COUNCIL AGENDA : 9/15/2026
FILE : 26-937
ITEM : 2.13
TO: HONORABLE MAYOR AND
CITY COUNCIL
FROM: Toni Taber, MMC
City Clerk
DATE: September 4, 2026
SUBJECT: Fourth Quarter Financial Reports for Fiscal Year 2025-2026 Recommendation
As recommended by the Public Safety, Finance and Strategic Support Committee on August 20, 2026, accept the Fourth Quarter (period ended June 30, 2026) Financial Reports for Fiscal Year 2025-2026 for the following programs:
(a) Debt Management;
(b) Investment Management;
(c) Revenue Management; and
(d) Purchasing and Risk Management
CEQA: Not a Project, File No. PP17-010, City Organizational and Administrative Activities, resulting in no changes to the physical environment. (Finance) [Public Safety, Finance and Strategic Support Committee referral 8/20/2026 - Item (d)1]
SUBJECT: SEE BELOW
PSFSS COMMITTEE AGENDA: 08/20/26
ITEM: (d)1
TO: PUBLIC SAFETY, FINANCE AND
STRATEGIC SUPPORT
COMMITTEE
FROM: Maria Öberg
SUBJECT: Fourth Quarter Financial Reports
for Fiscal Year 2025-2026
DATE: July 30, 2026
Approved Date
COUNCIL DISTRICT: Citywide
RECOMMENDATION
(a) Accept the Fourth Quarter (period ended June 30, 2026) 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 the Fourth Quarter Financial Reports for Fiscal Year 2025-2026 to the September 15, 2026 City Council meeting for full adoption.
SUMMARY AND OUTCOME
Provide the quarterly update on debt management, investment management, revenue management, purchasing, and risk management activities.
BACKGROUND
The attached Fourth Quarter Financial Reports for Fiscal Year (FY) 2025-2026 (quarter ended June 30, 2026) (Financial Reports) present the quarterly activity for the City of San José (City) Finance Department’s Debt Management, Investment Management, Revenue Management, Purchasing, and Risk Management programs (Attachment A).
Additionally, the Fourth Quarter Investment Report for the Quarter Ended June 30, 2026 (Attachment B), is available on the City’s website at: https://www.sanjoseca.gov/your- July 30, 2026
PUBLIC SAFETY, FINANCE AND STRATEGIC SUPPORT COMMITTEE
July 30, 2026
Subject: Fourth Quarter Financial Reports for Fiscal Year 2025-2026
government/departments-offices/finance/reports/-folder- 7054#docfold_14_4866_6255_7054 and is included with this report to the Public Safety, Finance and Strategic Support Committee (PSFSS Committee). As part of the ongoing effort to streamline work efforts within the Finance Department, these programs are combined into a single report for submission to the PSFSS Committee for its review and referral to the City Council for acceptance.
ANALYSIS
A brief narrative discussion is provided below for all programs in this quarterly report.
Debt Management Program
This report discusses the City’s completed debt activities for the period ended June 30, 2026, and relates to the following elements of the City’s Debt Management Program:
• Completed financings and current debt portfolio;
• Debt issuance, redemptions, and management activities completed during the second quarter;
• Current interest rate environment as of June 30, 2026; and • Credit ratings.
Investment Management Program
Pursuant to the City’s Investment Policy, verbal presentations, in addition to the written reports, are provided to the PSFSS Committee for the Second and Fourth Quarter Reports only. The materials presented in this consolidated report provide a “snapshot” of the investment portfolio.
Revenue Management Program
The Revenue Management report highlights key aspects of the City’s ongoing collection efforts. These efforts focus on reducing delinquent accounts receivable and enhancing revenue compliance through four primary collection programs: Accounts Receivable, Business Tax, Revenue Compliance and Monitoring, and Utility Billing. This report highlights the Revenue Management Division’s collection efforts and summarizes the progress towards maintaining a
Return-on-Investment ratio of 5.0 to 1. The Q4 FY
2025-26 Return on Investment is 4.8 to 1, and the FY 2025-26 Return on Investment is
5.13 to 1.
Overview of Collection Process – City departments issue invoices for various fines, fees, or other costs incurred by the City. Invoices are entered into the City's centralized Accounts Receivable system or referred to the Accounts Receivable group for accounts generated by City departments through stand-alone billing systems. Each department is responsible for the initial billing of the appropriate parties.
PUBLIC SAFETY, FINANCE AND STRATEGIC SUPPORT COMMITTEE
July 30, 2026
Subject: Fourth Quarter Financial Reports for Fiscal Year 2025-2026
If an account has an unpaid balance after 30 days, a delinquency notice, including any additional interest, penalties, and applicable fees, is generated and mailed to the debtor. The account is then assigned to an Investigator Collector in the Finance Department, who begins the revenue collection process by contacting the debtor to attempt to collect the past due amount. After 60 days, a second collection notice, including any additional interest, penalties, and other fees, is mailed to the debtor.
