City Council/CSJFA Board
September 29, 2026
Item: 1
Presenters:
Jeffrey Provenzano, Director of Environmental Services
Sylvia Jefferson, Assistant Director of Finance
CSJFA
SUBORDINATEWASTEWATER
COMMERCIAL PAPER PROGRAM
WASTEWATER SYSTEM
2 Sanitary Sewer Collection
System
• Over 2,000 miles sewer mains, 17
pump stations, and other critical
infrastructure
• Envision San José 2040 General Plan
and other interrelated plans
• The 2027-2031 CIP consists of $300
million of investment
Regional Treatment Plant
• Jointly owned by the City and the City
of Santa Clara, and provides
wastewater treatment for the owners
and tributary agencies.
• Treatment Plant Master Plan (PMP)
originally approved in 2013 and
updated in 2025
• Anticipate $1.6 billion of capital
improvements in the next ten years
and another $1.1 billion through 2050
INTERIM FINANCING PROGRAM
Executed the credit agreement
with Wells Fargo on October 19,
2017
Extended several times and the
last extension expires on October
16, 2026
Subordinate Wastewater
Revenue Notes
The City and MA initiated the
discussion with Wells Fargo in
April/May for another extension.
The proposed extension terms
would lead to significant cost
increase.
Negotiation for Extension
Released on June 18, 2026 to
solicit a new interim financing
program
CP Programs provide more
favorable terms on fees and
interest costs
RFP Solicitation
Selected Bank of America to
provide a letter of credit to
support the CP Program on July
24, 2026
RFP Award
Early October 2026
LOC of $200 million for 3 years
Execute the New
Agreement
CP Notes will be issued before
October 16, 2026 to refund the
outstanding subordinate revenue
notes of $90.1 million
Issue CP Notes
3 FEE AND PAYMENT SOURCE
Level Rating Facility Fee Rate
I AA- / AA – or above 0.31%
II A+ / A+ 0.51%
III A / A 0.71%
IV A- / A- 0.91%
V BBB+ / BBB+ 1.26%
VI BBB / BBB 1.61%
VII BBB- / BBB- or below 3.11%
4 • The payment source is the Wastewater Net System Revenues • CP payment obligation is subordinate to Wastewater Revenue Bonds, Series 2022B • No pledge of funds from General Fund
DOCUMENTS FOR COUNCIL APPROVAL
Offering Memorandum A document used by the Dealer to inform investors of the terms, risks, and financial background of the commercial paper.
Dealer Agreement A contract between the City and a bank that sets the terms for issuing and selling the commercial paper in the market.
Issuing and Paying Agent Agreement A contract that defines the responsibilities of U.S. Bank as to the issuances, transfers, and payouts of CP notes on behalf of the City.
Subordinate Installment Purchase Contract A financing agreement where the City pays a purchase price for projects of Wastewater System in regular installments to CSJFA.
The debt repayment priority is below the 2022A Bonds in the event of default.
Reimbursement Agreement Authorizes the issuance of a direct-pay LOC to support the CP notes.
Fee Agreement Specifies fees to be paid to the bank.
5 KEY FINANCING TEAM MEMBERS
6 Municipal Advisor Public Resources Advisory Group
Bond Counsel Orrick, Herrington & Sutcliffe LLP
Disclosure Counsel Anzel Galvan LLP
Bank Counsel Kutak Rock LLP
Issuing and Paying Agent U.S. Bank Trust Company, National Association CP Dealer Pool Barclays, Morgan Stanley, TD Financial Products
COUNCIL & CSJFA BOARD RECOMMENDATIONS
Adopt resolutions:
• approving the issuance and sale of the City of San José Financing Authority Subordinate Wastewater Revenue Commercial Paper Notes in an aggregate principal amount not to exceed $200 million outstanding at any one time,
• approving related documents in substantially final form and authorizing the City Manager, the Authority Executive Director, and other authorized officers to execute and deliver these documents, and
• authorizing the negotiation, execution and delivery of documents to provide for one or more extensions of the Letter of Credit as long as the extension shall require the payment of a facility fee rate of no more than 1.00% based on the obligor ratings
UNDER BOTH THE DEBT MANAGEMENT POLICY AND SAN JOSE MUNICIPAL CODE SECTION 4.34.200, APPROVAL OF THE ISSUANCE OF THESE CP NOTES REQUIRES A TWOTHIRDS VOTE BY THE CITY COUNCIL (8 VOTES). 7 City Council/CSJFA Board
September 29, 2026
Item: 1
Presenters:
Jeffrey Provenzano, Director of Environmental Services
Sylvia Jefferson, Assistant Director of Finance
QUESTIONS
8