Due date for current taxes: First installment - November 1; second installment - February 1.
Penalties for delinquency: 10% and 1.5% of tax per month after date taxes become delinquent.
Collected by government unit: County of Santa Clara.
Basis upon which collections are distributed: Taxing jurisdictions assessed valuations and tax rates for voter approved debt to taxing jurisdictions, County rate (1% of full cash value) shared by all jurisdictions.
Compensation paid to collecting government unit for fiscal year 2024-25 is $620,821 Note: Tax rates stated are the rates applicable to the tax rate area 7-000 as typical tax rate area within the City. Rates are based on $100 assessed valuation.
Source: County of Santa Clara, Department of Finance
6. Property Tax Rates Direct and Overlapping Govern ments – Last Ten Fiscal Years Draft
225
Table 7
Percentage of Percentage of
Assessed Total Assessed Assessed Total Assessed
Taxpayers Valuation Valuation Valuation Valuation
Intel Corporation 2,627,434$ 4.01% 1,459,395$ 4.43% Nvidia Corporation (formerly Nvidia Land Development LLC) 2,022,776 3.09% 337,283 1.02% Santa Clara Square Office IIA LLC 1,604,502 2.45% - - Vantage Data Centers LLC 1,221,334 1.86% - - Microsoft Corporation 1,178,702 1.80% 281,487 0.85% SI LLC 1,102,719 1.68% 811,564 2.46% Forty Niners SC Stadium Company LLC 824,299 1.26% 1,454,707 4.42% Apple Inc 815,653 1.24% - - Santa Clara Phase III EFH LLC 741,721 1.13% - - Coresite Real Estate 680,669 1.04% - - Xeres Ventures LLC - - 433,206 1.32% The Irvine Company - - 401,956 1.22% Oracle America Inc (formerly Sun Microsystems) - - 312,326 0.95% M West Propco LLC - - 283,068 0.86% PR 3975 Freedom Circle - - 280,750 0.85% Top Ten Total 12,819,809$ 19.56% 6,055,742$ 18.38% City Total 65,538,325$ 32,927,777$
Sources: Santa Clara County Assessor 2024-25 and 2015-16 Combined Tax Rolls through HdL Coren & Cone. 2024-25 2015-16
CITY OF SANTA CLARA
PRINCIPAL PROPERTY TAX PAYERS
2024-25 AND 2015-16 COMPARISON FOR GENERAL FUND
(In Thousands)
7. Principal Property Tax Payers 2024-25 and 2015-1 6 Comparison for General Fund
Draft
226
CITY OF SANTA CLARA
PROPERTY TAX LEVIES AND COLLECTIONS
Last Ten Fiscal Years
(In Thousands)
Table 8
Fiscal Year Percentage of Delinquent Percentage of
Ending Gross Current Tax Current Levy Tax Total Total Levy June 30 Tax Levy Collections Collected Collected Collections Collected 2015 / 16 24,745 $ 24,745 $ 100.00% - $ 24,745 $ 100.00% 2016 / 17 27,738 27,738 100.00% - 27,738 100.00% 2017 / 18 30,304 30,304 100.00% - 30,304 100.00% 2018 / 19 33,959 33,959 100.00% - 33,959 100.00% 2019 / 20 37,006 37,006 100.00% - 37,006 100.00% 2020 / 21 40,228 40,228 100.00% - 40,228 100.00% 2021 / 22 42,290 42,290 100.00% - 42,290 100.00% 2022 / 23 54,031 54,031 100.00% - 54,031 100.00% 2023 / 24 58,163 58,163 100.00% - 58,163 100.00% 2024 / 25 62,064 62,064 100.00% - 62,064 100.00% Sources: City of Santa Clara and County of Santa Clara, Department of Finance
8. Property Tax Levies and Collections – Last Ten F iscal Years
Draft
227
Table 9
This list is in alphabetical order and represents sales from July 2024 to June 2025 The Top 25 Sales / Use Tax contributors generate 49.6% of Santa Clara's total sales and use tax revenue AG Electronic Materials NVIDIA Corporation
Applied Materials Oracle America
Arista Networks Porsche Stevens Creek
Bell Electrical Supply Rotten Robbie Service Stations
Costco Wholesale Shockwave Medical
Financial Services Vehicle Trust Stevens Creek Auto Imports Frontier Ford Stevens Creek BMW
Home Depot Stevens Creek Hyundai
Ingrasys Technology USA Vantage Data Centers Procurement Lasertec U.S.A Wiwynn International
Lenovo Global Technology World Wide Technology
Levi's Stadium ZT Systems
Lexus of Stevens Creek
Sources: From Muni Services Sales Tax Digest Summary.
CITY OF SANTA CLARA
PRINCIPAL SALE/USE TAX CONTRIBUTORS
June 30, 2025
9. Principal Sale/Use Tax Contributors
Draft
228
Table 10
Fiscal Year
Ending
June 30 Residential Commercial Industrial Other Total
2015 / 16 27,789$ 15,409$ 321,491$ 7,112$ 371,801 $ 2016 / 17 28,007 15,855 341,865 4,682 390,410 2017 / 18 29,082 15,774 355,279 3,562 403,698 2018 / 19 29,734 15,378 359,407 2,428 406,947 2019 / 20 31,867 15,472 383,704 2,815 433,858 2020 / 21 35,440 16,489 399,940 1,394 453,264 2021 / 22 33,275 16,395 448,257 4,447 502,373 2022 / 23 38,021 17,991 500,189 2,964 559,165 2023 / 24 41,676 22,584 584,360 7,527 656,147 2024 / 25 47,179 26,684 660,654 7,771 742,288 Sources: City of Santa Clara
CITY OF SANTA CLARA
Electric Utility Charge For Services by Source
Last Ten Fiscal Years
(In Thousands)
10. Electric Utility Charge for Services by Source
Draft
229
Table 11
Total Primary
Government Population
Debt per
Capita
Total Personal
Income ($000)
Debt/ Income
Ratio
Fiscal Year
Ending
June 30
Certificates of
Participation
Lease
Liabilities
SBITA
Liabilities
Revenue Bonds/
Loan
Lease
Liabilities
SBITA
Liabilities Revenue Bonds
2015 / 16 22,905$ $ - $ - 229,719$ $ - $ - 464,720$ 717,344$ 123,752$ 5,797 $ 5,194,006$ 13.81% 2016 / 17 21,177 - - 220,800 - - 429,773 671,750 123,983 5,418 5,454,137 12.32% 2017 / 18 19,392 - - 208,117 - - 394,827 622,336 129,604 4,802 6,064,143 10.26% 2018 / 19 17,551 - - 189,158 - - 340,217 546,926 128,717 4,249 6,121,909 8.93% 2019 / 20 15,638 - - 196,012 - - 325,265 536,915 129,104 4,159 6,180,008 8.69% 2020 / 21 13,654 676 - 184,933 2,917 - 296,796 498,976 130,746 3,816 6,596,037 7.56% 2021 / 22 11,594 464 2,397 170,413 2,287 1,437 280,314 468,906 130,127 3,603 7,540,481 6.12% 2022 / 23 10,560 252 8,918 155,302 1,633 2,718 245,275 424,658 132,476 3,206 8,953,977 4.74% 2023 / 24 9,476 39 9,204 154,567 951 2,976 228,668 405,881 132,048 3,074 9,985,016 4.06% 2024 / 25 8,337 1,514 7,566 266,670 241 2,495 219,609 506,432 134,587 3,763 10,972,709 4.62% Sources: Finance Office, City of Santa Clara and MuniServices LLC.
CITY OF SANTA CLARA
RATIOS OF OUTSTANDING DEBT BY TYPE
Last Ten Fiscal Years
(In Thousands)
Governmental Activities Business Activities
Santa Clara
Stadium
Authority
11. Ratios of Outstanding Debt by Type – Last Ten Fi scal Years Draft
230
Fiscal Year
Ending June 30 Population
Total Assessed
Valuation
2015 / 16 123.8 32,927,777$
2016 / 17 123.9 36,638,297
2017 / 18 129.6 40,109,539
2018 / 19 128.7 43,964,914
2019 / 20 129.1 46,232,453
2020 / 21 130.7 50,118,954
2021 / 22 130.1 52,264,729
2022 / 23 132.5 56,926,788
2023 / 24 132.0 61,070,198
2024 / 25 134.6 65,538,325
Sources: State of California, Department of Finance
County of Santa Clara, Department of Finance
CITY OF SANTA CLARA
POPULATION AND ASSESSED VALUATION
Last Ten Fiscal Years
(In Thousands)
Table 12
12. Population and Assessed Valuation – Last Ten Fis cal Years Draft
231
Table 13
% Applicable Debt
Direct Debt:
2013 Refunding Certificates of Participation 100% 7,970,000$ Total Gross Direct Debt 7,970,000
Unamortized Premium/Discount 100% 366,503
Lease Liabilities 1,514,009
SBITA liabilities 7,565,921
Total Net Direct Debt 17,416,433
Overlapping Debt:
Santa Clara County General Fund Obligations 94,461,705
Santa Clara County Pension Fund Obligations 29,932,630
Santa Clara Valley Water District Benefit Assessment District 2,350,096 Santa Clara County Board of Education Certificates of Participation 1,137,584 San Jose-Evergreen Community College District OPEB Obligations 23,288 West Valley-Mission Community College District General Fund Obligations 785,232 Foothill-DeAnza Community College District 7,178,815
San Jose-Evergreen Community College District 470,352
West Valley Community College District 196,699,058
Fremont Union High School District 19,428,548
Campbell Union High School District General Fund Obligations 273,250 Campbell Union School District 11,202,845
Campbell Union High School District 6,953,775
Campbell Union School District General Fund Obligations 39,792 El Camino Hospital District 1,778,203
San Jose Unified School District 561,053
Cupertino Union School District 14,859,747
Santa Clara Unified School District 632,541,564
San Jose Unified School District General Fund Obligations 2,292 Santa Clara County 114,763,188
Cupertino Union School District General Fund Obligations 2,026,956 Santa Clara Unified School District Certificates of Participation 7,168,895 Total Overlapping Debt 1,144,638,868
Total Gross Direct and Overlapping Bonded Debt (1) 1,162,055,301 Direct Unamortized Premium/Discount
TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT 1,162,055,301$ 2024 / 25 Assessed Value 65,538,324,753$
Ratios to Assessed Valuation:
Direct Debt 17,416,433$ 0.027%
Total Gross Debt 1.773%
Total Net Debt 1.773%
Note: (1) Excludes tax and revenue anticipation notes, revenue, mortgage revenue and tax allocation bonds.
Source: California Municipal Statistics, Inc.
CITY OF SANTA CLARA
COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT June 30, 2025
Description
Draft
232
13. Computation of Direct and Overlapping Bonded Debt
Table 14
Fiscal Year Net
Ending Assessed Debt Limit- 15% of Debt Applicable
June 30 Valuation Assessed Valuation (1)
to Limit Legal Debt Margin
2015 / 16 32,821,489$ 4,923,223$ $ - 4,923,223$ 2016 / 17 36,533,664 5,480,050 - 5,480,050 2017 / 18 40,007,063 6,001,059 - 6,001,059 2018 / 19 43,863,429 6,579,514 - 6,579,514 2019 / 20 46,132,942 6,919,941 - 6,919,941 2020 / 21 50,021,129 7,503,169 - 7,503,169 2021 / 22 52,170,000 7,825,500 - 7,825,500 2022 / 23 56,833,678 8,525,052 - 8,525,052 2023 / 24 60,975,121 9,146,268 - 9,146,268 2024 / 25 65,444,063 9,816,609 - 9,816,609 Note:
Sources: County of Santa Clara, Department of Finance and City of Santa Clara
CITY OF SANTA CLARA
LEGAL DEBT MARGIN INFORMATION
Last Ten Fiscal Years
(In Thousands)
(1) Section 1309 of the City Charter of the City states: "Bonded Debt Limit. The bonded indebtedness of the City may not in the aggregate exceed the sum of fifteen percent (15%) of the total assessed valuation of property within the City, exclusive of revenue bonds or any indebtedness that has been or may hereafter be incurred for the purposes of acquiring, constructing, extending, or maintaining municipally owned utilities for which purposes a further indebtedness may be incurred by the issuance of bonds, subject only to the provisions of the State Constitution and this Charter."
14. Legal Debt Margin Information – Last Ten Fiscal Years Draft
233
Table 15
Fiscal Year
Ending June 30
Gross
Revenue
Less
Operating
Expense
Net Revenue
Available For
Debt Service Principal Interest
Letter Of
Credit
Fees Total Coverage (1)
2015 / 16 359,084 $ 316,578 $ 42,506$ 8,958 $ 8,348 $ 358 $ 17,664 $ 2.41 2016 / 17 352,828 317,237 35,591 7,640 8,434 335 16,409 2.17 2017 / 18 383,662 346,825 36,837 11,416 6,594 302 18,312 2.01 2018 / 19 414,975 331,141 83,834 11,897 11,565 607 24,069 3.48 2019 / 20 445,142 368,162 76,980 11,700 6,787 316 18,803 4.09 2020 / 21 465,675 407,627 58,048 9,580 3,862 349 13,791 4.21 2021 / 22 550,445 493,302 57,143 13,005 3,232 8 16,245 3.52 2022 / 23 635,066 602,370 32,696 13,580 2,696 15 16,291 2.01 2023 / 24 635,038 518,547 116,491 15,140 2,254 6 17,400 6.69 2024 / 25 860,791 570,619 290,172 15,460 5,767 581 21,808 13.31 Notes:
Source: City of Santa Clara
CITY OF SANTA CLARA
Last Ten Fiscal Years
(In Thousands)
(1) The required coverage is 1.00.
PLEDGED REVENUE COVERAGE
ELECTRIC REVENUE BOND
15. Pledged Revenue Coverage Electric Revenue Bond – Last Ten Fiscal Years Draft
234
Table 16
Per
Capita Public County City
Personal Buying Median School Unemployment Unemployment Year Population Income Income Age Enrollment Rate Rate
($000)
2015 / 16 123,752 5,194,006$ 41,971 $ 34.3 15,388 4.2% 3.7% 2016 / 17 123,983 5,454,137 43,991 34.3 15,409 3.8% 3.4% 2017 / 18 129,604 6,064,143 46,790 34.3 15,509 2.9% 2.7% 2018 / 19 128,717 6,121,909 47,561 33.9 15,387 2.1% 1.9% 2019 / 20 129,104 6,180,008 47,868 34.2 15,306 11.0% 9.0% 2020 / 21 130,746 6,596,037 50,449 33.9 14,808 7.0% 5.9% 2021 / 22 130,127 7,540,481 57,947 34.0 14,028 1.8% 1.6% 2022 / 23 132,476 8,953,977 67,589 34.5 13,919 3.2% 2.9% 2023 / 24 132,048 9,985,016 75,617 34.8 14,236 3.4% 3.2% 2024 / 25 134,587 10,972,709 81,529 34.4 14,448 3.8% 3.3% Sources: MuniServices, LLC \ Avenu Insights & Analytics (1) Population data by the California Department of Finance Projections. (2) The California Department of Finance demographics estimates now incorporate 2010 Census counts as a benchmark. (3) Unemployment and Total Employment Data are provided by the EDD's Bureau of Labor Statistics Department. (4) Student Enrollment reflects the total number of students enrolled in the Santa Clara Unified School District.
Other school districts within the City are not accounted for in this report.