At this point, a collection cost recovery fee is added to each account. This cost recovery fee is reviewed and set on an annual basis. After approximately 120 days, the Senior Investigator Collector reviews each remaining delinquent invoice with Investigator Collectors to determine the appropriate action to take against the debtor to collect the outstanding balances.
Business Tax Amnesty Program – The Amnesty Program increases statutory compliance while providing needed financial relief for City residents and businesses, by authorizing the Director of Finance to waive the respective late interest, and other collection levies on any base taxes, fees and charges collected. The Program application period began January 1, 2026, and will continue through December 31, 2026. Business Tax accounts with delinquent or unregistered business tax from January 1, 2022, through December 31, 2026, are eligible for amnesty forgiveness.
Table 1 below presents the program measurements for the Amnesty Program through June 30, 2026.
Table 1
Program Measurements through June 30, 2026
Projected Net Revenue $2.9M
FY25-26 Payments $2.15M
Program Expenses ($0.1M)
Net Revenue $2.05M
Amnesty Waivers to Date ($1.1M)
Purchasing Program
The Purchasing report highlights the key aspects of the City’s purchasing operations.
The Purchasing Unit is responsible for the centralized procurement of equipment, supplies, materials, information technology, and general services, pursuant to Chapter
4.12 of Title 4 of the San José Municipal Code. The Purchasing Unit’s objective is to deliver procurement and contracting services pursuant to public procurement best practices.
Additional information has been provided in this quarter’s report to highlight the status of a recent City audit. In August 2025, the Office of the City Auditor completed an audit of Purchasing functions entitled “Procurement: The City Should Review its Risk Strategy,
PUBLIC SAFETY, FINANCE AND STRATEGIC SUPPORT COMMITTEE
July 30, 2026
Subject: Fourth Quarter Financial Reports for Fiscal Year 2025-2026
Performance Measurement, and Guidance to Improve the Procurement Process1.” Eight recommendations were provided as a result of this audit. As of the most recent status report of open audit recommendations provided to City Council on March 24, 20262, two recommendations have been fully implemented with another recommendation partly implemented. The Finance Department intends to close out the remaining recommendations within the first quarter of FY 2026-2027.
Risk Management Program
The Risk Management report highlights the key aspects of the City’s Risk Management Program. The Risk Management Unit is responsible for the procurement and oversight of the City’s property and casualty insurance programs. The Risk Management Unit also provides contractual risk management services, property subrogation claims reporting, and other key services to City departments including enterprise departments such as the Airport Department and San José-Santa Clara Regional Wastewater Facility.
EVALUATION AND FOLLOW-UP
The Finance Department prepares this report on a quarterly basis for review and approval by the PSFSS Committee. Finance Department staff will present the investment report and will be available to answer questions on the Financial Reports at the PSFSS Committee meeting on August 20, 2026, and at the City Council meeting on September 15, 2026.
COORDINATION
This memorandum has been coordinated with the City Attorney’s Office and City Manager’s Budget Office.
PUBLIC OUTREACH
This memorandum will be posted on the City Council Agenda website for the August 20, 2026, PSFSS Committee meeting and the September 15, 2026, City Council meeting.
COMMISSION RECOMMENDATION AND INPUT
No commission recommendation or input is associated with this action.
1 https://www.sanjoseca.gov/home/showdocument?id=123964 2 https://www.sanjoseca.gov/home/showpublisheddocument/129507/639090157875500000
PUBLIC SAFETY, FINANCE AND STRATEGIC SUPPORT COMMITTEE
July 30, 2026
Subject: Fourth Quarter Financial Reports for Fiscal Year 2025-2026
CEQA
Not a project, Public Project number PP17-010, City Organizational & Administrative Activities, resulting in no changes to the physical 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.
