City Council Meeting
June 10, 2025
Item #11 – RTC 25-401
Resolution Authorizing an Ad
Valorem Tax Levy Based on
Debt Service Estimate to be
Provided to Santa Clara County
Respecting Unsold General
Obligation Bonds for FY2025/26
• Measure I Background
• First tranche of General Obligation Bonds issuance
• Ad Valorem Tax Rate and Levy timeline
• Recommendation
2 Agenda
• General Obligation Bonds administration team
‒ City staff from
City Manager’s Office
City Attorney’s Office
Finance
‒ External professional services providers confirmed by Resolution No. 24-9341* Bond Counsel: Jones Hall (Scott Ferguson)
Financial Advisor: PFM (Jaime Trejo)
3 Measure I Background
*Passed on July 9, 2024, A Resolution of the City of Santa Clara, California, determining that the public interest and necessity demand the acquisition, construction and improvement of municipal improvement projects constituting public infrastructure of the City, and their financing through the issuance of General Obligation Bonds • Key Actions & Timeline
4 Measure I Background – cont’d
Action Estimated
Timeline
1. Bond Compliance Citizens’ Oversight Committee (COC) Confirmation & COC Bylaws Approval
May 27, 2025
2. Approve Ad Valorem Tax Levy for Debt Service(1) June 10, 2025
3. Approve Updated Debt Management Policy September 2025
4. Approve Bond Issuance and Related Documents(2) December 2025 (1) Annual until final maturity
(2) Each Bond Issuance
• Ballot Measure passed in November 2024 approving the sale of up to $400 Million of General Obligation Bonds to finance specific types of city infrastructure (passage rate of 69.41%)*
• Projects to be funded and constructed outlined in an attached intended “Expenditure Plan”
‒ Streets and Transportation ($41,170,000)
‒ Fire Stations and Emergency Response ($142,235,450)
‒ Police Facilities ($43,987,500)
‒ Parks, Library, Senior Center and Aquatic Facilities ($115,258,750) ‒ Storm Drain Improvements ($46,000,000)
‒ Historic Buildings and Beautification ($9,200,000)
‒ Bond Issuance Costs ($2,000,000)
5 Measure I
*Source: Santa Clara County voter results, November 5, 2024, Measure I • The tax rate statement included in the full text of the ballot measure 6 Tax Rate Statement
Tax Rate Statement Information
Estimated maximum tax rate during the term of repayment: $28.70 per $100,000 of AV* tax year 2025-26 Estimated average tax rate during the term of repayment: $19.00 per $100,000 of AV* Total cost of repayment: $736,890,700
*Assessed Value
Source: Santa Clara County November 5, 2024 General Election; https://stgenrov.sccgov.org/voterguide/137/SC002ENG-508.pdf • Resolution No. 24-9341
‒ Stated the City’s intention to issue bonds for public interest and necessity demand for infrastructure
‒ Declared the City‘s intention to use GO Bonds proceeds for reimbursement of capital projects expenditures, paid prior to bond issuance, no later than 18 months after expenditure payment date or placed in service date
• Additional reimbursement timing
‒ Reimbursement from GO Bonds proceeds must occur no later than 3 years after the original expenditure date
Or 5 years with an engineer’s certificate
• First tranche of General Obligation Bonds (GO Bonds) issuance size of $150 Million
7 General Obligation Bonds, Series 2026
• Total estimated GO Bonds, Series 2026 Issuance = $150 Million • While City staff has developed the proposed phasing approach, it is subject to Council review and approval. Given the number, scale, and urgency of the infrastructure projects identified, a substantial initial tranche—estimated at $150 million—is necessary to initiate key improvements and maintain project momentum. This approach ensures that the City can begin addressing critical needs without delay while preserving flexibility for future Council direction. • Bond Compliance COC to review 1st tranche capital projects in early August 2025 • City Council to approve 1st tranche capital projects in late August 2025 8 General Obligation Bonds, Series 2026 – cont’d
9 Pro Forma Debt Service
*Net of cost of issuances and underwriter’s discount
** Does not account for original issue premium, which can de deposited into the debt service fund Period Ending Principal Interest Debt Service**
8/1/2026 $12,775,000 $3,750,000 $16,525,000
8/1/2027 13,045,000 6,861,250 19,906,250
8/1/2028 1,000,000 6,209,000 7,209,000