CITY OF SANTA CLARA
DEMOGRAPHIC AND ECONOMIC STATISTICS
Last Ten Calendar Years
16. Demographic and Economic Statistics – Last Ten C alendar Years Draft
235
Table 17
Percentage of Percentage of
Number of Total City Number of Total City
Company Employees Employment Employees Employment
Applied Materials, Inc. 8,500 21.1% 8,500 22.1% Intel Corporation 7,801 19.3% 7,801 20.3% Advanced Micro Devices Inc. 3,000 7.4%
Nvidia 2,700 6.7%
Kaiser Foundation Health Plan 2,600 6.4%
California's Great America 2,500 6.2% 2,500 6.5% Dell 2,088 5.2%
Santa Clara University 2,000 5.0% 1,200 3.1% City of Santa Clara 1,200 3.0% 1,759 4.6% Macy's 1,200 3.0% 1,200 3.1%
Avaya Inc. - - 2,000 5.2%
EMC Corporation - - 1,338 3.5%
Catalyst Semiconductor Inc - - 1,100 2.9% Lsa Global - - 1,001 2.6%
Total Top Ten 33,589 83.3% 28,399 73.9%
All Others 6,786 16.7% 10,022 26.1%
Total Employment 40,375 100% 38,421 100%
Sources: Fiscal year 2025: Reference Solutions database, Infogroup, Inc., Papillion, Nebraska Sources: Fiscal year 2016: ReferenceUSA database, infogroup, Inc., Papillion, Nebraska
CITY OF SANTA CLARA
PRINCIPAL EMPLOYERS
Current Year and Ten Years Ago
2025 2016
17. Principal Employers – Current Year and Ten Years Ago Draft
236
Table 18
2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
City Council 10.00 10.00 9.00 9.00 9.00 10.00 10.00 11.00 10.00 9.00 City Clerk 7.00 7.00 7.00 6.00 7.00 5.00 6.00 7.00 7.00 5.00 City Attorney 8.00 7.00 8.00 8.00 8.00 7.00 7.00 6.00 6.00 6.00 City Auditor 2.00 2.00 3.00 3.00 3.00 3.00 - - - - City Manager 19.00 11.30 19.00 19.00 13.00 13.00 13.00 14.00 13.00 16.00 Information Technology 7.00 6.00 6.00 6.00 7.00 7.00 7.00 7.00 7.00 5.00 Human Resources 15.00 15.00 15.00 14.00 15.75 15.75 15.00 15.00 15.00 14.50 Finance 71.50 70.75 69.75 68.75 69.75 61.75 61.00 61.00 61.75 60.25 Parks & Recreation 77.75 77.75 77.75 77.75 82.75 82.75 80.75 80.75 79.00 82.75 Library 42.75 42.75 42.50 42.50 46.75 46.75 46.75 45.50 45.50 47.00 Community Development 79.00 75.00 73.00 72.00 68.75 66.00 65.00 64.00 56.00 42.00 Engineering 41.25 36.25 40.25 39.25 42.25 39.25 39.92 40.92 39.25 38.25 Building Maintenance 13.00 13.00 13.00 13.00 13.00 13.00 13.23 13.23 12.90 10.90 Street 55.55 55.60 55.60 55.50 60.60 60.60 58.60 58.60 59.60 65.35 Automotive Services 14.70 14.65 14.65 14.75 15.65 15.65 15.75 15.75 15.75 15.00 Police 231.00 231.00 231.00 221.00 239.00 239.00 239.00 239.00 231.00 222.00 Fire 173.50 173.50 155.50 154.50 168.25 167.25 167.25 167.50 166.50 179.50 Non-Departmental 19.00 5.70 - - 11.00 9.00 4.00 - - - Electric Utility 223.00 222.00 214.00 198.00 198.00 197.00 189.00 186.00 179.00 166.00 Water Utility 49.85 50.55 50.55 50.55 50.80 50.80 50.35 50.85 52.70 50.10 Sewer Utility 23.15 22.45 22.45 22.45 22.20 22.20 22.65 22.15 21.30 19.90 TOTAL 1,183.00 1,149.25 1,127.00 1,095.00 1,151.00 1,131.75 1,111.25 1,105.25 1,078.25 1,054.50 Source: City of Santa Clara Annual Budget
CITY OF SANTA CLARA
FULL-TIME EQUIVALENT BUDGETED CITY EMPLOYEES BY PROGRAM/FUNCTION Last Ten Fiscal Years
Fiscal Year Ending June 30
18. Full-Time Equivalent Budgeted City Employees by Program/Function – Last Ten Fiscal Years Draft
237
Table 19
2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Culture and Recreation:
Number of library items circulated 1,862,771 2,060,389 2,152,877 1,268,965 736,301 1,598,171 2,509,201 2,612,102 2,700,315 2,479,126 Fire Protection:
Number of calls answered 11,086 10,949 10,688 10,391 8,853 9,339 9,456 8,849 8,850 8,933 Number of inspections conducted 4,332 8,801 N/A 10,143 4,004 4,303 6,404 8,470 9,696 8,260 Police Protection:
Number of calls for service
(1)
49,871 47,828 43,306 61,421 67,211 63,860 58,912 53,865 50,429 51,853 Electric System:
Maximum annual demand (MW) 713.5 669.2 693.9 649.4 590.6 579.3 587.8 586.6 568.1 526.4 Total annual energy (Mwh) 4,956,957 4,657,586 4,568,293 4,361,658 3,956,474 3,773,864 3,693,251 3,733,800 3,628,200 3,488,004 Sewer System:
Number of service connections 27,522 25,312 26,105 25,682 25,948 25,359 25,481 26,236 26,162 25,744 Peak flow (5-day average, WPCP)
(MG) 110 110 110 110 110 110 110 110 110 110 Maximum daily capacity of
treatment plant (WPCP) (MGD) 167 167 167 167 167 167 167 167 167 167 Peak flow (5-day average, City)
(MGD) 16 16 16 16 16 16 16 16 16 16 Water System:
Number of service accounts 27,971 24,903 25,894 25,371 25,592 24,904 25,293 25,670 25,714 25,716 Daily Average consumption (MG) 14 15 14 13 16 16 16 15 15 15 Maximum daily capacity of plant:
Potable Water (MGD) 80 80 80 80 80 80 80 80 80 96 Recycled Water (MGD) 15 15 15 15 15 15 15 15 30 14 Note: (1) Data Based on Calendar Year
Source: City of Santa Clara
CITY OF SANTA CLARA
OPERATING INDICATORS BY FUNCTION/ACTIVITY
Last Ten Fiscal Years
Fiscal Year Ending June 30
19. Operating Indicators by Function/Activity – Last Ten Fiscal Years
Draft
238
CITY OF SANTA CLARA
Table 20
2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Culture and Recreation:
Number of community centers 4 4 4 4 4 4 4 4 4 4 Number of parks 53 44 44 44 44 44 39 39 35 34 Park acreage 375 353 353 367 367 353 254 311 330 274 Number of golf courses - - - - - - 1 1 1 1 Number of swimming pools 11 11 11 11 11 11 11 11 11 5 Number of tennis courts 28 28 27 27 27 27 28 28 28 28 Number of lawn bowling greens 1 1 1 1 1 1 1 1 1 1 Number of lighted soccer fields 7 7 7 7 7 7 3 3 3 3 Number of lighted softball fields 4 4 4 4 4 4 7 7 7 7 Number of neighborhood park buildings 11 11 10 10 10 10 8 8 8 8 Number of gymnastic centers 1 1 1 1 1 1 1 1 1 1 Number of skate parks 1 1 1 1 1 1 1 1 1 1 Number of community theaters 1 1 1 1 1 1 1 1 1 1 Number of libraries 3 3 3 3 3 3 3 3 3 3 Cemetery 2 2 2 2 2 2 2 2 2 2 Fire Protection:
Number of stations 9 9 10 10 9 10 10 10 10 10 Police Protection:
Number of stations 2 1 1 1 1 2 2 2 2 2 Electric System:
Number of meters 62,081 60,795 59,297 59,227 58,230 57,066 55,971 55,139 54,942 53,824 Miles of high voltage lines 637 631 631 622 618 616 613 612 608 605 Number of substations 33 29 31 29 29 29 28 27 27 27 Sewerage and Storm Drain System:
Miles of sanitary sewers 288 288 288 288 288 288 288 288 288 288 Number of sanitary sewer pump stations 6 6 6 6 6 6 6 6 6 6 Miles of storm sewers 194 194 194 194 196 195 195 195 195 195 Number of treatment plants 1 1 1 1 1 1 Tertiary 1 Tertiary 1 Tertiary 1 Tertiary 1 Tertiary Number of storm drain pump stations 22 22 22 22 22 22 22 22 22 22 Water System:
Miles of water mains 306 306 306 306 306 306 335 335 335 310 Number of fire hydrants 3,648 3,648 3,437 3,437 3,248 3,429 3,404 3,382 3,501 3,383 Miles of recycled watermains 34 34 34 34 34 34 33 33 33 33 Streets:
Miles of Streets 252 252 252 252 252 252 252 252 252 252 Number of Street Lights 8,437 8,431 8,431 8,429 8,404 8,235 8,187 8,118 8,112 8,103 Number of Traffic Signals 161 160 157 186 183 182 207 207 207 206 Source: City of Santa Clara
CAPITAL ASSETS STATISTICS BY FUNCTION
Last Ten Fiscal Years
Fiscal Year Ending June 30
20. Capital Assets Statistics by Function – Last Ten Fiscal Years Draft
239
Table 21
INSURANCE ANNUAL TERM EXPIRATION
TYPE OF POLICY COMPANY LIMITS (1)
PREMIUM YEARS DATE (2)
Liability
Comprehensive General Self-insured (Since 1987) $3 million n/a - Ongoing Excess Liability PRISM $50 million $2,898,340 1 7/1/2025 and various other carriers
Workers' Compensation Self-insured (since 1973) $750 thousand n/a - Ongoing Excess Workers' PRISM Statutory $1,481,262 1 7/1/2025 Compensation and various other carriers
Property Coverage
All Risks, including flood, Alliant Property Insurance
excluding earthquake Program (APIP) $1 billion $2,061,403 1 7/1/2025 Various excess carriers
Boiler and Machinery Alliant Property Insurance $100 million $16,326 1 7/1/2025 Program (APIP)
Various excess carriers
Financial Loss Bonds
Crime Coverage Bond PRISM $25 million $16,257 1 6/30/2025 Notes:
(1) Limits are per occurrence
(2) All policies have been renewed
Source: City of Santa Clara
CITY OF SANTA CLARA
STATEMENT OF INSURANCE COVERAGE
June 30, 2025
21. Statement of Insurance Coverage
Draft
240
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241
SUCCESSOR AGENCY CITY OF SANTA CLARA
STATISTICAL SECTION
This part of the City of Santa Clara’s Annual Comprehensive Report provides detailed information to better understand the data presented within the financial statements, note disclosures, and required supplementary information.
TABLES
REVENUE CAPACITY 1 - 3
Contains information to help the reader assess the Successor Agency’s most significant local revenue source, the property tax.
DEBT CAPACITY 4
Presents information to assess the affordability of the Successor Agency’s current levels of outstanding debts.
Successor Agency
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243
` `
Table 1
2025 2024 2023 2022 2021 2020 2019 2018 2017 2016
Real Property Value 6,876,668$ 6,573,299$ 5,996,569$ 5,790,301$ 5,708,617$ 5,372,322$ 6,024,538$ 6,136,642$ 5,710,559$ 4,474,495$ Other Property Value 34,081 32,851 26,855 33,102 28,733 25,324 22,913 25,857 27,877 796,082 Total Project Value 6,910,749 6,606,150 6,023,424 5,823,403 5,737,350 5,397,646 6,047,451 6,162,499 5,738,436 5,270,577 Less Base Value (8,838) (8,838) (8,838) (8,838) (8,838) (8,838) (8,838) (8,838) 49,632 49,322 Increment Over Base Value 6,901,911 6,597,312 6,014,586 5,814,565 5,728,512 5,388,808 6,038,613 6,153,661 5,788,068 5,319,899 Redevelopment Property
Tax Trust Fund (RPTFF) (1) - - - - - - - - - 5,697 Total Tax Revenue -$ -$ -$ -$ -$ -$ -$ -$ -$ 5,697$ Notes:
Source: City of Santa Clara / Santa Clara County Auditor
SUCCESSOR AGENCY OF THE CITY OF SANTA CLARA
BAYSHORE NORTH P ROJECT AREA
HISTORICAL TAX INCREMENT
Las t Ten Fis cal Years
(In Tho us ands )
(1) With the State dissolving all RDAs on 02/01/2012, the structure of Tax Increment Revenue has changed. Starting in fiscal year 2012-13, the County's property tax distribution to the Successor Agency was changed to the Redevelopment Property Tax Trust Fund (RPTTF). The RPTTF reported in this table is the amount calculated by the County Auditor-Controller. Under the provisions of the laws dissolving the Redevelopment Agency, the Successor Agency only receives the funds necessary to fulfill its approved obligations.
1 . Historical Tax Increment – Last Ten Fiscal Years
Draft
244
Table 2
ASSESSED ASSESSED
PROPERTY PROPERTY PERCENT
ASSESSEE USE VALUATION OF TOTAL
1 Forty Niners SC Stadium Company LLC Commercial Office Building 824,299,415$ 11.93% 2 SI LLC Commercial Office Building 619,524,374 8.96% 3 Exchange Santa Clara Commercial Office Building 322,524,000 4.67% 4 Innovation Commons Owner LLC Commercial Office Building 295,835,617 4.28% 5 Apple Inc Commercial Office Building 255,240,714 3.69% 6 The Irvine Company Commercial Office Building 245,272,689 3.55% 7 PC Santa Clara Gateway 2 LLC Commercial Office Building 226,609,725 3.28% 8 SCT Owner LLC Commercial Office Building 209,792,223 3.04% 9 STC Venture LLC Commercial Office Building 192,645,216 2.79% 10 PRII Towers at Great America Owner LLC Commercial Office Building 186,969,014 2.71% TOTAL 3,378,712,987$ 48.90%
TOTAL AGENCY ASSESSED VALUE 6,910,749,141$
Source: HDL Coren & Cone
SUCCESSOR AGENCY OF THE CITY OF SANTA CLARA
BAYSHORE NORTH PROJECT AREA
TEN LARGEST ASSESSEES - TAXABLE VALUE
June 30, 2025
2. Ten Largest Assessees – Taxable Value
Draft
245
Table 3
HEARING APPLICANT'S
TAX ROLL ASSESSED APPEAL DATE OPINION
NUMBER ASSESSEE VALUATION/ORIGINAL S/U
(1)
NUMBER DEADLINE STATUS VALUATION LAND USE
1 984-92-103 FORTY NINERS 555,214,000$ S 15.0278 88,000,000$ Commerical 2 984-92-104 FORTY NINERS 555,214,000 S 15.0279 88,000,000 Commerical 3 984-92-103 FORTY NINERS 555,214,000 S 15.028 88,000,000 Commerical 4 984-92-104 FORTY NINERS 555,214,000 S 15.0281 88,000,000 Commerical 5 984-92-103 FORTY NINERS 554,267,314 S 17.0232 140,000,000 Commerical 6 984-92-104 FORTY NINERS 554,267,314 S 17.0233 140,000,000 Commerical 7 984-92-104 FORTY NINERS 548,980,708 S 16.0256 100,000,000 Commerical 8 984-92-103 FORTY NINERS 548,980,708 S 16.0257 100,000,000 Commerical 9 984-92-103 FORTY NINERS 253,784,158 S 18.1918 250,500,000 Commerical 10 22-0125223 APPLE INC 160,776,054 U 22.1293 50,100,000 N/A 11 21-0811071 CEDAR FAIR S 93,154,425 U 21.3482 46,577,214 N/A 12 21-0811089 CEDAR FAIR S 86,769,758 U 21.3483 42,989,135 N/A 13 21-0811097 CEDAR FAIR S 62,482,975 U 21.3484 35,620,612 N/A 14 21-0811105 CEDAR FAIR S 59,777,200 U 21.3485 29,888,601 N/A 15 17-018611 CEDAR FAIR S 59,280,246 U 17.1041 58,852,511 N/A 16 18-018278 CEDAR FAIR S 58,493,748 U 18.0594 50,547,232 N/A 17 18-0429201 CYXTERA COMM 46,130,484 U 22.416 16,130,000 N/A 18 104-50-025 COHERENT INC 46,023,273 S 15.0256 15,251,322 Commerical 19 10-037856 SAVVIS COMMU 45,935,890 U 10.5814 40,000,000 N/A 20 14-032002 SAVVIS COMMU 44,195,581 U 14.171 22,000,000 N/A 5,444,155,836$ 1,490,456,627$
Note:
(1) S=secured roll, U=unsecured roll
Source: Santa Clara County Assessor's Office
SUCCESSOR AGENCY OF THE CITY OF SANTA CLARA
BAYSHORE NORTH PROJECT AREA
ASSESSMENT APPEAL ACTIVITY OF TOP 20 ASSESSEES
2023-24 Impacts
3. Assessment Appeal Activity of Top 20 Assessees
Draft
246
Table 4
2024-25 Assessed Valuation: 6,910,749,141$
Base Year Valuation: (8,837,956)
Incremental Valuation: 6,901,911,185$
Total Debt Project Area’s Share of
6/30/2025 % Debt 6/30/25
OVERLAPPING TAX AND ASSESSMENT DEBT:
Santa Clara County 1,217,905,000$ 0.994% 12,105,976$
West Valley-Mission Community College District 631,255,000 3.449% 21,771,985 Santa Clara Unified School District 958,135,000 7.492% 71,783,474 El Camino Hospital District 98,789,066 0.008% 7,903 Santa Clara Valley Water District Benefit Assessment District 24,940,000 0.994% 247,904 TOTAL OVERLAPPING TAX AND ASSESSMENT DEBT 105,917,242$
OVERLAPPING GENERAL FUND DEBT:
Santa Clara County General Fund Obligations 1,002,458,930$ 0.994% 9,964,442$ Santa Clara County Pension Obligations 317,654,990 0.994% 3,157,491 Santa Clara County Board of Education Certificates of Participation 12,072,417 0.994% 120,000 West Valley-Mission Community College District General Fund Obligations 2,520,000 3.449% 86,915 Santa Clara Unified School District Certificates of Participation 10,859,000 7.492% 813,556 City of Santa Clara General Fund Obligations 7,970,000 10.545% 840,437 Santa Clara County Vector Control District Certificates of Participation - TOTAL OVERLAPPING GENERAL FUND DEBT 14,982,841$
Less: Santa Clara County supported obligations (24,055) COMBINED TOTAL DIRECT AND OVERLAPPING DEBT 120,900,083$ (2) TOTAL NET DIRECT AND OVERLAPPING BONDED DEBT 120,876,028$ (1) Percentage of overlapping agency's assessed valuation located within boundaries of the project area (2) Excludes tax and revenue anticipation notes, enterprise revenue, mortgage revenue and non-bonded capital lease obligations Ratios to 2024-25 Assessed Valuation :
Combined Total Direct and Overlapping Debt 1.75%
Net Combined Total Direct and Overlapping Debt 1.75%
Source: California Municipal Statistics, Inc.