MARIA ÖBERG
Director of Finance
For questions please contact:
Program
Finance
Contact
Finance Division
Phone
Debt Management
Investment Management
Qianyu Sun Deputy Director, Debt &
Treasury Management
(408) 535-7832
Revenue Management John
Kachmanian
Deputy Director,
Revenue Management
(408) 535-7034
Purchasing
Risk Management
Fletcher
Barnes
Hank Ford
Deputy Director,
Purchasing
Risk Manager
(408) 535-7017
(408) 535-3868
ATTACHMENTS:
Attachment A: Fourth Quarter Financial Reports for Fiscal Year 2025-2026 Presentation Attachment B: Fourth Quarter Investment Report for the Quarter Ended June 30, 2026
FOURTH QUARTER FINANCIAL REPORT
FISCALYEAR 2025-2026
Public Safety, Finance and
Strategic Support Committee
Prepared by the Finance Department
Presenter: Maria Öberg, Director, Finance
July 30, 2026
COMMITTEE AGENDA: AUGUST 20, 2026
ITEM: (D)1
ATTACHMENT A
1 FOURTH QUARTER
DEBT MANAGEMENT REPORT
FISCAL YEAR 2025-2026
2 3
OUTSTANDING DEBT: $4.21 BILLION
(CITY AND ALL AGENCIES)
FY 2025-26 YTD Issuance: $589.38 Million
$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: $3.49 BILLION
(EXCLUDING MULTIFAMILY HOUSING REVENUE BONDS)
CSJ GO Bonds,
$668,715,000, 19.18%
CSJFA Bonds/ CP Notes,
$625,862,000, 17.95%
Airport Revenue Bonds/
CP, $973,129,202, 27.92%
Wastewater Revenue Bonds /
Notes, $345,982,862, 9.93%
Successor Agency Tax Allocation
Bonds, $872,160,000, 25.02%
DEBT ISSUANCE & MANAGEMENT UPDATE
5 • On May 12, 2026, issued $82.6 million in multifamily housing revenue bonds for Berryessa TOD project.
• On June 25, 2026, issued $15 million in CSJFA commercial paper notes to fund the property acquisition of 447 S. Almaden Boulevard and the PRNS 2017 Floods project. • In June 2026, after releasing a Request for Proposals, selected a syndicate of underwriters to support the refunding of Airport Series 2017 bonds.
• Executed one-year extensions of various Municipal Advisor contracts.
FOURTH QUARTER
INVESTMENT MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
6 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 24, 2026
• Investment Program is audited semi-annually for compliance purposes • Awarded 2026 Investment Policy Certificate of Excellence by Association of Public Treasurers of the United States & Canada 7 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)
8 PORTFOLIO PERFORMANCE SUMMARY
Size of Total Portfolio $3,020,573,765
Earned Interest Yield 4.127%
Weighted Average Maturity 661 days
Fiscal Year-to-Date Net Income Recognized $109,160,369
Exceptions to the City Investment Policy this Quarter None 9 T otal Investment Portfolio:
$3,020,573,765
10 PORTFOLIO INVESTMENTS
U.S. Treasury
484,162,778 16.0%
U.S. Agency
1,049,056,441 34.7%
Supranationals
13,313,000 0.4%
Corporate Notes
542,541,754 18.0%
Asset Backed
Securities
12,389,613 0.4% Muni Bonds
349,343,264 11.6%
Mortgage
Backed
Securities
228,314,512
7.6%
JPAP
269,110,950
8.9%
LAIF 72,341,454
2.4%
The $731 million in the General Fund
presented includes $306,131,649 of
General Fund monies, as well as
$424,431,018 in other, separately
tracked general funds, such as the
Depositor Fund, Developer Fees and
other smaller funds and reserves.
11 INVESTMENTS BY FUND
Internal Services Fund
$6,038,390
Airport
$425,952,615 Capital Projects
$72,591,367
Debt Service
$66,286,111
Development Fees
$81,528,479
General Fund
$730,562,667
Muni Water
$57,713,769
Parking
$23,257,944
Housing
$265,999,997
Special Revenue
Funds $379,273,744
Wastewater
$426,861,253
SJ Clean Energy
$378,922,605
12 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
Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Dollars in millions
General Fund Wastewater Airport SJ Clean Energy 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.
13 BENCHMARK COMPARISONS
3.00 3.50
4.00 4.50
5.00 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Yield (%)
City LAIF BAML
Yield WAM
CITY: 4.061% 661
BAML: 4.010% 683
LAIF: 3.816% 269
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 14 FOURTH QUARTER
REVENUE MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
15 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.