8/1/2029 1,000,000 6,159,000 7,159,000
8/1/2030 1,810,000 6,109,000 7,919,000
8/1/2031 2,215,000 6,018,500 8,233,500
8/1/2032 2,655,000 5,907,750 8,562,750
8/1/2033 2,790,000 5,775,000 8,565,000
8/1/2034 2,930,000 5,635,500 8,565,500
8/1/2035 3,075,000 5,489,000 8,564,000
8/1/2036 3,225,000 5,335,250 8,560,250
8/1/2037 3,390,000 5,174,000 8,564,000
8/1/2038 3,560,000 5,004,500 8,564,500
8/1/2039 3,735,000 4,826,500 8,561,500
8/1/2040 3,920,000 4,639,750 8,559,750
Total $61,125,000 $82,894,000 $144,019,000
• Estimated Bond Statistics:
‒ Net Proceeds for Projects* $149,125,000
‒ True Interest Cost 4.58%
Period Ending Principal Interest Debt Service**
8/1/2041 4,120,000 4,443,750 8,563,750
8/1/2042 4,325,000 4,237,750 8,562,750
8/1/2043 4,540,000 4,021,500 8,561,500
8/1/2044 4,765,000 3,794,500 8,559,500
8/1/2045 5,005,000 3,556,250 8,561,250
8/1/2046 5,260,000 3,306,000 8,566,000
8/1/2047 5,520,000 3,043,000 8,563,000
8/1/2048 5,795,000 2,767,000 8,562,000
8/1/2049 6,085,000 2,477,250 8,562,250
8/1/2050 6,390,000 2,173,000 8,563,000
8/1/2051 6,710,000 1,853,500 8,563,500
8/1/2052 7,045,000 1,518,000 8,563,000
8/1/2053 7,395,000 1,165,750 8,560,750
8/1/2054 7,765,000 796,000 8,561,000
8/1/2055 8,155,000 407,750 8,562,750
Total $88,875,000 $39,561,000 $128,436,000
Grand Total $150,000,000 $122,455,000 $272,455,000
• If the City does not levy an Ad Valorem tax in advance of its proposed GO Bonds sale in early 2026, the City would need to rely on capitalized interest to make the first debt service payment
10 Tax Levy in Anticipation of Bond Sale
Advantage
• No Capitalized Interest (Cap I)
• Potentially provides approximately
$3.75M more for projects
Advantage
• Faster principal amortization reduces
interest costs*
Disadvantage
• Earlier than necessary taxpayer
payment if bond issuance is delayed
*Assuming principal is amortized over the 30-year term
*Assumes principal is amortized over a 30-year term
11 Tax Levy Annual Timeline
FY2025-26 Tax Rate
July 2025 – City files
property tax request with
County of Santa Clara
November 2025 & February
2026 – Property tax
payment due dates
August 2026 & February
2027 – debt service
payment dates
FY2026-27 Tax Rate
July 2026 – City files
property tax request with
County of Santa Clara
November 2026 & February
2027 – Property tax
payment due dates
August 2027 & February
2028 – debt service
payment dates
FY2027-28 Tax Rate
July 2027 – City files
property tax request with
County of Santa Clara
November 2027 &
February 2028 – Property
tax payment due dates
August 2028 & February
2029 – debt service
payment dates
• At this time, a tax rate of $28.70 per $100,000 of assessed value will generate an estimated $16.8 Million, based on projected FY 2025/26 assessed value • A more accurate tax levy projection, based on the tax rate, will be known when the County releases the assessed valuations for FY 2025/26 in September 2025 • Consistent with Measure I, the tax rate will be set at $28.70 per $100,000 of assessed value in the first year to generate adequate revenue to pay down principal
12 Tax Levy Rate and Amount
• The tax bill for the largest 20 commercial property owners would increase by $254,000, on average, in FY 2025/26, based on current AV* • The tax bill for a typical homeowner would increase by approximately $202 in FY 2025/26, based on current AV*
13 Tax Bill Increase to Each Property Owner
Ballot Summary
Estimated maximum tax rate during the term of repayment: $28.70 per $100,000 of AV* tax year 2025-26 Estimated average tax rate during the term of repayment: $19.00 per $100,000 of AV* FY 2023/24 median AV of single-family home $674,000
Tax per year, based on average / maximum $128 / $193
*Assessed Value
Source: Santa Clara County November 5, 2024 General Election; https://stgenrov.sccgov.org/voterguide/137/SC002ENG-508.pdf • Adopt the Resolution Authorizing an Ad Valorem Tax Levy Based on a Debt Service Estimate to be Provided to Santa Clara County Respecting Unsold General Obligation Bonds for Fiscal Year 2025/26
‒ Rate shall be $28.70 per $100,000 of assessed value
14 Recommendation
Agenda Item # 11
City Council Meeting
June 10, 2025
Item #11 – RTC 25-401
Resolution Authorizing an Ad
Valorem Tax Levy Based on
Debt Service Estimate to be
Provided to Santa Clara County
Respecting Unsold General
Obligation Bonds for FY2025/26