SUCCESSOR AGENCY OF THE CITY OF SANTA CLARA
BAYSHORE NORTH PROJECT AREA
COMPUTATION OF DIRECT AND OVERLAPPING BONDED DEBT
June 30, 2025
4. Computation of Direct and Overlapping Bonded Debt
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Electric Utility
Enterprise Fund
(Silicon Valley Power)
Financial Statements
For the year ended June 30, 2025 with
comparative totals as of June 30, 2024
City of Santa Clara, California
1500 Warburton Avenue
Santa Clara, CA 95050/hyphen.uc3796
Draft
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
TABLE OF CONTENTS
Pa
ge
INDEPENDENT AUDITOR'S REPORT ................................................................................... 1 Management’s Discussion and Analysis ..................................................................................... 5 Statements of Net Position .................................................................................................... 11 Statements of Revenue, Expenses and Changes in Net Position .......................................... 13 Statements of Cash Flows ..................................................................................................... 14 Required Supplementary Information
Schedule of Proportionate Share of the Net Pension Liability .............................................. 74 Schedule of Contributions (Pension Plan) ............................................................................ 76 Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios ................. 78 Schedule of Proportionate Share of the Contributions (OPEB Plan) .................................... 79 Draft
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1 INDEPENDENT AUDITOR'S REPORT
Maze's Opinion's Letter Page1-3
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2 INDEPENDENT AUDITOR'S REPORT
Maze's Opinion's Letter Page1-3
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3 INDEPENDENT AUDITOR'S REPORT
Maze's Opinion's Letter Page1-3
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5 Management’s Discussion and Analysis
MANAGEMENT’S DISCUSSION AND ANALYSIS
The Management's Discussion and Analysis (MD&A) of Silicon Valley Power (SVP) offers a comprehensive overview of SVP's financial activities during the fiscal years concluding on June 30, 2025 and 2024. The purpose of this MD&A is to provide a holistic assessment of SVP's financial performance. To gain a deeper insight into SVP's financial performance, readers are encouraged to examine this MD&A alongside the Basic Financial Statements and their accompanying notes. This combined approach will enhance their comprehension of SVP's financial performance.
SVP, a distinct enterprise fund under the jurisdiction of the City of Santa Clara (City), was created to manage and report on the City's electric power operations. SVP holds ownership of power generation facilities, maintains investments in joint ventures engaged in electricity production, and actively participates in power trading on the open market. These activities are undertaken with the primary objective of ensuring that SVP's retail customers, including the residents, institutions, and businesses within the City, have access to a dependable source of electric power at affordable rates.
The operations of SVP have been significantly influenced by the deregulation of the electric power industry in California, a topic elaborated upon in Note 9 within the financial statements.
FINANCIAL HIGHLIGHTS
Key financial highlights for the fiscal year ended June 30, 2025 are summarized as follows:
The total assets and deferred outflows of resources surpassed the liabilities and deferred inflows of resources by $1,562.6 million, representing a notable increase of $272.2 million or 21.1% compared to the restated previous fiscal year's position of $1,290.4 million. This growth is primarily attributed to a $73.0 million decrease in the net investment of capital assets, a $1.8 million increase in pension stabilization reserve, and a $343.4 million increase in unrestricted net position.
Operating revenues exhibited an increase of $66.5 million or 9.0%, climbing from the previous fiscal year of $741.5 million to $808.0 million. This growth can be chiefly attributed to heightened retail sales, a 6.3% of load growth, and the result of the implementation of a 5% rate increase in January 2025.
Operating expenses increased by $55.1 million or 9.5% from the previous fiscal year, climbing from restated $582.5 million to $637.5 million in the fiscal year 2024-25. This increase is primarily the result of higher resource purchase costs and generation production costs compared to the previous fiscal year.
SVP’s total outstanding long-term debt increased $113.8 million, climbing from $112.5 million in the previous fiscal year to $226.3 million during the current fiscal year. This increase is primarily the result of new issuance of bonds in October 2024.
Draft
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
6 O
VERVIEW OF SVP’S BASIC FINANCIAL STATEMENTS
This annual report comprises a series of financial statements and their accompanying notes, organized to provide readers with a comprehensive understanding of SVP’s financial position. The Basic Financial Statements consist of two key components:
1. Management’s Discussion and Analysis (this part),
2. The Basic Financial Statements, in conjunction with the Notes to these Basic Financial Statements.
The Basic Financial Statements offer insights into both the short-term and long-term financial aspects of SVP.
These statements include:
Statements of Net Position: These statements present a comprehensive overview of SVP's financial position, encompassing all long-term liabilities on a full accrual basis. Statements of Revenues, Expenses, and Changes in Net Position: These statements provide detailed information on all of SVP's revenues and expenses, also on a full accrual basis, with a focus on measuring the net revenues and expenses of the program. Statements of Cash Flows: These statements offer information about cash activities during the fiscal year.
FISCAL YEAR 2024-25 FINANCIAL HIGHLIGHTS
Below is a summary of financial information extracted from the Statements of Net Position (Table1) and the Statements of Revenues, Expenses, and Changes in Net Position (Table 2).
Draft
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
7 Description 2025 2024 (A) Amount % 2023
Pooled cash and investments 817.0$ 609.0$ 208.0$ 34.2% 461.1$ Other assets 410.2 265.6 144.6 54.4% 238.1 Capital assets 729.0 688.8 40.2 5.8% 655.8 Total Assets 1,956.2 1,563.4 392.8 25.1% 1,355.0 Deferred outflows on derivative instruments 1.1 - 1.1 N/A 0.8 Deferred outflows on refunding of debt 3.6 4.5 (0.9) -20.0% 5.3
19.7 25.4 (5.7) -22.4% 26.8 Total Deferred Outflows of Resources 24.4 29.9 (5.5) -18.4% 32.9 Long-term debt outstanding 226.3 112.5 113.8 101.2% 128.4 Right-to-use liability 2.7 3.9 (1.2) -30.8% 4.4 Net OPEB liability 6.7 6.9 (0.2) -2.9% 7.3 Net pension liability 103.9 108.3 (4.4) -4.1% 105.8 Other liabilities 72.5 55.4 17.1 30.9% 42.2 Total Liabilities 412.1 287.0 125.1 43.6% 288.1 Deferred inflows on derivative instruments 2.9 12.0 (9.1) -75.8% 23.4 Deferred inflows on refunding of debt 0.8 1.0 (0.2) -20.0% 1.3 Deferred inflows on lease related items 1.7 2.0 (0.3) -15.0% 2.3 Deferred inflows on pension related items 0.1 0.5 (0.4) -80.0% 0.8 Deferred inflows on OPEB related items 0.4 0.4 - 0.0% 0.7 Total Deferred Inflows of Resources 5.9 15.9 (10.0) -62.9% 28.5 Net Position:
Net investment in capital assets 502.8 575.8 (73.0) -12.7% 527.1 Restricted for contractual obligation 11.8 10.0 1.8 18.0% 6.3 Unrestricted 1,048.0 704.6 343.4 48.7% 537.9 Total Net Position 1,562.6$ 1,290.4$ 272.2$ 21.1% 1,071.3$ (A) Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I Deferred outflows on pension and OPEB
related items
Table 1
Net Position
(in millions)
Increase (Decrease)
June 30, 2025, 2024, and 2023
Draft
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
8 Description 2025 2024 (A) Amount % 2023
Revenues:
Retail 734.5$ 648.6$ 85.9$ 13.2% 556.2$
Wholesale 14.6 11.5 3.1 27.0% 85.0 Interest revenue 34.0 13.9 20.1 144.6% 8.4 Net increase (decrease) in fair value of investments 14.3 8.7 5.6 64.4% (2.8) Rents and royalties 3.4 3.5 (0.1) -2.9% 3.8 Renewable energy credits 2.7 10.5 (7.8) -74.3% 3.9 Mandated program receipts 22.6 20.1 2.5 12.4% 15.9 Other 92.2 89.4 2.8 3.1% 95.00.0 Total Revenues 918.3 806.2 112.1 13.9% 765.4 Expenses:
Retail 623.6 566.4 57.2 10.1% 631.0 Wholesale 8.5 9.8 (1.3) -13.3% 19.4 Interest on long-term debt 5.6 2.2 3.4 154.5% 2.7 Mandated program disbursement 5.4 6.2 (0.8) -12.9% 4.5 Other - - - 100.0% 3.8
Total Expenses 643.1 584.6 58.5 10.0% 661.4 Increase (decrease) in net position before transfers 275.2 221.6 53.6 24.2% 104.0 Transfers in (out) (3.0) (2.5) (0.5) -20.0% (3.5) Increase (decrease) in net position 272.2 219.1 53.1 24.2% 100.5 Net Position - July 1 1,290.4 1,071.3 219.1 20.5% 970.8 Net Position - June 30 1,562.6$ 1,290.4$ 272.2$ 21.1% 1,071.3$ (A) Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I Table 2
Revenues, Expenses, and Changes in Net Position
(in millions)
Increase (Decrease)
For the years ended June 30, 2025, 2024 and 2023
In fiscal year 2024-25, SVP's retail revenues reached $734.5 million, showing substantial growth from $648.6 million in fiscal year 2023-24 and $556.2 million in fiscal year 2022-23. These figures represent significant year over year growth of 13.2% in fiscal year 2024-25 compared to the preceding fiscal year (2023-24) and 16.6% growth in fiscal year 2023-24 compared to the fiscal year before that (2022-23). The primary driver behind the growth in fiscal year 2024-25 was the implementation of a 5% rate increase effective January 1, 2025, coupled with a 6.3% load growth in the fiscal year 2024-25.
In fiscal year 2024-25, SVP's retail operating expenses amounted to $623.6 million, climbing from restated $566.4 million in fiscal year 2023-24 and declining from $631.0 million in fiscal year 2022-23. These numbers indicate an increase of $57.2 million or 10.1% in the fiscal year 2024-25 compared to the preceding fiscal year (2023-24), and a decrease of restated $64.6 million or 10.2% Draft
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
9 i
n the fiscal year 2023-24 compared to the fiscal year before that (2022-23). The higher operating expenses for the fiscal year 2024-25 were primarily driven by the higher resource purchase costs and generation production costs compared to the fiscal year 2023-24.
In fiscal year 2024-25, revenues generated from wholesale resources sales, which encompass both gas and power, was $14.6 million. This figure represents a moderate increase compared to the $11.5 million in fiscal year 2023-24 and a significant decrease from the $85.0 million reported in fiscal year 2022-23. Simultaneously, the wholesale resources purchase was $8.5 million in fiscal year 2024-25, $9.8 million in fiscal year 2023-24, and $19.4 million in fiscal year 2022-23. The increase in wholesale resources sales during the fiscal year 2024-25 was primary attributed to increases in Ancillary Service sales and higher Capacity sales. The $73.5 million decrease in wholesale resource sales during the fiscal year 2023-2024 was primary attributed to a significant decrease in wholesale futures trading profit compared to the previous fiscal year due to sharp declined prices in overall resource market. The decrease in wholesale resources purchases during this fiscal year was primarily due to lower fuel cost for the in-town generation plants.
Interest income for fiscal year 2024-25 amounted to $34.0 million, an increase from $13.9 million reported in fiscal year 2023-24, and the $8.4 million recorded in fiscal year 2022-23. The growth in the most recent fiscal year is primarily attributable to elevated cash and investment balances, coupled with a higher interest rate environment. Conversely, interest expense for fiscal year 2024- 25 was $5.6 million, which is an increase from the $2.2 million in fiscal year 2023-24 and the $2.7 million in fiscal year 2022-23. For more detailed information regarding interest expense, please refer to Note 5 in the financial statements.
As of June 30, 2025, SVP's net position stood at $1,562.6 million, reflecting a $272.2 million increase from the preceding fiscal year. Within this total, there was a $73.0 million decrease in the net investment in capital assets, a $1.8 million increase in the amount restricted for contractual obligations, and a $343.4 million increase in unrestricted net position.
CAPITAL ASSETS
As of the end of fiscal year 2024-25, SVP had invested $729.0 million in capital assets, net of depreciation. Most of this investment was allocated to power generation facilities, with the remaining portion distributed across transmission and distribution assets, right-to-use buildings, and subscriptions for information technology arrangements.
As of June 30, 2025, SVP had several projects that were either completed or in progress. In the fiscal year 2024-25, the Capital Improvement Projects Budget included appropriations for significant investments in substation improvements for the upcoming years.
For more comprehensive information regarding SVP's capital assets, please refer to Note 4 in the financial statements.
Draft
MANAGEMENT’S DISCUSSION AND ANALYSIS (continued)
10 D
EBT ADMINISTRATION
SVP's debt portfolio and its individual components are comprehensively outlined in Note 5 within the financial statements. As of June 30, 2025, SVP's outstanding debt consists of two issues of Revenue Bonds and two issues of Subordinate Revenue Bonds, amounting to a total of $226.3 million. These bonds are backed by the net electric revenues generated by SVP and have maturity dates spanning from fiscal years 2026 through 2045.
ECONOMIC OUTLOOK AND MAJOR INITIATIVES
For detailed information regarding the economic outlook and major initiatives of the City, as well as what is planned for the upcoming year, please refer to the Letter of Transmittal Section of the City's Annual Comprehensive Financial Report for the fiscal year concluding on June 30, 2025.
This section provides an in-depth analysis and insight into the City's economic prospects and its key initiatives moving forward.
CONTACTING SVP’S FINANCIAL MANAGEMENT
These Basic Financial Statements are intended to provide citizens, taxpayers, investors, and creditors with a general overview of SVP’s finances. Questions about these Basic Financial Statements should be directed to the City of Santa Clara Finance Department, 1500 Warburton Avenue, Santa Clara, CA 95050-3796.