16 T otal Revenue: $4.558B
Source: 2024-25 City Manager’s
Budget Office Annual Report
(Graph is updated annually)
17 REVENUE MANAGEMENT PORTFOLIO
FY 2024-25 REVENUE ($ 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)
18 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
19 OUTSTANDING RECEIVABLES
THREE-YEAR HISTORY (FY 2023-24 Q1 TO FY 2025-26 Q4)
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
50%
$-
$20
$40
$60
$80
$100
$120
23-24
Q1
23-24
Q2
23-24
Q3
23-24
Q4
24-25
Q1
24-25
Q2
24-25
Q3
24-25
Q4
25-26
Q1
25-26
Q2
25-26
Q3
25-26
Q4
Quarter to Quarter % Change
Millions
Revenue Management Aging
Total Receivables Delinquent (91+ days) Delinquency Percentage Change 20 FY 2025-26 Q4 DELINQUENT RECEIVABLES
DELINQUENT RECEIVABLES SUMMARY ($ IN MILLIONS*)
*Rounded
As of June 30, 2026
Liens (A/R Only)
$1.6M
308 Invoices
Restitution,
Payment Plan (A/R Only)
$1.4M
361 Invoices
Legal,
Bankruptcy
$5.8M
767 Invoices
Collection Agency
$21.8M
14,590 Invoices
Aged 91 Days - 1 Year (Active)
$9.7M
14,590 Invoices
Aged 1-2 Years (Active)
$10.5M
8,401 Invoices
Aged 2-3 Years (Active)
$2.8M
2,661 Invoices
Aged Over 3 Years (Out of
Statute)
$5.7M
5,674 Invoices
Total Current
$23.8M
Total Delinquent
$59.3M
COLLECTIONS & RETURN ON INVESTMENT
REVENUE MANAGEMENT COLLECTIONS (FY 2024-25 Q1 TO FY 2025-26 Q4) Target ROI: 5.0
21 FY 25-26 ROI: 5.13
3.9 4.0
7.8 4.5 4.7
5.1 4.5
6.0 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 Q4 24-25 Q1 24-25 Q2 24-25 Q3 24-25 Q4 25-26 Q1 25-26 Q2 25-26 Q3 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, T elecommunications, and Cannabis).
• In Q4, ~$1.1M ($4.2M total in FY 25-26) was recovered in delinquent collections and audits (cannabis business tax, hotel tax, telecommunications user tax, utility user tax, and sales and use tax).
22 BUSINESS TAX AMNESTY PROGRAM
• This Amnesty Program offers an opportunity to have accumulated penalties and interest waived in exchange for payment of the principal amount due • Amnesty Program Application Period: January 1 – December 31, 2026 23 Program Stats through June 30, 2026
Projected Net Revenue $2.9M
FY 25-26 Payments $2.15M
Program Expenses ($0.1M)
Net Revenue $2.05M
Amnesty Waivers to Date ($1.1M)
FOURTH QUARTER
PURCHASING AND
RISK MANAGEMENT REPORT
FOR FISCAL YEAR 2025-2026
24 PURCHASING PROGRAM
The Purchasing Division of the Finance Department is responsible for the centralized procurement of equipment, supplies, materials, Information T echnology (IT), and general services, pursuant to the City of San José Municipal Code Title 4, Chapter 4.12.
25 PURCHASING TRANSACTIONS COMPLETED
FOURTH QUARTER FY 2025-26
DESCRIPTION
FOURTH
QUARTER
TRANSACTIONS
FISCAL YEAR
TO DATE
PURCHASE ORDERS EXECUTED 253 1,323
PURCHASE ORDER ADJUSTMENTS EXECUTED 137 483
CONTRACTS NEGOTIATED & EXECUTED 6 23
CONTRACT AMENDMENTS, CHANGE ORDERS, SERVICE ORDERS, & OPTIONS EXECUTED 41 144 PURCHASE ORDER DOLLARS PROCURED $47,571,517 $369,308,862 CONTRACT DOLLARS PROCURED $12,095,112 $36,982,442
26 PURCHASING AUDIT STATUS
• In August 2025, the Office of the City Auditor completed an audit of Purchasing functions to “assess the efficiency of the City’s procurement process for goods and services, excluding public works projects.”
• Eight recommendations were provided as a result of this audit. • As of December 31, 2025, two recommendations have been fully implemented with another recommendation partly implemented. • The Finance Department intends to close out the remaining recommendations within the first quarter of FY 26-27.
27 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.
28 29
RISK MANAGEMENT TRANSACTIONS COMPLETED
FOURTH QUARTER FY 2025-26
Transaction T ype Fourth Quarter
Transactions
Fiscal Y ear to
Date
Request for Contract Insurance Specifications 379 1173
Request for Insurance Compliance Review 245 790
Request for Letters of Self-Insurance 45 134
Subrogation Dollars Billed to Responsible Third Parties $232,320.60 $557,053.90 Council and Committee Memorandums Issued 2 4
RECOMMENDATION
(a) Accept the Fourth Quarter (period ended June 30, 2026) 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 Fourth Quarter Financial Reports for Fiscal Year 2025-2026 to the September 15, 2026 City Council meeting for full adoption.
30 APPENDIX
31 • 10-year history of higher
rated (“AA+”) General
Obligation debt (20-year
term) yield averaged 3.21%
and is currently at 4.53%
(as of 7/2/2026).
32 BOND BUYER GO BOND YIELD INDEX
3.21%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
Jun-17
Jun-18
Jun-19
Jun-20
Jun-21
Jun-22
Jun-23
Jun-24
Jun-25
Jun-26
Interest Rate
Bond Buyer 11-GO Index (AA+) avg. rating
Index Average 6/17 - 6/26
4.53%
• The Daily Secured
Overnight Financing Rate
(SOFR) interest rate is
3.63% (as of 6/30/26).
