
25-26
Q1
Quarter to Quarter % Change
Millions
Revenue Management Aging
Total Receivables Delinquent (91+ days) Delinquency Percentage Change 22 FY 2025-26 Q1 DELINQUENT RECEIVABLES
COLLECTION STATUS SUMMARY ($ IN MILLIONS*)
*Rounded
As of September 30, 2025
Write-Off Pending (A/R Only)
$1.1M
618 Invoices
Liens (A/R Only)
$1.0M
291 Invoices
Restitution,
Payment Plan (A/R Only)
$1.0M
344 Invoices
Legal,
Bankruptcy
$5.1M
703 Invoices
Collection Agency
$21.5M
21,475 Invoices
Active
$23.8M
18,245 Invoices
Total Delinquent
$53.5M
Total Current
$19.3M
COLLECTIONS & RETURN ON INVESTMENT
REVENUE MANAGEMENT COLLECTIONS (FY 2023-24 Q2 TO FY 2025-26 Q1) Target ROI: 5.0
23 FY YTD 25-26 ROI: 5.11
8.3 5.7
3.9 4.0
7.8 4.5 4.7
5.1 0.00
1.00 2.00
3.00 4.00
5.00 6.00
7.00 8.00
9.00 $0.0
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
23-24 Q2 23-24 Q3 23-24 Q4 24-25 Q1 24-25 Q2 24-25 Q3 24-25 Q4 25-26 Q1 Millions
Revenue Management Collections
Business Tax Accounts Receivable Actual ROI
REVENUE COMPLIANCE REVENUE
RECOVERY
• Revenue Compliance and Monitoring conducts cyclical tax and fee audits and revenue collections for a variety of programs (e.g., Sales and Use Tax, Hotel Taxes/Lodging Fees, Utilities, Telecommunications, and Cannabis).
• In Q1, ~$563K was recovered in delinquent collections and audits (cannabis business tax, hotel tax, telecommunications user tax, utility user tax, and sales and use tax).
24 ACCOUNTS RECEIVABLE & UTILITY
BILLING AMNESTY PROGRAMS
• These Amnesty Programs offered an opportunity to have accumulated penalties and interest waived in exchange for payment of the principal amount due. • Amnesty Program Application Period: April 1 – September 30, 2025 25 Accounts Receivable Amnesty
Program Target - Expenses $600K
FY 24-25 Payments $391K
FY 25-26 Payments $284K
Program Expenses ($60K)
Total Revenue $615K
Amnesty Waivers to Date ($300K)
Utility Billing Amnesty
FY 24-25 Payments $428K
FY 25-26 Payments $861K
Total Revenue $1.29M
Amnesty Waivers to Date ($1.5M)
FIRST QUARTER
PURCHASING AND
RISK MANAGEMENT REPORT
FOR FISCALYEAR 2025-2026
26 PURCHASING PROGRAM
The Purchasing Division of the Finance Department is responsible for the centralized procurement of equipment, supplies, materials, Information Technology (IT), and general services, pursuant to the City of San José Municipal Code Title 4, Chapter 4.12.
27 PURCHASING TRANSACTIONS COMPLETED
FIRST QUARTER FY 2025-26
DESCRIPTION
FIRST QUARTER
TRANSACTIONS
FISCALYEAR
TO DATE
PURCHASE ORDERS EXECUTED 512 512
PURCHASE ORDER ADJUSTMENTS EXECUTED 142 142
CONTRACTS NEGOTIATED & EXECUTED 4 4
CONTRACT AMENDMENTS, CHANGE ORDERS, SERVICE ORDERS, & OPTIONS EXECUTED 25 25 PURCHASE ORDER DOLLARS PROCURED $142,642,199 $142,642,199 CONTRACT DOLLARS PROCURED $19,761,290.51 $19,761,290.51 28 RISK MANAGEMENT PROGRAM
The Division is responsible for the procurement and oversight of the City’s property and casualty insurance programs and providing contractual risk management services, property subrogation claims reporting and other key services to City Departments.