Draft
See accompanying notes to financial statements
11 ASSETS 2025 2024(A)
Current Assets:
P
ooled cash and investments (Note 3) 817,007,119$ 609,040,674$ Investments with fiscal agent (Note 3) 130,517,424 16,596,885 Leases receivable (Note 2R) 271,306 259,985 Receivables (net of allowances)
Accounts 154,525,464 122,946,617
Interest 5,717,203 3,761,308
Derivative instrument (Note 5G) 2,871,435 7,119,963 Due from the City of Santa Clara (Note 2E) 4,773,495 4,017,195 Inventory of materials and supplies (Note 2F) 25,172,910 19,366,588 Total Current Assets 1,140,856,356 783,109,215
Noncurrent Assets:
Capital assets (Note 4)
Land 19,879,593 14,371,743
Construction in progress 138,921,943 86,463,324
Buildings, improvements and infrastructure 1,158,113,200 1,147,187,859 Equipment 10,745,377 10,212,515
Right-to-use leased assets 2,916,623 2,916,623 Right-to-use SBITA 3,837,038 3,837,038
Accumulated depreciation (605,432,919) (576,144,800) Total Capital Assets (Net of Accumulated
Depreciation) 728,980,855 688,844,302
Other Noncurrent Assets:
Restricted investments (Note 3) 11,792,344 10,065,874 Derivative instrument (Note 5G) - 4,867,018 Investments in joint ventures (Note 6) 65,322,413 65,209,772 Deposits (Note 3) 7,621,750 9,449,807
Leases receivable (Note 2R) 1,581,619 1,852,925 Total Other Noncurrent Assets 86,318,126 91,445,396 Total Noncurrent Assets 815,298,981 780,289,698
Total Assets 1,956,155,337 1,563,398,913
DEFERRED OUTFLOWS OF RESOURCES
Accumulated decrease in fair value of hedging
instruments (Note 5G) 1,098,675 7,708
Deferred outflows on refunding of debt 3,616,269 4,474,983 Deferred outflows on OPEB related items (Note 8) 440,104 311,077 Deferred outflows on pension related items (Note 7) 19,295,396 25,096,908 Total Deferred Outflows of Resources 24,450,444 29,890,676 (A)
Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I C
ITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
STATEMENTS OF NET POSITION
with Comparative Totals as of June 30, 2024
June 30, 2025
Statements of Net Position
Draft
See accompanying notes to financial statements
12 LIABILITIES 2025 2024(A)
Current Liabilities:
A
ccrued liabilities 56,862,758 44,808,600
Interest payable 3,801,132 1,190,753
Unearned revenue 915,150 -
Accrued compensated absences 3,414,541 3,277,328 Current portion of long-term debt (Note 5) 15,260,000 15,460,000 Current portion derivative financial instruments (Note 5G) 1,098,675 7,708 Current portion of leases obligation (Note 5J) 240,824 710,181 Current portion of SBITA (Note 5K) 503,819 481,034 Total Current Liabilities 82,096,899 65,935,604 Noncurrent Liabilities:
Long-term accrued compensated absences 6,459,948 6,110,204 Net pension liability (Note 7) 103,868,311 108,269,790 Net OPEB liability (Note 8) 6,727,406 6,898,479 Long-term leases obligation (Note 5J) - 240,824 Long-term SBITA (Note 5K) 1,991,616 2,495,433 Long-term debt (Note 5) 210,996,153 97,089,699
Total Noncurrent Liabilities 330,043,434 221,104,429 Total Liabilities 412,140,333 287,040,033
DEFERRED INFLOWS OF RESOURCES
Accumulated increase in fair value of hedging instruments (Note 5G) 2,871,435 11,986,981
Deferred inflows on refunding of debt 768,263 1,024,530 Deferred inflows on leases related items (Note 2R) 1,712,000 1,997,165 Deferred inflows pension related items (Note 7) 136,885 479,098 Deferred inflows OPEB related items (Note 8) 423,976 382,621 Total Deferred Inflows of Resources 5,912,559 15,870,395
NET POSITION
Net investment in capital assets (Note 12) 502,836,449 575,817,583 Restricted (Note 12) 11,792,344 10,065,874
Unrestricted (Note 12) 1,047,924,096 704,495,704
Total Net Position 1,562,552,889$ 1,290,379,161$
(A)
Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I C
ITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
with Comparative Totals as of June 30, 2024
(SILICON VALLEY POWER)
STATEMENTS OF NET POSITION
June 30, 2025
Draft
See accompanying notes to financial statements
13 2025 2 024(A)
Operating Revenues:
R
esidential sales 47,178,812$ 41,675,989$
Commercial sales 26,684,230 22,584,103
Industrial sales 660,653,982 584,360,495
Renewable energy credits 2,718,750 10,502,295
Wholesale resource sales (Note 9) 14,612,434 11,470,683 Mandated program receipts 22,625,543 20,120,470 Other operating revenues 33,514,188 50,751,706
Total Operating Revenues 807,987,939 741,465,741
Operating Expenses:
Operations 116,962,896 114,089,909
Maintenance 34,113,469 29,090,846
Purchased resource 443,203,513 394,828,371
Wholesale resource purchases (Note 9) 8,512,008 9,785,427 Mandated program disbursement 5,439,689 6,179,170 Amortization (Note 4) 1,175,506 1,158,632
Depreciation (Note 4) 28,122,466 27,322,314
Total Operating Expenses 637,529,547 582,454,669
Operating Income 170,458,392 159,011,072
Nonoperating Revenues (Expenses):
Interest revenue 33,984,491 13,871,450
Net changes in the fair value of investments 14,315,051 8,702,128 Interest expense (5,610,150) (2,206,422)
Equity in income (losses) of joint ventures 3,612,641 (635,169) Rents and royalties 3,425,438 3,484,588
Other revenues 54,978,153 39,365,830
Gain (loss) on retirement of assets 7,399 - Total Nonoperating Revenues, net 104,713,023 62,582,405 Income Before Transfers 275,171,415 221,593,477
Transfers from the City of Santa Clara 559,815 376,500 Transfers to the City of Santa Clara (3,557,502) (2,885,902) Net Income 272,173,728 219,084,075
Net Position, Beginning of Year
(A)
1,290,379,161 1,071,295,086
Net Position, End of Year 1,562,552,889$ 1,290,379,161$ (A)
Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
STATEMENTS OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION For the Year Ended June 30, 2025
with Comparative Totals for the Year Ended June 30, 2024
Statements of Revenue, Expenses and Changes in Net Position
Draft
See accompanying notes to financial statements
14 2025 2024
CASH FLOWS FROM OPERATING ACTIVITIES
Receipts from customers $ 739,570,602 $ 668,767,150 Payments to suppliers (530,304,443) (465,537,231) Payments to employees for salaries and benefits (61,741,071) (56,790,537) Rents and royalties received 3,435,723 4,543,348 Resource energy trading escrow 2,743,207 1,677,372 Wholesale resource sales 14,612,434 11,470,683 Wholesale resource purchases (8,512,008) (9,785,427) Renewable energy credits 2,718,750 10,502,295 Other receipts 67,134,490 48,902,208
Contribution of Joint Ventures 3,500,000 -
Net Cash provided by Operating Activities 233,157,684 213,749,861
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
Increase (decrease) in due from other funds (756,300) (807,346) Changes in restricted investments 1,726,470 3,741,829 Transfers in 559,815 376,500
Transfers out (3,557,502) (2,885,902)
Net Cash provided (used) by Noncapital Financing Activities (2,027,517) 425,081
CASH FLOWS FROM CAPITAL AND RELATED
FINANCING ACTIVITIES
Acquisition and construction of capital assets, net (63,983,783) (63,780,946) Proceeds from sale of assets 7,399 -
Proceeds from debt issuance 112,175,000 -
Premium on debt issuance 18,410,113 -
Principal payments on debt (16,651,215) (16,292,174) Cost of issuance (576,116) -
Interest paid on debt (3,239,866) (2,555,620) Net Cash provided (used) by Capital and Related Financing Activities 46,141,532 (82,628,740)
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
STATEMENTS OF CASH FLOWS
with Comparative Totals for the Year Ended June 30, 2024 For the Year Ended June 30, 2025
Statements of Cash Flows
Draft
See accompanying notes to financial statements
15 2025 2024
CASH FLOWS FROM INVESTING ACTIVITIES
Interest and dividends 32,026,705 11,877,286
Net increase (decrease) in the fair value of investments 14,315,051 8,702,128 Payments made by fiscal agent 19,183,798 17,593,392 Deposits made with fiscal agent (133,104,338) (17,992,362) Net Cash provided (used) by Investing Activities (67,578,784) 20,180,444 Net Increase (Decrease) in Cash and Cash Equivalents 209,692,915 151,726,646 Cash and cash equivalent at Beginning of Period 619,106,548 467,379,902 Cash and cash equivalent at End of Period 828,799,463$ 619,106,548$ Reconciliation of Operating Gain (Loss) to Net Cash Provided (Used) by Operating activities:
Operating income 170,458,392$ 161,487,501$
Joint venture income 3,500,000 -
Adjustments to reconcile operating income to net cash
provided (used) by operating activities:
(Decrease) Increase due to OPEB system (258,745) (404,151) (Decrease) Increase due to retirement system 1,057,820 3,230,418 (Decrease) Increase due to lease and SBITA Obligation (23,287) (34,360) Depreciation and amortization 29,297,972 28,480,946 Change in assets and liabilities:
Receivable, net (31,578,847) (30,948,216)
Inventory (5,806,322) (3,539,456)
Accrued liabilities 6,603,416 14,234,570
Restricted cash (1,726,470) (3,741,829)
Compensated absences 486,957 456,648
Unearned revenues 915,150 -
Other receipts 58,403,591 42,850,418
Resource trading escrow 1,828,057 1,677,372
Net Cash Provided by Operating Activities 233,157,684$ 213,749,861$ NONCASH TRANSACTIONS:
Joint Ventures
Nonoperating Income (Expense) 3,612,641$ (635,169)$ Issuance of SBITA Liability -$ (729,014)$ Addition of SBITA Asset -$ 729,014$
(SILICON VALLEY POWER)
STATEMENTS OF CASH FLOWS
with Comparative Totals for the Year Ended June 30, 2024
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
For the Year Ended June 30, 2025
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
17 NOTE 1 – DEFINITION OF THE REPORTING ENTITY
Th
e City of Santa Clara (the City), California’s Electric Utility Enterprise Fund, which began operating as Silicon Valley Power (SVP) in 1997, commenced operations over 100 years ago in 1896. Originally, SVP constructed a lighting plant consisting of forty-six 2000 candlepower direct current lamps and a dynamo (a type of electric generator) which entered into service in October 1896. In late 1903, SVP invested $5,000 to convert the system to alternating current and abandoned the small generating plant. Wholesale power was purchased from United Gas and Electric Company of San Jose.
Between 1903 and 1965, SVP purchased all of its electric power requirements from investor- owned utilities. In 1965, it received an allocation of power from the Federal Central Valley Project and began to diversify its resources. SVP became a charter member of the Northern California Power Agency (NCPA) in June 1968. Throughout the 1970’s, SVP and NCPA worked on behalf of all municipal electric utilities in Northern California to gain access to wholesale transmission markets and to jointly develop cost-effective electric generation resources.
In 1980, SVP became a generating utility for the first time in 73 years with the start of operations of the 6-Megawatt Cogen No. 1 power plant. In 1983, the 110 Megawatt NCPA Geothermal Project, the first municipally owned and operated geothermal power plant in the United States, entered service with SVP as lead partner holding a 55% participation share. Subsequently, SVP participated in further jointly owned power generation projects including hydroelectric, natural gas and coal fired generation. In 2005, SVP placed the 147 Megawatt Don Von Raesfeld Power Plant into service.
Today, SVP has grown to approximately 8,437 streetlights and serves approximately 62,081 electric customers. As SVP looks to the future, it continues to be responsive to the electric market development by increasing its renewable power resources, reducing its greenhouse gas (GHG) footprint, and working with its customers to enhance the value they receive from municipal ownership of their electric utility.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Basis of Presentation
SVP’s Financial Statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to government units. The Government Accounting Standards Board (GASB) is the acknowledged standard setting body for establishing accounting and financial reporting standards followed by governmental entities in the United States of America. The electric enterprise fund is included in the City’s Annual Comprehensive Financial Report, and therefore, these financial statements do not purport to represent the financial position and changes in financial position of the City.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 18 B. B asis of Accounting
SVP reports its activities as a proprietary fund type (Enterprise Fund) which is maintained on the accrual basis of accounting wherein revenues are recognized in the accounting period in which they are earned regardless of whether they are received, and expenses are recognized in the period in which the related liabilities are incurred. Certain indirect costs are included in program expenses reported for individual functions and activities.
During the year ended June 30, 2024, SVP implemented the following GASB Statement:
The GASB issued Statement No. 100 “Accounting Changes and Errors Corrections.” The objective of this statement is to establish accounting and financial reporting requirements for (a) accounting changes and (b) the correction of an error in previously issued financial statements.
This statement becomes effective for periods beginning after June 15, 2023. The provision of this statement were implemented during fiscal year 2024. The implementation had no effect on the financial statements.
During the year ended June 30, 2025, SVP implemented the following GASB Statement:
The GASB issued Statement No. 101 “Compensated Absences.” The objective of this statement is to amend the existing requirements for the recognition of compensated absences liability. This statement becomes effective for periods beginning after December 15, 2023. The provisions of this Statement were implemented during fiscal year 2024-25. SVP restated the statement of net position and statement of revenues, expenses, and changes in fund net position for the fiscal year 2023-24 to reflect the impact of this implementation. For further details refer to Note 2I.
The GASB issued Statement No. 102 “Certain Risk Disclosures.” The objective of this Statement is to provide users of government financial statements with essential information about risks related to a government’s vulnerabilities due to certain concentrations or constraints. This statement is effective for fiscal years beginning after June 15, 2024. The implementation had no effect on the financial statements.
SVP is analyzing the effects of the following pronouncements and plans to adopt them by the effective dates:
The GASB issued Statement No. 103, “Financial Reporting Model Improvements.” The objective of this Statement is to improve key components of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This statement is effective for fiscal years beginning after June 15, 2025. SVP is currently evaluating the impact on the financial statements.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 19 The GASB issued Statement No. 104, “Disclosure of Certain Capital Assets.” The objective of t
his Statement is to provide users of government financial statements with essential information about certain types of capital assets. This statement is effective for fiscal years beginning after June 15, 2025. SVP is currently evaluating the impact on the financial statements.
C. Measurement Focus
Enterprise funds are accounted for on a cost of services or economic resources measurement focus, which means that all liabilities associated with the activity are included on their Statement of Net Position. Enterprise fund type operating statements present increases (revenues) and decreases (expenses) in total net position. Reported net position is segregated into three categories – net investment in capital assets, restricted, and unrestricted.
D. Cash and Investments
SVP’s cash and investments pool is maintained by the City except for fiscal agent cash and investments.
While maintaining safety and liquidity, the City maximizes investment return by pooling its available cash for investment purposes. Unless there are specific legal or contractual requirements to do otherwise, interest earnings are apportioned among funds according to average monthly cash and investment balances. It is generally the City's intention to hold investments until maturity.
City investments are stated at fair value (see Note 3).
Cash and cash equivalents for purposes of the statement of cash flows include pooled cash and investments and cash designated for construction. Transactions with City-wide cash management pools are similar to those with external investment pools; therefore, since pooled cash and investments have the same characteristics as demand deposits in that the City's individual funds and component units may withdraw additional monies at any time without prior notice or penalty, pooled cash and investments are considered essentially demand deposit accounts.
Cash and investments with fiscal agent, a bond reserve investment pool, and amounts classified as deposits are not considered cash and cash equivalents.
E. Due from City of Santa Clara
During the course of operations, transactions occur between SVP and the City for goods provided or services rendered. The related receivables, net, are classified as “Due from the City of Santa Clara” on the accompanying statement of net position.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 20 F. I nventory of Materials and Supplies
Inventory of materials and supplies is accounted for using the consumption method and is stated at average cost. Inventory consists of expendable supplies held for consumption by the electric utility.
G. Capital Assets
All capital equipment and right-to-use equipment with a value of $10,000 or more, buildings, improvements and infrastructure, right-to-use building with costs exceeding $20,000 or more, and the right-to-use SBITA with a value of $400,000 or more, with useful lives exceeding two years are capitalized. These assets are valued at historical cost or estimated historical cost if actual historical cost is not available except for intangible right -to-use assets, the measurement of which discussed in Note 2R and 2S below. Contributed capital assets are valued at their estimated acquisition value on the date contributed. Depreciation is recorded on a straight-line basis over the estimated useful lives of the assets (buildings and improvements: 20 to 50 years; equipment: 2 to 20 years; and right-to-use SBITA assets: 3-25 years) and is charged as an expense against operations. Accumulated depreciation is reported on the statement of net position.
The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related capital assets.
Capital assets and the related obligations under lease/purchase agreements are capitalized and accounted for in accordance with Accounting Standards Codification (ASC) Topic 842. Interest is capitalized on construction in progress in accordance with ASC Topic 835, Capitalization of Interest Cost in Situations Involving Certain Tax-Exempt Borrowings, and Certain Gifts and Grants. Accordingly, interest capitalized is the total interest cost for the date of the borrowings net of any interest earned on temporary investments of the borrowed proceeds until the specified asset is ready for its intended use. There was no interest capitalized for the fiscal years ended June 30, 2024 or 2025.
H. Joint Ventures
SVP participates in several joint ventures in accordance with GAAP. If SVP’s equity in net losses of a joint venture exceeds its investments, use of the equity method is suspended except to the extent that SVP is obligated to provide further support or has guaranteed obligations of the joint venture.
SVP advances funds to certain of its joint ventures in the form of refundable advances, project advances, and operating and maintenance advances. Refundable advances accrue interest at rates Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 21 stated in the related agreements. Operating, maintenance, and project advances are charged to op
erations when incurred.
Capitalized project costs are charged to operations in the event that a project is determined to be not economically feasible.
I. Compensated Absences
Effective July 1, 2024, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences. GASB 101 establishes recognition and measurement criteria for all types of compensated absences, such as vacation leave, sick leave, and paid time off, including guidance for leave that accumulates and vests, as well as certain non-vesting leave.
Under the previous guidance (GASB 16), certain types of leave were only recognized when earned and expected to be paid. GASB 101 requires governments to recognize a liability for all leave that is attributable to services already rendered and for which it is probable the leave will be used or paid. It also requires governments to measure leave using either an employee’s pay rate as of the financial statement date or an expected future pay rate if that is expected to be higher.
As a result of this change, the statement of net position for fiscal year 2023-24 was adjusted as follows:
FY2024
previously
reported
GASB101
restatement FY2024 Restated
Current liabilities:
Accrued compensated absences 472,381$ 2,804,947 $ 3,277,328$ Noncurrent liabilities
Long-term accrued compensated absences 6,438,722$ (328,518) $ 6,110,204$ Net position
Unrestricted 706,972,133$ (2,476,429) $ 704,495,704$ The statement of revenues, expenses and changes in net position for fiscal year 2023-24 was adjusted as follows:
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 22 FY2024
previously
reported
GASB101
restatement
FY2024
Restated
Operating expenses: 111,613,480$ 2,476,429 $ 114,089,909$ Operating income 161,487,501$ (2,476,429) $ 159,011,072$ Net position- end of year 1,292,855,590$ (2,476,429) $ 1,290,379,161$ Ongoing calculations of compensated absences liabilities will follow the recognition and measurement guidance prescribed by the new standard.
J. Risk Management
SVP is covered under the City’s self-insurance programs via Internal Service Funds. There were no significant reductions in insurance coverage from the prior year by major categories of risk and the amount of settlements did not exceed insurance coverage for the past four fiscal years.
Additional information with respect to the City’s self-insurance programs can be found in the City’s Annual Comprehensive Financial Report.
In addition, SVP has property coverage specific to the power plants with a policy limit of $250 million.
K. Electric Resource Purchased
SVP purchases power from various suppliers and agencies (including joint powers agencies) for resale to its customers (see Note 10). SVP also engages in numerous resource energy transactions with the objective of reducing its overall cost of resource energy. Gross resource energy sales and resource energy purchases are recorded as operating revenue and expense, respectively (see Note 9).
L. Bond Discounts/Issuance Costs
Bond discounts are presented as a reduction of the face amount of bonds payable, whereas issuance costs are recognized in the current period.
M. Revenue Recognition
Operating revenues are recognized based on cycle billings periodically rendered to customers.
Operating revenues for services provided, but not billed at the end of the fiscal year, are recognized Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 23 and accrued based on estimated consumption. Operating revenues primarily include the sales of e
lectric power to residential, commercial, industrial, and municipal customers.
Non-operating revenues primarily represent interest income, grants, rents, and other non-recurring miscellaneous income.
N. Taxes on Income
As an agency of the City, SVP falls under the review of the Internal Revenue Code Section 115 and corresponding California Revenue and Taxation Code provisions. As such, it is not subject to federal income or state franchise taxes.
O. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position includes a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net assets that applies to a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. SVP has four items that qualify for reporting in this category:
deferred outflows related to the derivative instruments, refunding of debt, pension, and OPEB.
In addition to liabilities, the statement of financial position includes a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net assets that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. SVP reports deferred amounts related to derivative instruments, debt refunding, leases and deferred amounts related to pension and OPEB.
P. Net Position and Fund Equity
SVP may fund certain programs with a combination of restricted and unrestricted net position.
The policy is to first apply restricted net position followed by unrestricted net position if necessary.
Q. Use of Estimates
The preparation of financial statements in conformity with GAAP in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 24 R. L ease Agreements
A lease is defined as a contract that conveys control of the right to use another entity’s nonfinancial asset (the underlying asset) as specified in the contract for a period of time in an exchange or exchange-like transaction. Examples of nonfinancial assets include buildings, land, vehicles, and equipment.
Lessee - SVP is a lessee for noncancellable lease of buildings. SVP recognizes a lease liability with an initial, and individual value of $100,000 and an intangible right‐to‐use lease asset (lease asset) in the statement of net position financial statements.