• The City uses SOFR as a
proxy for forecasting
interest rates for various
short-term debt
instruments.
33 SOFR RATES
3.5%
3.6%
3.7%
3.8%
3.9%
4.0%
4.1%
4.2%
4.3%
4.4%
4.5%
Jun-25
Jul-25
Aug-25
Sep-25
Oct-25
Nov-25
Dec-25
Jan-26
Feb-26
Mar-26
Apr-26
May-26
Jun-26
Interest Rate
Daily SOFR
3.63%
GENERAL OBLIGATION CREDIT RATINGS
AS OF JUNE 30, 2026
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:
34 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 JUNE 30, 2026
The City of San José continues to maintain very high credit ratings. 35 T ype 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 JUNE 30, 2026
36 T ype of Rating Moody’s S&P Fitch KBRA 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 T ax
Allocation Bonds N/A AA
(stable)
AA+
(stable) N/A
SARA Subordinate
T ax 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 has assigned a rating to the CSJFA Wastewater Revenue Bonds exclusively.
PSFSS COMMITTEE AGENDA: 08/20/26
ITEM: (d)1
TO: HONORABLE MAYOR FROM: Maria Öberg
AND CITY COUNCIL
SUBJECT: Fourth Quarter Investment Report DATE: July 30, 2026 For the Quarter Ended
June 30, 2026
Approved Date: July 30, 2026
Transmitted herewith is the City Investment Report for the quarter ended June 30, 2026. To meet the reporting requirements set forth in the City of San José Investment Policy, an electronic version of this report will be posted on the City’s website at : https://www.sanjoseca.gov/your- government/departments-offices/finance/reports/-folder-7054#docfold_14_4866_6255_7054 and a hard copy will be on file at the City Clerk’s Office located at 200 East Santa Clara Street , San José.
This report will be distributed to the Public Safety, Finance and Strategic Support Committee (PSFSS) for discussion during its meeting on August 20, 2026, and will be agendized through the PSFSS Committee for review by the full City Council on September 15, 2026.
Summary of portfolio performance and compliance for quarter ended June 30, 2026:
• Size of total portfolio: $3,020,573,765
• Earned interest yield: 4.127%
• Weighted average days to maturity: 661 days
• Fiscal year-to-date net interest earnings: $109,160,369 • No exceptions to the City’s Investment Policy during this quarter
If you have questions on this investment report, please do not hesitate to call me at (408) 535- 7011, or via email at [email protected].
MARIA ÖBERG
Director of Finance
cc: Jennifer A. Maguire, City Manager
Joe Rois, City Auditor
Susana Alcala Wood, City Attorney
Attachment B
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
THIS PAGE IS INTENTIONALLY LEFT BLANK
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
City of San José
California
INVESTMENT REPORT FOR THE
QUARTER ENDED
JUNE 30, 2026
Prepared by
Finance Department
Debt and Treasury Management Division
Maria Öberg
Director of Finance
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
Investment Report for
The Quarter Ended
June 30, 2026
City of San José
Department of Finance
Debt and Treasury Management Division
Maria Öberg
Director of Finance
Qianyu Sun
Deputy Director of Finance,
Debt & Treasury Management Division
Investment Staff
Brian Chi, Principal Investment Officer
Cesar Blengino, Financial Analyst
Chheth Kim, Accounting Technician
Special Assistance by
Katie Su, Senior Accountant
Mia Huang, Accountant
Margarita Carrazco, Administrative Officer
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
CITY OF SAN JOSE
INVESTMENT REPORT FOR
THE QUARTER ENDED JUNE 30, 2026
TABLE OF CONTENTS
LETTER OF TRANSMITTAL
SECTION A. PORTFOLIO STATISTICS
Portfolio Statistics – Quarter-to-Date
Portfolio Statistics – Fiscal Year-to-Date
SECTION B. TOTAL EARNINGS REPORTS
Total Earnings – Quarter-to-Date
Total Earnings – Fiscal Year-to-Date
SECTION C.
SECTION D.
PORTFOLIO HOLDINGS AT COST
Investment Status Report
MARKET VALUE OF PORTFOLIO
Portfolio Details - Investments
SECTION E. DETAIL OF INVESTMENT ACTIVITY
Transaction Activity Report
Reconciliation of Investment Activities
Purchase Report
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
THIS PAGE IS INTENTIONALLY LEFT BLANK
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
July 30, 2026
HONORABLE MAYOR and CITY COUNCIL
INVESTMENT REPORT FOR THE QUARTER ENDED JUNE 30, 2026
I am pleased to present this report of investment activity for the quarter ended June 30, 2026, in compliance with the reporting requirements set forth in the City of San José Investment Policy. The report presents information in the following major categories:
Portfolio Statistics, Portfolio Performance, Compliance Reporting Requirements, Investment Trading Activity, and Investment Strategy.