29 30
RISK MANAGEMENT TRANSACTIONS COMPLETED
FIRST QUARTER FY 2025-26
Transaction Type First Quarter
Transactions
Fiscal Year to
Date
Request for Contract Insurance Specifications 337 337
Request for Insurance Compliance Review 371 371
Request for Letters of Self-Insurance 46 46
Subrogation Dollars Billed to Responsible Third Parties $219,614 $219,614 Council and Committee Memorandums Issued 2 2
RECOMMENDATION
(a) Accept the First Quarter (period ended September 30, 2025) Financial Reports for Fiscal Year 2025-2026 for the following programs:
▪ (1) Debt Management;
▪ (2) Investment Management;
▪ (3) Revenue Management; and
▪ (4) Purchasing and Risk Management
(b) Refer and cross-reference the First Quarter Financial Reports for Fiscal Year 2025-2026 to the January 13, 2026 City Council meeting for full adoption.
31 APPENDIX
32 • 10-year history of higher
rated (“AA+”) General
Obligation debt (20-year
term) yield averaged 3.09%
and is currently at 4.80%
(as of 9/25/2025).
33 BOND BUYER GO BONDYIELD INDEX
3.09%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Sep-16Sep-17Sep-18Sep-19Sep-20Sep-21Sep-22Sep-23Sep-24Sep-25 Interest Rate
Bond Buyer 11-Bond GO Index (AA+) avg. rating
Index Average 9/16 - 9/25 (AA+) avg. rating
• The Daily Secured
Overnight Financing Rate
(SOFR) interest rate is
4.31% (as of 9/30/25).
• The City uses SOFR as a
proxy for forecasting
interest rates for various
short-term debt
instruments.
34 SOFR RATES
4.2%
4.3%
4.4%
4.5%
4.6%
4.7%
4.8%
4.9%
5.0%
5.1%
5.2%
5.3%
Sep-24
Oct-24
Nov-24Dec-24
Jan-25
Feb-25
Mar-25
Apr-25
May-25
Jun-25
Jul-25
Aug-25Sep-25
Interest Rate
Daily SOFR
GENERAL OBLIGATION CREDIT RATINGS
AS OF SEPTEMBER 30, 2025
The City’s GO Ratings are higher than the State of California’s ratings and analogous to Santa Clara County’s ratings, which is to be expected given the extent of the tax base and other credit fundamentals that the City and the County share:
35 Entity Moody’s S&P Fitch
City of San José Aa1 AA+ AAA
State of California Aa2 AA- AA
Santa Clara County (1) N/A AAA AAA
(1) Moody’s does not currently rate Santa Clara County’s General Obligation Bonds but maintains an Issuer rating of Aa1.
GENERAL CITY CREDIT RATINGS
AS OF SEPTEMBER 30, 2025
The City of San José continues to maintain very high credit ratings. 36 Type of Rating Moody’s S&P Fitch
Issuer Rating Aa1
(stable)
AA+
(stable)
AA+
(stable)
General Obligation Bonds Aa1
(stable)
AA+
(stable)
AAA
(stable)
Lease Revenue Bonds
(Essential Assets)
Aa2
(stable)
AA
(stable)
AA
(stable)
Lease Revenue Bonds
(Less Essential Assets)
Aa3(1)
(stable)
AA
(stable)
AA-
(2)
(stable)
(1) Moody’s assigns a rating of Aa3 to CSJFA 2020B and 2022A bonds which the rating agency considers less essential assets. (2) Fitch assigns a rating of AA- to CSJFA 2020B bonds which the rating agency considers less essential assets.
OTHER CITY CREDIT RATINGS
AS OF SEPTEMBER 30, 2025
37 Type of Rating Moody’s S&P Fitch KBRA (Kroll) 1
San José Airport
Bonds
A2
(stable)
A
(stable)
A
(stable) N/A
Wastewater
Revenue Bonds N/A AAA(stable)
AAA
(stable)
AAA(1)
(stable)
SARA Senior Tax
Allocation Bonds N/A AA(stable)
AA+
(stable) N/A
SARA Subordinate
Tax Allocation Bonds N/A AA-(stable)
AA+
(stable) N/A
San José Clean
Energy (Issuer)
A2
(stable)
A
(stable) N/A N/A
(1) KBRA (Kroll) has assigned a rating to the CSJFA Wastewater Revenue Bonds exclusively.