At the commencement of a lease, SVP initially measures the lease liability at the present value of payments expected to be made during the lease term. Subsequently, the lease liability is reduced by the principal portion of lease payments made. The lease asset is initially measured as the initial amount of the lease liability, adjusted for lease payments made at or before the lease commencement date, plus certain initial direct costs. Subsequently, the lease asset is amortized on a straight‐line basis over its useful life.
Key estimates and judgments related to leases include how SVP determines (1) the discount rate it uses to discount the expected lease payments to present value, (2) lease term, and (3) lease payments as follows:
SVP uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided, SVP generally uses its estimated incremental borrowing rate as the discount rate for leases.
The lease term includes the noncancellable period of the lease. Lease payments included in the measurement of the lease liability are composed of fixed payments and purchase option price that SVP is reasonably certain to exercise.
SVP monitors changes in circumstances that would require a remeasurement of its lease and will remeasure the lease asset and liability if certain changes occur that are expected to significantly affect the amount of the lease liability.
Lease assets are reported with other capital assets and lease liabilities are reported with long-term debt on the statement of net position. Additional information can be found in Notes 4 and 5J.
Lessor - SVP is a lessor for noncancellable leases of land, equipment, and fiber infrastructure. SVP recognizes a lease receivable and a deferred inflow of resources in the financial statements.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 25 At the commencement of a lease, SVP initially measures the lease receivable at the present value o
f payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payments received at or before the lease commencement date. Subsequently, the deferred inflow of resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how SVP determines (1) the discount rate it uses to discount the expected lease receipts to present value, (2) lease term, and (3) lease receipts as follows:
SVP uses its estimated incremental borrowing rate as the discount rate for leases. The lease term includes the noncancellable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee.
SVP monitors changes in circumstances that would require a remeasurement of its lease, and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. SVP has not engaged in any sublease transactions, sale-leaseback arrangements, or lease-leaseback agreements.
The balances related to the leases receivable and deferred inflow of resources as of June 30, 2024 were $2,112,910 and $1,997,165 respectively. SVP recognized $285,164 in lease revenue and $58,002 in interest revenue during the fiscal year 2023-24 related to these leases. The leases receivable and deferred inflow of resources as of June 30, 2025 were $1,852,925 and $1,712,000 respectively. SVP recognized $285,165 in lease revenue and $53,865 in interest revenue during the fiscal year 2024-25 related to these leases.
S. Subscription-Based Information Technology Arrangements (SBITAs) Accounting A Subscription-Based Information Technology Arrangement (SBITA) is a contract that conveys control of the right to use another party’s (a SBITA vendor’s) IT software, alone or in combination with tangible capital assets (the underlying IT assets), as specified in the contract for a period of time in an exchange or exchange-like transaction.
At the commencement of a SBITA, SVP initially measures the subscription liability at the present value of payments expected to be made during the contract term. Subsequently, the subscription liability is reduced by the principal portion of payments made. The subscription asset is initially measured as the initial amount of the subscription liability, adjusted for payments made at or before the SBITA commencement date, plus certain initial direct costs. Subsequently, the subscription Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 2- SUMMARY OF SIGNIIFICANT ACCOUNTING POLICIES (continued) 26 asset is amortized on a straight‐line basis over shorter of the subscription term or the useful life of t
he underlying IT assets. SVP recognizes SBITA liabilities with an initial, individual value of $400,000 or more for all funds based on the future SBITA payments remaining at the start of the contract.
Key estimates and judgments related to SBITAs include how SVP determines (1) the discount rate it uses to discount the expected subscription payments to present value, (2) subscription term, and (3) subscription payments as follows:
SVP uses the interest rate charged by the IT vendor as the discount rate. When the interest rate charged by the IT vendor is not provided, SVP uses its estimated incremental borrowing rate as the discount rate for subscription liabilities. The subscription term includes the noncancellable period of the subscription. Subscription payments included in the measurement of the subscription liability are composed of fixed payments and purchase option price that SVP is reasonably certain to exercise.
SVP monitors changes in circumstances that would require a remeasurement of its subscription and will remeasure the subscription asset and liability if certain changes occur that are expected to significantly affect the amount of the subscription liability.
Subscription assets are reported with other capital assets and subscription liabilities are reported with liabilities on the statement of net position. Additional information can be found in Notes 4 and 5K.
T. Prior Period Adjustments
SVP implemented GASB Statement No. 101, Compensated Absences, in the current fiscal year.
As a result, beginning net position was restated to reflect the recognition and measurement requirements of the new standard. The adoption of GASB 101 resulted in an adjustment to beginning balances to properly account for compensated absences in accordance with the new guidance. Comparative prior year financial information has been restated, where practicable, to conform to the provisions of GASB 101. Additional details regarding the restatement are disclosed in the note 2I.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
27 NOTE 3 – CASH AND INVESTMENTS
S
VP’s cash and investments pool is maintained by the City except for fiscal agent cash and investments. A full description of the City’s cash and investment policy is in Note 7 of its Annual Comprehensive Financial Report.
A. Investments Authorized by the California Government Code and the City’s Investment Policy
The City’s Investment Policy and the California Government Code allow the City to invest in certain types of investments, provided the credit ratings of the issuers are acceptable to the City.
The table below also identifies certain provisions of the City’s Investment Policy and the California Government Code that address interest rate risk, credit risk, and concentration of credit risk.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
28 Minimum Maximum Maximum
Maximum Credit Percentage Investment
Authorized Investment Type Maturity Quality or Portfolio In One Issuer U.S. Treasury Obligations 7 years N/A 100% 100%
U.S. Agency Securities (1) 7 years Top three ratings
categories 80%(2) 40%
Negotiable Certificates of Deposit 5 years A / A-1 30% 5% Bankers Acceptances 180 days N/A 25% 5%
Commercial Paper 270 days A / A-1 25% 5%(3)
California Local Agency Investment
Fund
N/A N/A None $75M Per A/C
Repurchase Agreements 60 days N/A 50% 20%
Reverse Repurchase Agreements
(requires City Council approval)
92 days N/A 20% 10%
Municipal Obligations 7 years A 20% 5%
Medium Term Corporate Notes 5 years A/A- 25% 5%(3)
Mutual Funds / Money Market Funds N/A Top rating category 20% 10% Joint Powers Authority Investment Pools N/A N/A 100% 100% Supranational Obligations 5 years AA 20% 10%
Asset-Backed Securities 5 years AA 10% 5%
Non-Negotiable Certificates of Deposit 5 years N/A 10% 5% Mortgage-Backed Securities and
Collateralized Mortgage Obligations 6-12 years (4) AA 15% 10% (2) Callable securities are limited to 30% of the portfolio. time of purchase for Mortgage-Backed Securities (MBS). Maximum Final Maturity for MBS's and CMOs = 30 years with balloon payments.
(1) Securities issued by the Federal Farm Credit Bank (FFCB), the Federal Home Loan Bank (FHLB), the Federal National Mortgage Association (FNMA), the Federal Home Loan Mortgage Corporation (FHLMC), local agencies and other U.S. government sponsored enterprises. (4) Maximum Weighted Average Life with Current Public Securities Association Assumptions =12 years at (3) No more than 10% of the outstanding commercial paper and medium term corporate notes of any single issuer.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
29 B. I nvestments Authorized by Debt Agreements
The City invests bond proceeds restricted for construction in instruments that are stated in the Investment Policy and in various return-guaranteed investment agreements. These investments are invested in accordance with bond indentures and the maturities of each investment should not exceed the final maturity of each bond. Bond proceed investments are reported monthly to the City Council.
SVP also maintains required amounts of cash and investments with trustees or fiscal agents under the terms of certain debt issues. These funds are unexpended bond proceeds or are pledged reserves to be used if SVP fails to meet its obligations under these debt issues. The California Government Code 53601 (L) allows these funds to be invested in accordance with the statutory provisions governing the issuance of those bonds, indebtedness, other agreements, or certificates of participation in accordance with the ordinance, resolution, indenture, or agreement of the local agency providing for the issuance.
C. Pension Rate Stabilization Program
In February 2017, the City Council approved a Pension Rate Stabilization Program, (PRSP) Trust administered by Public Agency Retirement Services (PARS). The PRSP is an irrevocable trust and qualifies as an Internal Revenue Section 115 trust. This trust will assist the City in mitigating the CalPERS contribution rate volatility. Investments of funds held in Pension Rate Stabilization Program (PRSP) are governed by the Investment Guideline Document for the investment account and by the agreement for administrative services with the Public Agency Retirement Services (PARS), rather than the general provisions of the California Government code or the City’s investment policy. The City elected a discretionary investment approach which allows the City to maintain oversight of the investment management, control on target yield and the portfolio’ risk tolerance. The assets in this program will eventually be used to fund Pension Plan obligations.
As part of the year-end process for fiscal year 2016-17, the City Council approved SVP to designate and make an initial deposit of $3.5 million in fiscal year 2018 towards pre-funding the City’s pension obligations. As of June 30, 2025, the balance in the pension rate stabilization program trust was $11.8 million.
D. Credit and Interest Rate Risk
Credit risk is the risk that an issuer of an investment will not fulfill its obligations to the holder of the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating organization.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
30 Interest rate risk is the risk that changes in market interest rate will adversely affect the fair value o
f an investment. Generally, the longer the maturity of an investment is the greater the sensitivity of its fair value to changes in market interest rates to be.
Information about the sensitivity of the fair values of SVP’s investments to market interest rate fluctuations is provided by the following table that shows the distribution to SVP’s investment by maturity.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
31 2025 2024
Credit Under 180 181 - 365 1 - 3 3 - 5 Fair Fair
Type of Investment Rating Days Days Years Years Value Value Cash and Investments
- City Treasury:
Cash N/A 65,858,443$ -$ -$ -$ 65,858,443$ 59,372,862$ US Treasury Notes AA+ - - 225,366,079 143,320,746 368,686,825 231,973,928 Federal Farm Credit Bank AA+ - - - - - 19,417,882 Federal Home Loan Bank AA+ - - - - - 2,350,184 Federal National Mortgage
Association AA+ - - - - - 8,921,280 Federal Home Loan Mortgage
Corporation AA+ 2,590,553 - - - 2,590,553 10,906,591 Mortagage-Backed Securities AA+ - - 19,470,633 34,874,693 54,345,326 27,838,747 Corporate Notes AAA - - 2,538,987 - 2,538,987 6,963,207 Corporate Notes Aa 5,155,287 - 10,588,740 31,357,955 47,101,982 22,952,253 Corporate Notes A 4,482,106 7,084,025 28,030,283 39,710,269 79,306,683 61,958,499 Corporate Notes BBB+(1) - - - - - 1,190,179 Asset-Backed Securities Aaa - - 12,064,255 39,840,705 51,904,960 30,232,181 Certificates of Deposit A+ - - 3,942,405 - 3,942,405 3,602,799 Certificates of Deposit A - - - - - 3,457,974 Money Market Funds (CAMP Pool) AAAm 106,130,648 - - - 106,130,648 95,951,939 Money Market Funds (CAMP
Term) AAAf 31,106,851 - - - 31,106,851 19,026,752 Principal Public Deposit Sweep
Program Not Rated 273,389 - - - 273,389 100,549 State Investment Pool (LAIF) Not Rated 3,220,067 - - - 3,220,067 2,822,868 Cash and Investments
- City Treasury 218,817,344 7,084,025 302,001,382 289,104,368 817,007,119 609,040,674 Cash and Investments
- Other:
Cash (Debt Fund) N/A 12,637,965 - - - 12,637,965 6,414,375 Cash (Pension Rate Stabilization
Investment) N/A 1,325 - - - 1,325 2,823 Mutual Fund - Goldman FS
- Money Market Funds
(Debt Funds) Aaam - - - - - - Mutual Fund - JP Morgan
- Money Market Funds
(Debt Funds) Aaam 117,879,459 - - - 117,879,459 10,182,510 Pension Rate Stabilization
Investment
(Cash and Equivalents) Not Rated 393,727 - - - 393,727 414,823 Pension Rate Stabilization
Investment
(Mutual Fund - Equity) Not Rated 3,549,427 - - - 3,549,427 3,033,155 Pension Rate Stabilization
Investment
(Mutual Fund - Fixed Income) Not Rated 7,847,865 - - - 7,847,865 6,615,073 Collateral Obligations
(Archer Daniels Midland and
CAISO) Not Rated 7,621,750 - - - 7,621,750 9,449,807 Investments - Other 149,931,518 - - - 149,931,518 36,112,566 Total Cash and Investments 368,748,862$ 7,084,025$ 302,001,382$ 289,104,368$ 966,938,637$ 645,153,240$ (1) The investments in the corporate notes were rated A+ when purchased.
Maturity
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
32 The City is a voluntary participant in the Local Agency Investment Fund (LAIF). LAIF is r
egulated by California Government Code Section 16429 under the oversight of the Treasurer of the State of California. LAIF’s investment portfolio mainly consists of Treasuries, loans, Federal Agency securities, and collateralized mortgage obligations. Each regular LAIF account is permitted to have up to 15 transactions per month, with a minimum transaction amount of $5,000, a maximum transaction amount of $75 million and at least 24 hours advance notice for withdrawals of $10 million or more. Bond proceeds accounts are subject to one time deposit with no cap and are set up with a monthly draw down schedule. The carrying value of LAIF approximates fair value.
The City, as a CAMP shareholder, participates in both the CAMP Pool Portfolio and the CAMP Term Portfolio. The CAMP Pool is
fully liquid, stable net asset value (NAV) investment option with a competitive yield, while the CAMP Term is a fixed-rate, fixed term investment option that offers securities with maturities ranging from 60 days to one year. Investment principal and interest in the CAMP Term account are paid at maturity, with an automatic sweep into the CAMP Pool account.
The CAMP Pool is managed to maintain a dollar-weighted average portfolio maturity of 60 days or less and seeks to maintain a constant NAV per share of $1.00. The CAMP Pool invests in obligations of the United States Government and its agencies, high-quality, short-term debt obligations of U.S. companies and financial institutions. The CAMP Term investments are based on a pool of open-market securities similar to those in the CAMP Pool. The investments are matched to the amount invested and maturities selected by the Shareholder.
The City may withdraw all or any portion of the funds
in the CAMP Pool account at any time by
redeeming shares. The City may withdraw all or a portion of the funds in the CAMP Term account in $10,000 increments prior to maturity, but there is a premature redemption penalty.
The CAMP Declaration of Trust permits the CAMP trustee to suspend the right of withdrawal from CAMP or to postpone the date of payment of redemption proceeds if the New York Stock Exchange is closed other than for customary weekend and holiday closings, if trading on the New York Stock Exchange is restricted, or if, in the opinion of the CAMP trustees, an emergency exists such that disposal of the CAMP pool securities or determination of its net asset value is not reasonably practicable. If the right of withdrawal is suspended, the City may either withdraw its request for that withdrawal or receive payment based on the net asset value of the CAMP pool next determined after termination of the suspension of the right of withdrawal. At June 30, 2025, the fair value approximated the City’s cost. At June 30, 2025, the CAMP Pool investments had an average maturity of 41 days.
Mutual funds are available for withdrawal on demand. See City’s Annual Financial Report Note 7 to the financial statements for additional detail on the fiscal year 2024-25 investment portfolio.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
33 E. C ustodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial institution, the City will not be able to recover its deposits or will not be able to recover collateral securities that are in the possession of an outside party. Under California Government Code Section 53651, depending on specific types of eligible securities, a bank must deposit eligible securities posted as collateral with its Agent having a fair value of 105% to 150% of the City’s cash on deposit. All of the City’s deposits are either insured by the Federal Depository Insurance Corporation (FDIC) or collateralized with pledged securities held in the trust department of the financial institutions.
The custodial credit risk for investments is the risk that, in the event of the failure of the counterparty (e.g. broker-dealer) to a transaction, the City will not be able to recover the value of its investment or collateral securities that are in the possession of another party. The City’s Investment Policy limits its exposure to custodial credit risk by requiring that all security transactions entered into by the City, including collateral for repurchase agreements, be conducted on a delivery-versus-payment basis. Securities are to be held by a third party custodian.
F. Fair Value Hierarchy
SVP categorizes its fair value measurements within the fair value hierarchy established by GAAP.