The information presented in the table below highlights the investment activity for the quarter ended June 30, 2026, and provides a comparison to the quarters ended March 31, 2025, and June 30, 2025.
INVESTMENT SUMMARY
For the Quarter Ended June 30, 2026 March 31, 2026 June 30, 2025
Total Portfolio
Portfolio Value (1) (2) $3,020,573,765 $2,721,537,480 $2,980,651,143 Earned Interest Yield 4.127% 4.197% 3.805%
Dollar-weighted average yield
Purchases 3.919% 3.791% 4.257%
Maturities 3.562% 1.991% 2.117%
Called Securities 5.058% 4.328% 5.120%
Weighted avg. yield at end of period 4.061% 4.093% 4.046% Weighted avg. days to maturity 661 749 560
1 Reflects book value (principal plus any purchased interest) of investments. 2 Total excludes bond proceeds held by trustees for the City of San José ($304,643,591).
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
PORTFOLIO STATISTICS
Detailed information can be found in the attachments while summaries are provided below.
Portfolio Composition
Within this section are snapshots of the City’s total investment portfolio as of June 30, 2026.
The first graph shows the portfolio composition by investment type.
Portfolio Composition
$3,020,573,765
U.S. Treasury
484,162,778 16.0%
U.S. Agency
1,049,056,441 34.7%
Supranationals
13,313,000 0.4%
Corporate Notes
542,541,754
18.0%
Asset Backed
Securities
12,389,613 0.4% Muni Bonds
349,343,264 11.6%
Mortgage
Backed
Securities
228,314,512
7.6%
JPAP
269,110,950
8.9%
LAIF
72,341,454
2.4%
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
The graph below reflects the reconciliation of total balances reported by the investment program’s record-keeping system to the City’s Financial Management System (FMS).
Balances by Fund Type
1 $2,901,834,662
Portfolio Balance $3,020,573,765
General Banking Balance 3,026,378
Trust & Agency Fund Balance (13,154,284)
Deposit-in-Transit, Outstanding Checks2 (108,611,197) Total Balances per FMS $2,901,834,662
1 General Fund includes $306,131,649 of General Fund (Fund 001) as well as $424,431,018 of other General Fund funds which are separately tracked including the Depositor Fund, Developer Fees, Real Property Transfer and other smaller funds and reserves.
2 Reflects timing difference between when deposits are made and accounted for in FMS or when checks are written and not yet cashed by the receiving party.
Internal Services Fund
$6,038,390
Airport
$425,952,615 Capital Projects
$72,591,367
Debt Service
$66,286,111
Development Fees
$81,528,479
General Fund
$730,562,667
Muni Water
$57,713,769
Parking
$23,257,944
Housing
$265,999,997
Special Revenue
Funds
$379,273,744
Wastewater
$426,861,253
SJ Clean Energy
$378,922,605
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
General Fund Balances
The General Fund balances increased by $332 million with the receipt of property taxes in June and ended with a balance of $ 731 million as of June 30, 2026. 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.
The following graph compares monthly balances of five largest City funds as reported by FMS.
Monthly Comparison of Balances by Fund Type
June 2024 – June 2026
Prefunding of Annual Retirement Contributions
The City opted to prefund Police and Fire Retirement Plan Tier 1 annual employer retirement contributions along with Other Post -Employment Benefit (OPEB) contributions for Fiscal Year 202 5-26 with cash and matured investments on July 1, 2025. The total prefunding amount was $227 million.
Successor Agency to the Redevelopment Agency of the City of San José
Historically, the Redevelopment Agency participated in the City investment pool with both restricted bond proceeds and operating cash balances. As of February 1, 2012, redevelopment agencies in California were dissolved by legislative action and the City, as the Successor Agency to the Redevelopment Agency (SARA), transferred the Redevelopment Agency funds from the investment pool to SARA bank accounts. In July 2018, the City entered the final stage of dissolution and absorbed the remaining SARA operations into City operations. City staff will continue to manage SARA’s accounts until all assets are liquidated and bonds are redeemed.
$0
$200
$400
$600
$800
$1000
Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Dollars in millions
General Fund Wastewater Airport SJ Clean Energy Special Revenue Fund
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
As of June 30, 2026, SARA reported cash balances as outlined in the table below:
SARA CASH SUMMARY
Pledged for
Bond/Enforceable
Obligations
LAIF $5,123,161
Wells Fargo General Account: $70,109
Wilmington Trust Funds $128,804,875 (A)
TOTAL $133,998,145
(A) Funds restricted for tax allocation bond debt service payments
PORTFOLIO PERFORMANCE
The following table illustrates the total portfolio income recognized for the last quarter as compared to the prior quarter and the same quarter one year ago.
TOTAL PORTFOLIO INCOME RECOGNIZED
Accrual Basis
Total Portfolio June 30, 2026 March 31, 2026 June 30, 2025 Quarter-End
Total interest earnings $28,208,480 $27,539,061 $25,674,119 Realized gains (losses) $59,021 $580,815 $11,577
Total income recognized $28,267,501 $28,119,876 $25,685,696
Fiscal Year-to-Date
Total interest earnings $108,520,155 $80,311,675 $95,630,775 Realized gains (losses) $640,214 $581,193 $188,390
Total income recognized $109,160,369 $80,892,868 $95,819,165
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
Yield and Maturity Trend
The following graph illustrates the monthly dollar-weighted average maturity (WAM) of the Portfolio (bar graph) along with the weighted average yield (line graph) for the past two years.
Portfolio Yield and Maturity Trends
June 2024 – June 2026
The Portfolio’s WAM decreased from 749 days on March 31, 2026, to 661 days on June 30, 2026. The weighted average yield decreased from 4.093% on March 31, 2026, to
4.061% on June 30, 2026. The decrease in WAM is due to the large infusion of cash from property tax receipts and vehicle licensing taxes. This increased the overall size of the portfolio and lowered the average maturity because most of these receipts are invested to a shorter term in expectation that they will be used to pay for operating expenses over the next year. When the yield curve is upward sloping, and money is invested over a shorter horizon, it lowers the overall yield of the portfolio, as shorter -term investments offer less return than longer-term investments.
3.00 3.50
4.00 4.50
400
450
500
550
600
650
700
750
800
Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Weighted Average Yield (%)
Weighted Average Maturity
Weighted Average Maturity Weighted Average Yield
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
Comparison with Benchmarks
The City’s Portfolio is compared against benchmarks for performance purposes. The following graph demonstrates a yield comparison by month of the City’s Portfolio, the California LAIF, and the BAML Index for the period from June 2024 to June 2026.
Portfolio vs. Benchmarks
June 2024 – June 2026
Notes:
1. City refers to the City's Portfolio, and the yield data are month-end weighted average yields.
2. LAIF refers to the State of California Local Agency Investment Fund and yield data are average monthly effective yields.
3. BAML refers to the Bank of America Merrill Lynch 1-3 Year AAA-A US Corporate & Government Index, and yield data are rolling 2-year effective yields.
LAIF is a short -term investment option available to local agencies in California. LAIF’s WAM was 269 days as of June 30, 2026, much shorter than the City’s portfolio WAM of 661 days. Since LAIF has a much shorter average maturity, it is more sensitive to the Fed Funds Rate, which has declined in recent years, as the Federal Reserve has eased economic conditions. The City’s portfolio of longer dated bonds means the portfolio’s overall yield reacts at a slower pace than overnight rates . As shorter-term rates decline and longer-term rates increase, staff expect that the difference in average maturity should reflect a larger spread between LAIF and the City’s portfolio.
The BAML Index is a broad market index that tracks dollar -denominated, investment- grade, bonds with a remaining maturity of up to three (3) years. To simulate an index portfolio for comparison purposes, Treasury staff calculates a 2 -year rolling average of daily BAML Index effective yield s. The City’s Investment Policy allows investments, i n several sectors, up to a 5-year final maturity. Staff expect to see the BAML yield continue to decline, but on a slower basis than LAIF.
3.00 3.50
4.00 4.50
5.00 Jun-24 Sep-24 Dec-24 Mar-25 Jun-25 Sep-25 Dec-25 Mar-26 Jun-26 Yield (%)
City LAIF BAML
Yield WAM
CITY: 4.061% 661
BAML: 4.010% 683
LAIF: 3.816% 269
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
Unrealized Losses and Gains
As shown in the Investment Summary Table on page one of this report, the total portfolio size as of June 30, 2026, was approximately $3.02 billion. The following table illustrates the net unrealized gains or losses on the portfolio when comparing the portfolio’s market value to both its original cost and amortized cost for the quarter ending June 30, 2026.
UNREALIZED GAINS & LOSSES
Cash Basis
Original Cost Amortized Cost
Market Value $3,036,896,196 Market Value $3,036,896,196 Original Cost (3,020,573,765) Amortized Cost (3,045,288,058) Net Unrealized Gain $ 16,322,431 Net Unrealized Loss ($ 8,391,862)
An inverse relationship exists between changes in interest rates (Yield) and the value (Price) of fixed income investment securities. As interest rates decrease, the value of fixed income investments increases. Conversely, as interest rates increase, the value of fixed income investments decreases. The City’s investment practice, per the Investment Policy, is generally to hold securities to maturity, with exceptions as noted in the Investment Policy.