The hierarchy is based on the valuation input used to measure the fair value of asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. See City’s Annual Comprehensive Financial Report Note 7 to the financial statements for more detailed information.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
34 Fair Value Measurements Using
Investments and
Derivative
Instruments
Measured at Fair
Value
Quoted Prices in
Active Markets
for Identical
Assets
Significant
Other
Observable
Inputs
6/30/2025 Level 1 Level 2 Exempt (1)
Investments by Fair Value Level
Short Term Investments
US Treasury Notes 368,686,825$ 368,686,825$ $ - $ - Federal Home Loan Mortgage Corp 2,590,553 - 2,590,553 - Mortagage-Backed Securities 54,345,326 - 54,345,326 - Corporate notes 128,947,652 - 128,947,652 - Asset-Backed Securities 51,904,960 - 51,904,960 - Certificates of Deposit 3,942,405 - 3,942,405 - Money Market Fund (CAMP Pool and Term) 137,237,499 - - 137,237,499 Principal Public Deposit Sweep Program 273,389 - - 273,389 Total Short Term Investments 747,928,609 368,686,825 241,730,896 137,510,888 Debt Securities and Other
Mutual Fund - JP Morgan
- Money Market Funds (Debt Funds) 117,879,459 - - 117,879,459 Pension Rate Stabilization Investment (Cash
and Equivalents) 393,727 393,727 - - Pension Rate Stabilization Investment (Mutual
Fund - Equity) 3,549,427 1,003,978 2,545,449 - Pension Rate Stabilization Investment (Mutual 7,847,865 7,847,865 - - Pension Rate Stabilization Investment (Cash 1,325 - - 1,325 Collateral Obligations (Archer Daniels
Midland and CAISO) 7,621,750 - - 7,621,750 Total Debt Securities and Other 137,293,553 9,245,570 2,545,449 125,502,534 Total Investment by Fair Value Level $ 885,222,162 $ 377,932,395 $ 244,276,345 $ 263,013,422 Investments Measured at fair value, but not subject to fair value hierarchy:
State Investment Pool (LAIF) 3,220,067 - - 3,220,067 Total Investments 888,442,229 $ 377,932,395 $ 244,276,345 $ 266,233,489 Cash in Banks 78,496,408
Total Cash and Investment 966,938,637$
Investments Derivative Instruments
Open contract gas trading - current assets 2,871,435 2,871,435 Open contract gas trading - current liabilities (1,098,675) (1,098,675) Total Investment Derivative Instruments 1,772,760$ 1,772,760$ (1) Accounts in exempt column are Mutual Fund-Money Market, Collateral Obligation and LAIF investments which are exempt f
rom fair value hierarchy, or reported at amortized cost.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 3 – CASH AND INVESTMENTS (continued)
35 The City utilizes a third party pricing service to determine fair market prices for its individually h
eld investments. Evaluations are based on market information available at the time and generated using proprietary evaluated pricing models and methodologies.
Level 1 investments are valued using a marketable actively traded assets closing price for identical assets. Level 2 investments are determined by using quoted prices for similar assets.
G. Investments with Fair Values Highly Sensitive to Interest Rate Fluctuations The City’s investment portfolio includes callable corporate notes and callable asset-backed securities (ABS) held within the City’s investment pool. These investments are considered highly sensitive to interest rate fluctuations because changes in market interest rates may affect both the timing and amount of the securities’ cash flows. When interest rates decline, issuers may exercise the call option and redeem the securities prior to their stated maturity. If these securities are called, the City may be required to reinvest the proceeds at lower prevailing market rates, which may reduce future investment earnings. See City’s Annual Comprehensive Financial Report Note 7 to the financial statements for more detailed information.
NOTE 4 – CAPITAL ASSETS
A. Capital Assets Summary
Capital asset activity for the years ended June 30, 2025 and 2024 is as follows:
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 4 – CAPITAL ASSETS (continued)
36 Balance Balance
June 30, 2024 Additions Retirements Transfers June 30, 2025 Non Depreciable Assets:
Land 14,371,743 $ 5,507,850$ -$ -$ 19,879,593$ Construction In Progress 86,463,324 63,383,960 - (10,925,341) 138,921,943 Total Non Depreciable Assets 100,835,067 68,891,810 - (10,925,341) 158,801,536 Capital assets being depreciated:
Buildings and Improvements 1,147,187,859 - - 10,925,341 1,158,113,200 Right-to-use leased building 2,916,623 - - - 2,916,623 Right-to-use SBITA 3,837,038 - - 3,837,038 Machinery & Equipment 10,212,515 542,715 (9,853) - 10,745,377 Total capital assets being
depreciated 1,164,154,035 542,715 (9,853) 10,925,341 1,175,612,238 Less accumulated depreciation for:
Buildings and Improvements (564,248,905) (27,882,392) - - (592,131,297) Right-to-use leased building (2,019,200) (673,066) - - (2,692,266) Right-to-use SBITA (864,051) (502,440) - - (1,366,491) Machinery & Equipment (9,012,644) (240,074) 9,853 - (9,242,865) Total accumulated depreciation (576,144,800) (29,297,972) 9,853 - (605,432,919) Net Depreciable Assets 588,009,235 (28,755,257) - 10,925,341 570,179,319 Enterprise Activity Capital
Assets, Net 688,844,302$ 40,136,553$ -$ -$ 728,980,855$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 4 – CAPITAL ASSETS (continued)
37 Balance Balance
June 30, 2023 Additions Retirements Transfers June 30, 2024 Non Depreciable Assets:
Land 14,371,743$ -$ -$ -$ 14,371,743$ Construction In Progress 71,262,465 60,741,105 - (45,540,246) 86,463,324 Total Non Depreciable Assets 85,634,208 60,741,105 - (45,540,246) 100,835,067 Capital assets being depreciated:
Buildings and Improvements 1,101,647,613 - - 45,540,246 1,147,187,859 Right-to-use leased building 2,916,623 - - - 2,916,623 Right-to-use SBITA 3,108,024 729,014 - - 3,837,038 Machinery & Equipment 10,297,966 12,544 (97,995) - 10,212,515 Total capital assets being
depreciated 1,117,970,226 741,558 (97,995) 45,540,246 1,164,154,035 Less accumulated depreciation for:
Buildings and Improvements (537,222,730) (27,026,175) - - (564,248,905) Right-to-use leased building (1,346,134) (673,066) - - (2,019,200) Right-to-use SBITA (378,485) (485,566) - - (864,051) Machinery & Equipment (8,814,500) (296,139) 97,995 - (9,012,644) Total accumulated depreciation (547,761,849) (28,480,946) 97,995 - (576,144,800) Net Depreciable Assets 570,208,377 (27,739,388) - 45,540,246 588,009,235 Enterprise Activity Capital
Assets, Net 655,842,585$ 33,001,717$ -$ -$ 688,844,302$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 4 – CAPITAL ASSETS (continued)
38 B. C onstruction in Progress
Construction in progress as of June 30, 2025 and 2024 consisted of the following in SVP Projects.
Projects as of June 30 , 2025 Authorized Expended Commitments Northern Receiving Substation (NRS) Transformer Replacement 62,857,832.0$ 10,483,513.0$ 52,374,319.0$ Kifer Receiving Station (KRS) Rebuild and Replacement 37,207,482 6,070,298 31,137,184 Scott Receiving Station (SRS) Rebuild and Replacement 36,950,412 5,472,352 31,478,060 Esperanca Substation 28,905,947 1,219,736 27,686,211 Grizzly Tap Line Repairs 28,607,653 27,169,164 1,438,489 Implementation of Advanced Meter 28,088,715 28,029,548 59,167 Juliette Substation Expansion and Transformer Rerate 25,764,241 3,853,205 21,911,036 NRS-KRS 115kV Line 23,759,946 2,633,569 21,126,377 Great America Street Lighting Replacement Project 13,051,982 2,009,754 11,042,228 Walsh-Uranium 60kV Reconductor 12,113,296 7,007 12,106,289 Memorex Junction Substation 11,870,500 7,961,378 3,909,122 System Capacity Expansion 11,861,584 7,221,950 4,639,634 Northwest Loop Capacity Upgrade 11,391,316 1,112,771 10,278,545 Transmission Loop 1 10,814,252 146,860 10,667,392 Other Projects 86,257,285 35,530,838 50,726,447 Total 429,502,443$ 138,921,943$ 290,580,500$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 4 – CAPITAL ASSETS (continued)
39 Projects as of June 30 , 2024 Authorized Expended Commitments Implementation of Advanced Meter 28,089,215$ 28,024,202$ 65,013$ Grizzly Tap Line Repairs 21,999,893 14,113,347 7,886,546 Northern Receiving Substation (NRS) Transformer Replacement 15,900,020 5,998,030 9,901,990 System Capacity Expansion 10,973,778 4,954,305 6,019,473 Memorex Junction Substation 11,739,354 3,649,556 8,089,798 Kifer Receiving Station (KRS) Rebuild and Replacement 14,211,430 3,317,073 10,894,357 Scott Receiving Station (SRS) Rebuild and Replacement 13,956,517 2,973,236 10,983,281 Freedom Circle Junction Substation 5,350,106 2,682,803 2,667,303 Replace Balance of Plant Control System (DCS) 5,559,127 2,540,683 3,018,444 San Tomas Junction 5,570,131 2,394,995 3,175,136 Electric Vehicle (EV) Charging 4,563,033 1,769,817 2,793,216 Stender Way Junction Substation 8,697,335 1,767,424 6,929,911 NRS-KRS 115kV Line 11,644,882 1,317,608 10,327,273 Bower Avenue Junction 3,882,492 1,122,084 2,760,408 Street Light Improvement 2,813,495 1,015,901 1,797,594 Other Projects 93,731,632 8,822,259 84,909,374 Total 258,682,442$ 86,463,324$ 172,219,118$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
40 NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS
C
hanges in long-term debt for the year ended June 30, 2025, consisted of the following:
Outstanding Debt Additions and Outstanding
Type of Indebtedness as of June 30, Retired / Amortization of as of June 30, Current Rate, Issue Date and Maturity 2024 Defeased Premiums/Discounts 2025 Portion Senior Revenue Bonds:
2018 Series A Refunding Revenue Bonds,
5%, 12/18/18 - 07/01/27 24,775,000$ 5,795,000$ -$ 18,980,000$ 6,005,000$ 2024 Series A Refunding Revenue Bonds, - 112,175,000 112,175,000 3,345,000 5%, 10/23/24 - 07/01/44
Unamortized Discount/Premium 2,259,699 - 16,991,454 19,251,153 - Subtotal Electric Utility Revenue Bonds 27,034,699 5,795,000 129,166,454 150,406,153 9,350,000 Direct Placement:
Series 2020-1 Revenue Refunding Bonds,
1.74%, 04/10/2020 - 07/01/2032 52,985,000 - - 52,985,000 - Series 2020-2 Revenue Refunding Bonds,
1.31%, 04/10/2020 - 07/01/2028 28,560,000 5,695,000 - 22,865,000 5,910,000 Series 2020-3 Revenue Refunding Bonds,
0.58% 04/10/2020 - 07/01/2024 3,970,000 3,970,000 - - - Subtotal Electric Utility Revenue Bonds 85,515,000 9,665,000 - 75,850,000 5,910,000 Total Electric Utility Activities - Bonds and Notes from Direct
Borrowing 112,549,699$ 15,460,000$ 129,166,454$ 226,256,153$ 15,260,000$
A. Electric Revenue Refunding Bonds, Series 2018A
On December 18, 2018, SVP issued $48.8 million of Electric Revenue Refunding Bonds, Series 2018A (Electric 2018A Bonds) to refinance $54.58 million outstanding principal amount of Variable Rate Demand Electric Revenue Refunding Bonds, Series 2008B and terminate a related swap agreement. The Electric 2018A Bonds bear a 5% coupon rate, mature annually beginning on July 1, 2019 through July 1, 2027, and were sold at an All-In True Interest Cost of 2.32%. Debt service on the Electric 2018A Bonds is secured by a pledge of net revenues of SVP.
In the event of default, SVP will transfer to the trustee all adjusted net revenues held by it and received thereafter and the trustee will disburse all adjusted net revenues and any other funds then held or thereafter received by the trustee under the provisions of indenture. In the case of default, the trustee will be entitled to declare the bond obligation of all bonds then outstanding to be due and payable immediately.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
41 B. E lectric Revenue Bonds, Series 2024A
On October 23, 2024, SVP issued $112,175,000 of Electric Revenue Bonds, Series 2024 A (Electric 2024A Bonds), to provide funding for several of its capital projects in the System Expansion Plan. These projects include Kifer Receiving Station (KRS) rebuild, Scott Receiving Station (SRS) rebuild, and Northern Receiving Station (NRS) upgrades and expansion. The Electric 2024A Bonds mature annually beginning on July 1, 2025 through July 1, 2044, bear coupon rate of 5%, with optional redemption for bonds with maturities after July 1, 2035 and were sold at an All-In True Interest Cost of 3.27%. Debt service on the Electric 2024A Bonds is secured by a pledge of net revenues of the Electric Utility Fund.
In the event of default, SVP will transfer to the trustee all adjusted net revenues held by it and received thereafter and the trustee will disburse all adjusted net revenues and any other funds then held or thereafter received by the trustee under the provisions of indenture. In the case of default, the trustee will be entitled to declare the bond obligation of all bonds then outstanding to be due and payable immediately.
C. Subordinate Electric Revenue Refunding Bonds, Series 2020-1 As of April 1, 2020, all $54.830 million of the Electric 2011 A Bonds were outstanding and callable at par beginning July 1, 2021. The passage of the Tax Cuts and Jobs Act on December 22, 2017 eliminated tax-exempt advance refunding of tax-exempt bonds beginning January 1, 2018, and therefore tax-exempt advance refunding is no longer a refinancing option.
The City Council determined that it was in the best interests of the City to enter into a credit facility with a bank for the purpose of refunding all outstanding Electric 2011A Bonds; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.
On April 10, 2020, the City entered into a loan agreement with Bank of America, N.A. (the “Bank”) and issued $52.985 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-1 (Electric 2020-1 Bonds) to refinance $54.830 million outstanding principal amount of Electric Series 2011A Bonds under a Taxable to Tax-Exempt Conversion structure. The Electric 2020-1 Bonds bear 1.74% coupon rates, mature annually beginning on July 1, 2028 through July 1, 2032 and were sold at a true interest cost of 1.43% with an average coupon rate of 1.40%.
Electric 2020-1 Bonds were priced at taxable rates and was converted to tax-exempt on April 2, 2021. Both the taxable rate and tax-exempt rate after conversion were fixed at time of issuance.
Starting April 2, 2021, the Bonds will bear interest at the tax exempt rate of 1.360% per annum.
Debt service on the Electric 2020-1 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
42 In the event of default under the loan agreement for the 2020-1 bonds (including a failure by the C
ity to pay principal or interest on the related bonds, a failure by the City to perform or observe its covenants, a default in other specified indebtedness or obligations of the City, certain acts of bankruptcy or insolvency, or other specified events of default), the Bank has the right, upon written notice to the City, to accelerate and declare the City’s obligation to repay the related bonds and all other obligations of the City to the Bank under such loan agreement to be immediately due and payable.
D. Subordinate Electric Revenue Refunding Bonds, Series 2020-2 The City Council determined that it was in the best interests of the City to enter into a credit facility with a bank for the purpose of refunding a portion of the outstanding Electric 2013A Bonds; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the Bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.
On April 10, 2020, the City entered into a loan agreement with Bank of America, N.A. (the “Bank”) and issued $34.315 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-2 (Electric 2020-2 Bonds) to refinance $30.725 million of the callable portion of the outstanding Electric Revenue Refunding Bonds, Series 2013 A under a Taxable to Tax-Exempt Conversion structure. The Electric 2020-2 Bonds bear 1.31% coupon rates, mature annually beginning on July 1, 2023 through July 1, 2028 and were sold at a true interest cost of 1.21% with an average coupon rate of 1.15%. Electric 2020-2 Bonds were priced at taxable rates and were convert to tax-exempt basis on December 28, 2022, which now bear 1.02% coupon rates. Debt service on the Electric 2020-2 Bonds is secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.
In the event of default under the loan agreement for the 2020-2 Bonds (including a failure by the City to pay principal or interest on the related bonds, a failure by the City to perform or observe its covenants, a default in other specified indebtedness or obligations of the City, certain acts of bankruptcy or insolvency, or other specified events of default), the Bank has the right, upon written notice to the City, to accelerate and declare the City’s obligation to repay the related bonds and all other obligations of the City to the Bank under such loan agreement to be immediately due and payable.
E. Subordinate Electric Revenue Refunding Bonds, Series 2020-3 On June 16, 2014, the City entered into a Tax-Exempt Multiple Draw Term Loan with the Bank of America Preferred Funding Corporation (the “Electric 2014 Loan Agreement”) to fund the phase-shifting transformer project and the acquisition of property for future utility use. The indebtedness created under such credit facility was evidenced by a subordinate electric revenue Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
43 bond issued by the City - Subordinated Electric Revenue Bond, Series 2014. As of April 1, 2020, $
19.413 million principal amount was outstanding and unpaid.
The City Council determined that it was in the best interests of the City to continue the credit facility with the bank for the purpose of refunding of the outstanding Electric 2014 Loan Agreement at lower interest rate; and for the indebtedness created under such credit facility to be evidenced by a subordinate electric revenue bond to be issued by the City and delivered to the Bank as authorized by Resolution No. 20-8834 adopted by the City Council on April 7, 2020.
On April 10, 2020, the City entered into a loan agreement with Bank of America, N.A. (the “Bank” and issued $16.720 million of Subordinate Electric Revenue Refunding Bonds, Series 2020-3 (Electric 2020-3 Bonds) to refinance $19.413 million outstanding principal amount of Subordinated Electric Revenue Bonds, Series 2014. The Electric 2020-3 Bonds bear 0.58% coupon rates mature annually beginning on July 1, 2020 through July 1, 2024 and were sold at a true interest cost of 0.70%. Debt service on the Electric 2020-3 Bonds was secured by a pledge of Available Electric Revenues of SVP on a basis subordinate to outstanding Senior Electric Revenue Bonds, if any.
In the event of default under the loan agreement for the 2020-3 bonds (including a failure by the City to pay principal or interest on the related bonds, a failure by the City to perform or observe its covenants, a default in other specified indebtedness or obligations of the City, certain acts of bankruptcy or insolvency, or other specified events of default), the Bank has the right, upon written notice to the City, to accelerate and declare the City’s obligation to repay the related bonds and all other obligations of the City to the Bank under such loan agreement to be immediately due and payable.
The final debt service payment was made on July 1, 2024 for this loan.
F. Pledge of Future Electric Revenues
The pledge of future Electric Fund adjusted net revenues ends upon repayment of the $278.2 million in principal and interest on the bonds which is scheduled to occur in fiscal year 2044-45.