The net unrealized gains and losses noted above are “paper gains and losses” and would only be realized if securities were sold prior to maturity.
The inverse relationship between interest rates and value has led to an unrealized gain in FY Q4 2026 of $16 million (as compared with original cost) and an unrealized loss of $8.4 million (as compared with amortized cost) as of June 30, 2026, respectively, as shown in the table above.
Earned Interest Yield
The earned interest yield of the total investment portfolio for the quarter ended June 30, 2026, was 4.127%, 0.070% lower than the previous quarter and 0.322% higher than a year ago.
Cash Management Projection
Based on the Finance Department’s pooled cash flow projection as of June 30, 2026, total revenues, investment maturities and cash for the next six months are anticipated to be approximately $2.1 billion. This is sufficient to cover projected expenditures of approximately $2.0 billion.
Statement of Compliance with the Policy
There were no exceptions or violations outstanding for the quarter ended June 30, 2026.
The investment portfolio meets the requirements of the City’s Investment Policy and California Government Code Section 53601.
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
In May 2026, the City’s Investment Policy received national certification by the Association of Public Treasurers of the United States & Canada (APT US&C) . The City was awarded a 2026 Investment Policy Certificate of Excellence Award . T he City’s Investment Policy is reviewed on a periodic basis by the APT US&C.
Comparison of Portfolio Investment Earnings to FY 2025-26 Budget
The following is a comparison of actual General Fund investment earnings, on an accrual basis, to the Fiscal Year 2025-26 budget. The Fiscal Year 2025-26 Budget included $16 million for interest earnings for the General Fund, based on an assumed net interest yield of 3.90%. The schedule below compares the unaudited actual net investment earnings to the General Fund budget for the quarter ended June 30, 2026. The actual interest earning rates are greater than the forecast for the quarter and for the fiscal year.
BUDGET COMPARISON
Net Investment Earnings Yield
Quarter Ended
Budget(a) 3.90%
Actual(b) 3.98%
Variance 0.08%
Fiscal Year to Date
Budget(a) 3.90%
Actual(b) 3.94%
Variance 0.04%
(a) Reflects the 2026-2030 General Fund Forecast Information submitted by Finance on January 31, 2025.
(b) Reflects the earned interest yield less costs to administer the investment program, adjusted for funds with negative cash balances at month end.
INVESTMENT TRADING ACTIVITY
Section E provides details of the City’s investment activities, including purchases, maturities, amortization, interest received, and realized gains or losses from trading activities.
In general, the City holds all securities to maturity. On rare occasions, the City may liquidate holdings to raise cash or as allowed under the Investment Policy.
HONORABLE MAYOR AND CITY COUNCIL
Subject: Investment Report for Quarter Ended June 30, 2026 July 30, 2026
INVESTMENT STRATEGY AND MARKET UPDATE
The Investment Program continues to focus on its core mandates of safety, liquidity, and yield. Staff continue their efforts to match known cash flow outlays in the next 24-month horizon with investment maturities. Beyond the 24 -month horizon, staff selectively invests in various asset classes and maturity buckets to diversify the portfolio structure and maximize the portfolio’s earnings potential, as allowed by the Investment Policy.
Major themes for the quarter ended June 30, 2026 included the continued military conflict in the Middle East, the installation of new Federal Reserve Chair Kevin Warsh, and the expansion of the Artificial Intelligence (AI) buildout. The military conflict with Iran has simmered on-and-off throughout the quarter with investors unsure if oil is flowing through the Strait of Hormuz, and interest rates generally moving in tandem with oil prices. The confirmation of Kevin Warsh has caused a modest rise in rates, as investors assess his willingness and ability to rein in inflation. Finally, companies such as SpaceX, Alphabet, Amazon, Meta, Nvidia and other “hyperscalers” have continued to raise money through the capital markets via debt and equity offerings in order to continue building data centers. These three themes have driven longer-term interest rates modestly higher throughout the quarter.
Investment staff will closely monitor market developments, continue to focus on the overall quality of the portfolio and invest with care, prudence and diligence.
Future Commitments – As of June 30, 2026, the City had no obligations to sell securities and no commitments to participate in securities trading.
Executed Reverse Repurchase Agreements – No reverse repurchase agreements were executed this quarter.
Restructuring – No restructuring activities took place during this quarter.
CONCLUSION
The total investment portfolio as of June 30, 2026, was $3,020,573,765 an increase of approximately $299 million from the previous quarter. For the quarter ended June 30, 2026, the earned interest yield decreased from 4.197% to 4.127% as compared to the quarter ended March 31, 2026, and the weighted average days to maturity decreased from 749 days to 661 days over the same period. As of June 30, 2026, approximately 51% of the total portfolio was invested in U.S. Treasuries and Agency securities.
MARIA ÖBERG
Director of Finance