For fiscal year 2024-25, Electric Fund revenues including operating revenues and non-operating interest earnings amounted to $860.8 million and operating costs including operating expenses, but not interest, depreciation or amortization amounted to $570.6 million. Net adjusted revenues available for debt service amounted to $290.1 million which represented a coverage ratio of 13.3 on the $21.8 million of debt service.
G. Derivative Instruments
In fiscal year 2009-10, SVP implemented GAAP, which addresses recognition, measurement and disclosures related to derivative instruments to determine whether they meet the definition of Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
44 derivative instruments, and if so, whether they effectively hedge the expected cash flows a
ssociated with the interest rate and energy exposures. Under hedge accounting, the increase (decrease) in the fair value of a hedge is reported as a deferred cash flow hedge on the statement of net position.
Notional Amounts and Fair Values – Future Derivative Instruments SVP maintains a Market Risk Management Policy, which among other things, sets forth the guidelines for the purchase and sale of certain financial instruments defined as hedge instruments in support of market power purchase and sales transactions. The primary goal of these guidelines is to provide a framework for the operation of an energy price hedging program to better manage SVP’s risk exposure in order to utilize resources, stabilize pricing and hedge costs for the benefit of SVP and its customers.
Consistent with hedge accounting treatment meeting effectiveness tests, changes in fair value are reported as deferred flows of resources on the statement of net position until the contract expiration that occurs in conjunction with the hedged expected energy purchase/sales transaction. When hedging contracts expire, at the time the purchase/sales transactions occur, the deferred balance is recorded as a component of Purchased Power. For energy derivatives, fair values are estimated by comparing contract prices to forward market prices quoted by third party market participants.
SVP had the following future derivative instruments outstanding at June 30, 2025 with Archer Daniels Midland Company to hedge cash flows on sales of excess resources in CAISO market in June and purchase of power from CAISO in the future months.
Notional Amount (MMBtu)
Long Short
Effective
Date Maturity Date
Average
Price Classification Amount Classification Amount
765,000 7/1/2020 12/31/2025 $2.42 Derivative
Instrument 1,069,345$ Deferred inflow 1,069,345 $ 1,530,000 1/1/2022 12/31/2025 2.64 Derivative Instrument 1,802,090 Deferred inflow 1,802,090
920,000 1/1/2021 12/31/2025 0.56 Derivative Instrument (81,025) Deferred
outflow (81,025)
1,840,000 1/1/2022 12/31/2025 1.03 Derivative Instrument (1,017,650) Deferred
outflow (1,017,650)
Net Total 1,772,760$ 1,772,760$
Fair Value Change in Fair Value
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
45 Credit Risk
Credit risk is the risk of loss due to a counterparty defaulting on its obligations. SVP is exposed to credit risk if hedging instruments are in asset positions. In order to eliminate counterparty credit risk, SVP has transacted both long term power and gas contracts on the Futures market on Intercontinental Exchange (ICE). As of June 30, 2025, two of SVP’s open derivative gas contracts were in an asset position, and the fair values of the open contracts were positive $2.9 million. Two of SVP’s open derivative gas contracts were in a liability position, and the fair values of those open contracts were negative $1.1million. The open contract was with ADM Investor Service, Inc., a clearing member of ICE and a company of Archer Daniels Midland Company who was rated A by S&P Global Rating as of June 30, 2025.
SVP's policy for requiring collateral on hedging instruments varies based on individual contracts and counterparty credit ratings. Under the brokerage agreements with Archer Daniels Midland Company, the accounts are prefunded by SVP. If the account value falls below zero, margin calls are invoked. At June 30, 2025, SVP had posted collateral of $7.6 million deposited with CAISO and Archer Daniels Midland Company for resource energy trading It is also SVP's policy to negotiate netting arrangements whenever it has entered into more than one bilateral transactions with counterparty. Under the terms of these arrangements, should one party become insolvent or otherwise default on its obligations, the non-defaulting party may accelerate and terminate all outstanding transactions and net their fair values so that a single amount will be owed by (or to) the non-defaulting party.
Termination Risk
SVP’s futures contracts are traded over the counter and have no termination risk.
Price Risk
With respect to price risk under power Futures contracts, on purchase contracts (long positions), SVP receives the CAISO NP15 average daily rate at settlement and pays the fixed contracted rate entered into on the trade date; on sales contracts (short positions), SVP pays the CAISO NP15 average daily rate at settlement and receives the fixed contracted rate entered into on the trade date.
With respect to price risk under gas Futures contracts, on purchase contracts (long positions), SVP receives PG&E Citygate average daily price at settlement and pays the fixed contracted rate entered into on the trade date; on sales contracts (short positions), SVP pays the PG&E Citygate average daily price at settlement and receives the fixed contracted rate entered into on the trade date. SVP is exposed to risk because the contract prices are different from the settlement prices.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
46 H. O ther
Various debt agreements governing SVP’s revenue bonds contain a number of covenants including those that require SVP to maintain and preserve the enterprise in good repair and working order, to maintain certain levels of insurance, and to fix and collect rates, fees, and charges so as to maintain certain debt coverage ratios. SVP is in compliance with these specific covenants and all other material covenants governing the particular revenue bond issues. No event of default as defined in the bond indentures has occurred or was occurring as of the date of this report.
I. Repayment Requirements
As of June 30, 2025, the debt service requirements to maturity for SVP’s long-term debt are as follows:
Year Ending
June 30 Principal Interest Total Principal Interest Total 2026 9,350,000$ 6,324,000$ 15,674,000$ 5,910,000$ 923,678$ 6,833,678$ 2027 9,840,000 5,844,250 15,684,250 5,975,000 863,065 6,838,065 2028 10,355,000 5,339,375 15,694,375 6,050,000 801,737 6,851,737 2029 3,890,000 4,983,250 8,873,250 11,485,000 701,165 12,186,165 2030 4,090,000 4,783,750 8,873,750 12,745,000 544,782 13,289,782 2031-2035 23,805,000 20,551,375 44,356,375 33,685,000 615,094 34,300,094 2036-2040 30,570,000 13,787,500 44,357,500 - - - 2041-2045 39,255,000 5,103,125 44,358,125 - - - 131,155,000$ 66,716,625$ 197,871,625$ 75,850,000$ 4,449,521$ $80,299,521 Senior Revenue Bonds
Future Debt Service Requirements
Subordinate Revenue Bonds from
Direct Placement
Long-term Debt
Reconciliation of Long-term Debt:
Principal Outstanding as of June 30, 2025 207,005,000$
Unamortized Discount/Premium - Electric Revenue Bonds 19,251,153 Total Long-term Debt 226,256,153$
J. Lease Liabilities
A summary of the SVP’s lease transactions for the fiscal year ended June 30, 2025 and 2024 are as follows:
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
47 Balance
June 30, 2023 Addition Retirment
Balance
June 30, 2024 Current portion
Lease liabilities 1,632,622$ - $ (681,617)$ 951,005$ 710,181$ Balance
June 30, 2024 Addition Retirment
Balance
June 30, 2025 Current portion
Lease liabilities 951,005$ - $ (710,181)$ 240,824$ 240,824$
The future principal and interest lease payments as of June 30, 2025, are as follows:
For the Year
Ending June 30 Principal Interest Total
2026 240,824 $ 553 $ 241,377$
Total 240,824 $ 553 $ 241,377$
K. Subscription-Based IT Arrangements and Liabilities
In fiscal year 2022-23, SVP implemented the provisions of GASB Statement No. 96, Subscription- Based Information Technology Arrangements, which required the SVP to record an intangible right-to-use subscription asset. As a result, a right-to-use subscription asset have been recorded in the amount of $3,837,038. As of June 30, 2024, SVP has recorded a net intangible right-to use subscription asset amounting to $2,972,987, with accumulated amortization of $864,051. As of June 30, 2025, the net intangible right-to use subscription is $2,470,547 with accumulated amortization of $1,366,491. The subscription assets are offset with subscription liabilities. A summary of the SVP’s SBITA transactions for the fiscal year ended June 30, 2024 and 2025 are as follows:
Balance
June 30, 2023 Addition Retirment
Balance
June 30, 2024 Current portion
SBITA liabilities 2,718,010$ 729,014$ (470,556)$ 2,976,468$ 481,034$ Balance
June 30, 2024 Addition Retirment
Balance
June 30, 2025 Current portion
SBITA liabilities 2,976,468$ - $ (481,033)$ 2,495,435$ 503,819$ Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 5 – LONG-TERM DEBT AND DERIVATIVE INSTRUMENTS (continued)
48 The future principal and interest SBITA payments as of June 30, 2025, are as follows:
For the Year
Ending June 30 Principal Interest Total
2026 503,819 $ 67,315 $ 571,134$
2027 527,486 53,844 581,330
2028 552,141 39,762 591,903
2029 382,523 25,069 407,592
2030 321,376 14,770 336,146
2031-2035 208,089 6,011 214,100
Total 2,495,434 $ 206,771 $ 2,702,205$
NOTE 6 – PARTICIPATION IN JOINT VENTURES
A. Investment in Joint Ventures
SVP (through the City) participates in significant joint ventures: Northern California Power Agency (NCPA), Transmission Agency of Northern California (TANC), M-S-R Public Power Agency (MSR PPA), M-S-R Energy Authority (MSR EA).
The separately issued financial statements of these joint ventures (as noted below) are available on request.
Date of latest audited
financial statement Joint venture’s address
NCPA 6/30/2024 651 Commerce Dr. Roseville, CA 95678
TANC 6/30/2024 P.O. Box 15129 Sacramento, CA 95851
MSR EA 12/31/2024 P.O. Box 4060 Modesto, CA 95352
MSR PPA 12/31/2024 P.O. Box 4060 Modesto, CA 95352
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
49 As described in paragraph (E) below, the carrying value of SVP’s investment in MSR EA is $0.
S
VP’s financial statements as of June 30, 2025 and 2024 reflect the following investments in joint ventures:
Participating
percentage Investment
Participating
percentage Investment
Method of
accounting
NCPA $44,099,226 $41,747,424
Geothermal 44.39% 44.39% Equity
Hydroelectric 37.02% 37.02%
Combustion Turbine 41.67% 41.67%
Lodi Energy Center 25.75% 25.75%
TANC 9.69% 9,823,936 9.69% 9,136,635 Equity MSR EA 33.40% - 33.40% - Suspended MSR PPA 35.00% 11,399,251 35.00% 14,325,713 Equity *
Total $65,322,413 $65,209,772
*
June 30, 2025 June 30, 2024
The equity method of accounting for investment in MSR PPA was suspended prior to fiscal year ended June 30, 2021. Starting in fiscal year 2022, equity method was used for SVP's investment with MSR PPA.
B. Northern California Power Agency (NCPA)
NCPA was formed in 1968 as a joint powers agency in the State of California. Its membership consists of sixteen public agencies. NCPA is generally empowered to sell, purchase, generate, transmit, manage electrical energy and provide regulatory and legislative advocacy. Members participate in the projects of NCPA on an elective basis. Therefore, the participation percentage varies for each project in which it participates.
A Commission comprised of one representative from each joint venture member governs NCPA.
The Commission is responsible for the general management of the affairs, property, and business of NCPA. Under the direction of the General Manager, the staff of NCPA is responsible for providing various administrative, operating and planning services for NCPA and its associated power corporations.
Project Financing and Construction
NCPA’s project construction and development programs have been individually financed by project revenue bonds collateralized by NCPA’s assignment of all payments, revenues and proceeds associated with its interest in each project. Each project participant has agreed to pay its proportionate share of debt service and other costs of the related project, notwithstanding the Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
50 suspension, interruption, interference, reduction or curtailment of output from the project for any r
eason. Certain of the revenue bonds are additionally supported by municipal bond insurance credit enhancements.
Hydroelectric Project
NCPA is contracted to finance, manage, construct, and operate Hydroelectric Project Number One for the licensed owner, Calaveras County Water District (CCWD). In exchange, NCPA has the right to the electric output of the project for 50 years from February 1982. NCPA also has an option to purchase power from the project in excess of the CCWD’s requirements for the subsequent 50 years, subject to regulatory approval.
Geothermal Project
The NCPA Geothermal Plants have historically experienced greater than anticipated declines in steam production from the existing geothermal wells. Although initially operated as baseload generation projects at full capability (238MW), NCPA changed its steam field production from baseload to load-following and reduced average annual steam production. Along with other steam field operators in the area, the Agency began implementing various operating strategies to further reduce the rate of decline in steam production. The Agency has modified both steam turbine units and the associated steam collection system to enable generation with lower pressure steam at higher mass-flow rates to optimize the utilization of the available steam resource. In FY 19-20, NCPA began a well-workover program to restore underperforming wells.
Based upon current operation protocols and forecasted operations, NCPA expects average annual generation and peak capacity to decrease further, reaching approximately 68 MW by the year 2040.
Combustion Turbine Project No. 1
NCPA originally owned five combustion turbine units, each of which is nominally rated at 25 MW, which are collectively known as the Combustion Turbine Project No. 1. These units were completed in 1986 and are designed to provide peak power and reserve requirements and emergency support. Effective September 1, 2010, two units located in the City of Roseville was sold to the City of Roseville. NCPA still owns and operates two units in the City of Alameda and one unit in the City of Lodi. Each purchaser is responsible under its power sales contract for paying entitlement share in Combustion Turbine Project No. 1 of all NCPA’s costs of such project.
Lodi Energy Center
On May 24, 2010, SVP entered into an agreement with NCPA for a 25.75% interest in the Lodi Energy Center, a 280 MW combined cycle natural gas fired power plant, located in Lodi, California. The project received approval from the California Energy Commission in April 2010 Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
51 and was placed into operation in November 2012. In January 2020, the Lodi Energy Center s
uffered a catastrophic turbine failure. NCPA replaced the turbine with a newer state-of-the-art turbine which could use hydrogen as a cleaner fuel source. The majority of the replacement cost was covered by NCPA’s insurance resulting in relatively minimal financial impact to project participants.
C. Transmission Agency of Northern California (TANC)
TANC was organized under the California Government Code pursuant to a joint powers agreement entered into by 15 Northern California utilities. The purpose of TANC is to provide electric transmission and other facilities for the use of its members through its authority to plan, acquire, construct, finance, operate and maintain facilities for electric power transmission. The joint powers agreement provides that the costs of TANC’s activities can be financed or recovered through assessment of its members or from user charges through transmission contracts with its members. Each TANC member has agreed to pay a pro-rata share of the costs to operate TANC and for payment of debt service, and has the right to participate in future project agreements.
The joint powers agreement remains in effect until all debt obligations and interest thereon have been paid, unless otherwise extended by the members.
California-Oregon Transmission Project
TANC is a participant and also the Project Manager of the California-Oregon Transmission Project (Project), a 340 mile long, 500 kilovolt alternating current transmission project between Southern Oregon and Central California. As Project Manager, TANC is responsible for the overall direction and coordination of all Project operations and maintenance, additions and betterments, and for general and administrative support.
The Project was declared commercially operable on March 24, 1993, with a rated transfer capability of 1,600 megawatts and provides a third transmission path between the electric systems of the Pacific Northwest and those in California. The Project has successfully met and completed all major environmental requirements. As of June 30, 2024, the most recent data available, TANC’s investment in the Project was $556.4 million, less accumulated depreciation and amortization of $297.7 million.
In connection with its participation in the Project, TANC has an entitlement balance of the Project’s transfer capability of approximately 1,362 megawatts and is obligated to pay an average of approximately 80 percent of the operating costs associated with the Project. TANC incurred and initially capitalized all costs for project construction since they were expected to be recovered through reimbursement from Project participants and from the successful operations of the Project transmission lines. The Project agreement among the participating members provides that each Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
52 member agrees to make payments, from its revenues, to TANC for project costs incurred and for p
ayment of debt service.
SVP has historically been obligated to pay 20.47% of TANC’s COTP operating and maintenance expenses and 20.70% of TANC’s COTP debt service and 22.16% of the Vernon acquisition debt.
SVP has also been entitled to 20.4745% of TANC’s share of COTP transfer capability (approximately 278 MW net of third party layoffs of TANC) on an unconditional take-or-pay basis. Starting on July 1, 2014, SVP laid-off 147 MWs of this entitlement to other TANC members under a 25 year agreement. During the term of this agreement the parties taking on the entitlement will pay all associated debt service, operations and maintenance costs, and all administrative and general costs. SVP’s portion of the operating and maintenance expenses and the COTP debt service is 10.004 %.
D. M-S-R Public Power Agency (MSR PPA)
MSR PPA is a joint power agency formed in 1980 by the Modesto Irrigation District, the City of Santa Clara, and the City of Redding, California, to develop or acquire and manage electric power resources for the benefit of the members. The personnel of its members and contract professional staff perform the administrative and management functions of MSR PPA. The member’s income and expenses sharing ratio is as follows: Modesto Irrigation District – 50 percent, City of Santa Clara – 35 percent, and City of Redding – 15 percent.
Prior to fiscal year ended December 31, 2020, SVP’s equity in MSR PPA’s net losses exceeds its investments and, therefore, the equity method of accounting for the investment was suspended.
As of December 31, 2024, the date of the latest available audited financial statements, SVP was in a positive equity position of $11.4 million. The equity method of accounting of SVP’s investment in MSR PPA was applied. Under the joint exercise of power agreement, which formed MSR PPA, SVP is responsible for funding up to 35 percent of MSR PPA’s operating cost, to the extent such funding is necessary. During the years ended June 30, 2025 and 2024, SVP funded its share of operating costs in SVP’s expenses.
MSR PPA’s principal activity is a 28.8% ownership interest in a 507-megawatt unit of a coal-fired electricity generating plant located in New Mexico (San Juan Plant). The San Juan plant was jointly owned by the Public Service Company of New Mexico (PNM) (38.5%), MSR PPA (28.8%) and other municipal power entities (32.7%). On December 31, 2017, MSR PPA divested its ownership interest in the San Juan plant and no longer receives electric energy or capacity from the San Juan Generating Station.
In 2006, MSR PPA entered into a Wholesale Purchase and Sale Agreement and a Shaping and Firming Agreement with Avangrid Renewables, Inc. to provide renewable wind energy to the Members from the Big Horn I Wind Energy Project (Big Horn I Project) with a nominal installed Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
53 capacity of approximately 199.5 MW. SVP receives the power purchased by MSR PPA from the B
ig Horn I Project. SVP’s share equates to approximately a 105 MW share of the output. Power deliveries commenced on October 1, 2006 and will continue through September 30, 2026. Through an amendment of the original agreements MSR PPA has an obligation to continue to take the same output through September 30, 2031, or if the Big Horn Project is repowered MSR PPA will have a right of first offer to negotiate a long-term power purchase for such repowered project. The participation in this project is as follows:
Modesto Irrigation District 12.5%
City of Santa Clara 52.5%
City of Redding 35.0%
In 2009, MSR PPA entered into a Power Purchase Agreement and Redelivery Agreement with Avangrid Renewables Inc. to purchase additional wind power energy from the same site, called Big Horn II, with a nominal installed capacity of 50 MW for a twenty-year period. Deliveries of energy under this project began on November 1, 2010. The participation in this project is as follows: Modesto Irrigation District – 65%; City of Santa Clara – 35%.
MSR PPA San Juan
In 2015, the MSR PPA Commission approved a number of agreements (the “San Juan Restructuring Agreements”) to provide for the interests of MSR PPA and certain other San Juan Participants (the “exiting participants”) in the San Juan Generation Station to be transferred to the remaining San Juan Participants effective December 31, 2017. In addition to the ownership divesture, the San Juan Restructuring Agreements provide for, among other things, the allocation of ongoing responsibility for decommissioning costs, mine reclamation costs and any environmental remediation obligations among the exiting participants and the remaining San Juan Participants, and the establishment and funding of mine reclamation and plant decommissioning trust funds. The San Juan Restructuring Agreements were subsequently executed by all nine San Juan Generation Station owners and PNM Resources Development Company (a non-utility affiliate of PNM) and, following receipt of regulatory approvals, became effective on January 31, 2016. Various other implementing agreements and amendments to existing San Juan project agreements to effect the restructuring have also been executed. Closing of the ownership restructuring of the San Juan Generation Station and the divestiture of M-S-R PPA’s interests in San Juan Unit No. 4 was completed on schedule on December 31, 2017. Demolition of the San Juan Generation Station Started in 2025 with completion estimated in 2026.
E. M-S-R Energy Authority (MSR EA)
MSR EA is a joint power agency formed in 2008 by the Modesto Irrigation District, the City of Santa Clara, and the City of Redding, California, to develop or acquire and manage natural gas Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
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NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
54 resources for the benefit of the members. The personnel of its members and contract professional s
taff perform the administrative and management functions of MSR EA. Each member’s income and expense sharing ratio is as follows: Modesto Irrigation District – 33.3%; City of Santa Clara – 33.4%; and City of Redding – 33.3%.
SVP’s equity in MSR EA’s net losses exceeds its investment and, therefore, the equity method of accounting for the investment has been suspended. As of December 31, 2024, the date of the latest available audited financial statements, SVP’s unrecognized share of member’s deficit of MSR EA was $27.2 million. Under the joint exercise of power agreement, which formed MSR EA, SVP is responsible for funding up to 33.4% of MSR EA’s operating cost, to the extent such funding is necessary. During the years ended June 30, 2025 and 2024, SVP funded its share of operating costs in SVP’s expenses.
In 2009, the City of Santa Clara, along with the Cities of Modesto and Redding participated in the M-S-R Energy Authority Gas Prepay Project. The Gas Prepay Project provides the City, through a Gas Supply Agreement with MSR EA dated September 10, 2009, a secure and long-term supply of natural gas of 7,500 MM Btu (Million British thermal unit) daily or 2,730,500 MM Btu annually through December 31, 2012, and 12,500 MM Btu daily, or 4,562,500 MM Btu annually thereafter until September 30, 2039. The agreement provides this supply at a discounted price below the spot market price (the Pacific Gas & Electric City gate index) over the next 30 years. As of December 31, 2024, bonds issued by MSR EA to finance the City’s share of the Gas Prepay Project were outstanding in the principal amount of $474,530,000. These bonds were initially sold on August 27, 2009. Under the Gas Supply Agreement, MSR EA will bill the City for actual quantities of natural gas delivered each month on a “take-and-pay” basis. MSR EA has contracted with Citigroup Energy, Inc. (“CEI”) to use the proceeds of the Gas Prepay bond issue to prepay CEI for natural gas. CEI has guaranteed repayment of the bonds, and responsibility for bond repayment is non-recourse to the City. Moreover, any default by the other Gas Prepay Project participants is also non-recourse to the City.
F. Contingent Liability
Under the terms of the various joint venture agreements, SVP is contingently liable for a portion of the long-term debt of the entities under take-or-pay agreements, letters of credit, guarantees or other similar agreements.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
55 Based on the most recent audited financial statements of the individual joint ventures, SVP was c
ontingently liable for long-term debt as of June 30, 2024 as follows:
Total Debt Silicon Valley Power's Silicon Valley Power's Agreements (Principal) Debt Share Contingent Liability
NCPA 06/30/24 449,300,353$ 35.64% 160,113,100$
TANC 06/30/24 159,565,000 9.65% 15,399,890
TOTAL 608,865,353$ 175,512,990$
In addition, SVP would be, under certain conditions, liable to pay a portion of costs associated with the operations of the entities. Under certain circumstances, such as default or bankruptcy of the other participants, SVP may also be liable to pay a portion of the debt of these joint ventures on behalf of those participants and seek reimbursement from those participants.
Take-or-Pay commitments expire upon final maturity of outstanding debt for each project. Final fiscal year debt expirations as of June 30, 2024 are as follows:
Entitlement Debt Service
Project Debt Expiration Share % Share %
NCPA - Geothermal Project (NGP) July-2024 44.3905% 44.3905% NCPA - Hydroelectric Project (NHP) July-2032 37.0200% 37.0200% NCPA - Lodi Energy Center (NLEC)** June-2040 25.7500% 35.2854% TANC - CA-OR Transmission Project (COTP) May-2039 9.6887% 9.6512% ** The SVP's debt service share in NLEC on issue one is 46.1588%, on issue two is 0%.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 6 – PARTICIPATION IN JOINT VENTURES (continued)
56 A summary of SVP’s “Take-or-Pay” contracts and related projects and its contingent liability for t
he debt service including principal and interest payments at June 30, 2024 is as follows:
Fiscal Year NGP NHP NLEC COTP Total
2025 1,545,765$ 13,367,196 $ 7,565,513 $ 1,465,120$ 23,943,594$ 2026 - 6,817,614 7,581,031 1,464,903 15,863,548 2027 - 6,822,128 7,721,815 1,464,831 16,008,774 2028 - 6,884,294 7,723,465 1,464,806 16,072,565 2029 - 6,815,475 7,723,430 1,464,734 16,003,639 2030-2034 - 28,857,091 38,621,287 7,324,659 74,803,037 2035-2039 - - 38,615,696 7,324,975 45,940,671 2040-2041 - - 14,804,750 - 14,804,750 Total 1,545,765$ 69,563,798$ 130,356,987$ 21,974,028$ 223,440,578$ NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s fiduciary net position have been determined on the same basis as they are reported by the CalPERS Financial Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when currently due and payable in accordance with the benefit terms. Investments are reported at fair value.
A. General Information about the Pension Plan
Plan Descriptions
All qualified regular and probationary employees are required to participate in the City’s Miscellaneous Agent Multiple-Employer defined benefit plan administered by the California Public Employees’ Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating member employers. Benefit provisions under the Plan are established by State statute and City resolution. CalPERS issues a publicly available report that include a full description of the pension plan regarding benefit provisions, assumptions and membership information and can be found on the CalPERS website.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
57 Benefits Provided
CalPERS provides service retirement and disability benefits, annual cost of living adjustments, and death benefits to plan members, who must be public employees or beneficiaries. Benefits are based on years of credited service, equal to one year of full time employment. Members with five years of total service are eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability benefits after 5 years of service. The pre-retirement death benefit is the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are applied as specified by the Public Employees’ Retirement Law.
The Plan’s provisions and benefits in effect at June 30, 2025 and June 30, 2024, are summarized as follows:
Miscellaneous
Hire date
Prior to
January 1, 2013
On or after
January 1, 2013
Benefit formula 2.7% @ 55 2% @ 62
Benefit vesting schedule 5 years service 5 years service Benefit payments monthly for life monthly for life
Retirement age 50 - 55 52 - 67
Monthly benefits, as a % of eligible compensation 2.00 - 2.70% 1.00 - 2.50% Required employee contribution rates 8.00% 7.00%
Required employer contribution rates, June 30, 2025 11.830% 11.830% Required employer contribution rates, June 30, 2024 11.160% 11.160% June 30, 2025 June 30, 2024
Required unfunded liability contribution $9,564,329 $8,571,789 Contributions
Section 20814(c) of the California Public Employees’ Retirement Law requires that the employer contribution rates for all public employers are determined on an annual basis by the actuary and shall be effective on the July 1 following notice of a change in the rate. Funding contributions are determined annually on an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to finance the costs of benefits earned by employees during the year, with an additional amount to finance any unfunded accrued liability. SVP is required to contribute the difference between the actuarially determined rate and the contribution rate of employees.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
58 The contributions to the Plan were as follows:
June 30, 2025 June 30, 2024
Contributions - employer $13,152,459 $11,871,745
Miscellaneous
B. Net Pension Liability, Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
SVP reported a net pension liability for its proportionate share of the net pension liability of the Plan as follows:
June 30, 2025 June 30, 2024
Miscellaneous 103,868,311$ 108,269,790$
Proportionate Share of Net Pension Liability
SVP’s net pension liability for the Plan is measured as the proportionate share of the net pension liability. The net pension liability of the Plan is measured as of June 30, 2024, and the total pension liability for the Plan used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2023 rolled forward to June 30, 2024 using standard update procedures.
SVP’s proportion of the net pension liability was based on a projection of SVP’s long-term share of contributions to the pension plan relative to the projected contributions of all funds of the City.
SVP’s proportionate share of the net pension liability for the Plan as of June 30, 2025 and 2024 was 32.31%.
For the years ended June 30, 2025 and 2024, SVP recognized pension expense of $14,210,280 and $15,598,392 respectively. At June 30, 2025 and 2024, SVP reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:
Miscellaneous Plan:
Deferred Outflows Deferred Inflows
June 30, 2025 of Resources of Resources
Pension contributions subsequent to measurement date 13,152,459$ -$ Changes of assumptions 923,587 -
Differences between expected and actual experience 2,587,826 (136,885) Net differences between projected and actual earnings
on plan investments 2,631,524 -
Total 19,295,396$ (136,885)$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
59 Deferred Outflows Deferred Inflows
June 30, 2024 of Resources of Resources
Pension contributions subsequent to measurement date 11,871,745$ -$ Changes of assumptions 3,232,554 -
Differences between expected and actual experience 1,737,475 (479,098) Net differences between projected and actual earnings
on plan investments 8,255,134 -
Total 25,096,908$ (479,098)$
$13,152,459 reported as deferred outflows of resources related to contributions subsequent to the June 30, 2025 measurement date will be recognized as a reduction of the net pension liability in the year ended June 30, 2026. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized as pension expense as follows:
Measurement Period Annual Measurement Period Annual
Ended June 30 Amortization Ended June 30 Amortization
2025 1,976,536$ 2024 4,182,884$
2026 5,700,456 2025 2,313,824
2027 (623,077) 2026 6,037,743
2028 (1,047,863) 2027 211,614
2025 2024
C. Actuarial Assumptions
For the measurement period ended June 30, 2024, the total pension liability was determined by rolling forward the June 30, 2023 total pension liability. The June 30, 2023 total pension liability was based on the following actuarial methods and assumptions:
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
60 Miscellaneous
Valuation Date June 30, 2023
Measurement Date June 30, 2024
Actuarial Cost Method Entry-Age Normal Cost Method
Actuarial Assumptions:
Discount Rate 6.90%
Inflation 2.30%
Payroll Growth 2.80%
Projected Salary Increase Varies by Entry-Age and Service Investment Rate of Return 6.80% (1)
Post Retirement Benefit Increase The lesser of Contract COLA or 2.3% until Purchasing Power Protection applies, 2.3%
thereafter
Mortality (2) Derived using CalPERS' Membership Data for all Funds
(1) Net of pension plan investment and administrative expenses; including inflation. (2) The probabilities of mortality are based on the 2021 CalPERS Experience Study for the p
eriod from 2000 to 2019. Pre-retirement and post-retirement mortality rates include generational mortality improvement using 80% of Scale MP-2020 published by the Society of Actuaries. For more details on this table, please refer to the CalPERS' November 2021 experience study report available on CalPERS' website.
The underlying mortality assumptions and all other actual assumptions used in the June 30, 2023 valuation were based on the results of a December 2021 actuarial experience study for the period 2000 to 2019. Further details of the Experience Study can be found on the CalPERS website.
Discount Rate
The discount rate used to measure the total pension liability for the Plan was 6.90%. The projection of cash flows used to determine the discount rate for the Plan assumed that contributions from all plan members in the Public Employees Retirement Fund (PERF) will be made at the current member contribution rates and that contributions from employers will be made statutorily required rates, actuarially determined. Based on those assumptions, the Plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members for all plans in the PERF. Therefore, the long-term expected rate of return on plan investments Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
61 was applied to all period of projected benefit payments to determine the total pension liability for t
he Plan.
The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term market return expectations as well as the expected pension fund cash flows. Using historical returns of all the funds’ assets classes, expected compound (geometric) returns were calculated over the short-term (first 10 years) and the long-term (11+ years) using a building-block approach. Using the expected nominal returns for both short-term and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by calculating the rounded single equivalent expected return that arrived at the same present value of benefits for cash flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set equal to the single equivalent rate calculated above and adjusted to account for assumed administrative expenses.
The table below reflects the long-term expected real rate of return by asset class.
Asset Class(a)
Assumed Asset
A
llocation Real Return (a)(b)
Global Equity - Cap-weighted 3 0.0% 4.54%
Global Equity - Non-Cap-weighted 12.0% 3.84%
Private Equity 13.0% 7.28%
Treasury 5.0% 0.27%
Mortgage-backed Securities 5.0% 0.50%
Investment Grade Corporates 10.0% 1.56%
High Yield 5.0% 2.27%
Emerging Market Debt 5.0% 2.48%
Private Debt 5.0% 3.57%
Real Assets 15.0% 3.21%
Leverage -5.0% -0.59%
100.0%
(b) Figures are based on the 2021 Asset Liability Management Study. (a) An expected inflation of 2.30% used for this period.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 7 – RETIREMENT PLAN – DEFINED BENEFIT PENSION PLAN (continued)
62 Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate
The following presents SVP’s proportionate share of the net pension liability for the Plan, calculated using the discount rate for the Plan, as well as what SVP’s proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower or 1-percentage point higher than the current rate:
June 30, 2025 June 30, 2024
1% Decrease 5.90% 5.90%
Net Pension Liability 141,763,931$ 144,951,938$
Current Discount Rate 6.90% 6.90%
Net Pension Liability 103,868,311$ 108,269,790$
1% Increase 7.90% 7.90%
Net Pension Liability 72,380,300$ 77,805,619$
Miscellaneous
Pension Plan Fiduciary Net Position
Detailed information about the pension plan’s fiduciary net position is available in the separately issued CalPERS financial report.
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS
A. Plan Description
The City’s agent multiple-employer defined benefit Other Post Employment Benefit (OPEB) Plan, which was established by City Council in fiscal year 2007-08 in accordance with GAAP, provides reimbursements to retirees for qualified expenses. Employees who have retired from the City with at least ten years of service and meet certain criterion based upon retirement date, household income in the most recent calendar year and age are entitled to reimbursements for qualified expenses. Annual maximum reimbursement amounts differ depending on when an employee retired from City service. The majority of retirees may be eligible for a maximum of annual reimbursements of $5,046 in the fiscal year 2024-25 and $4,932 in the fiscal year 2023-24.
Amendments to benefit provisions are negotiated by the various bargaining units at the City and must be approved by Council. In fiscal year 2007-08, the City established an irrevocable exclusive agent multiple-employer defined benefit trust which is administered by Public Agency Retirement Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
63 Services (PARS). The City is the Plan administrator, and PARS administers the investment trust f
or the City’s Plan. The trust is used to accumulate and invest assets necessary to reimburse retirees. Separate financial reports are issued by PARS for the OPEB Plan Trust. The report can be obtained by writing to PARS at 4350 Von Karman Avenue, Suite 100, Newport Beach, CA 92660, or by calling 1-800-540-6369.
For purposes of measuring the net OPEB liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the OPEB plan and additions to and deduction from the OPEB’s fiduciary net position have been determined on the same bases. For this purpose OPEB benefit payments are recognized when currently due and payable in accordance with the benefits terms. Investments are report at fair value.
Generally accepted accounting principles require that the reporting results must pertain to liability and asset information within certain defined timeframes. For the fiscal year 2024-25 and the fiscal year 2023-24, the following time frames were used.
Fiscal year 2024-25
Measurement Date June 30, 2025
Measurement Period July 1, 2024 to June 30, 2025
Actuarial valuation date
(1)
June 30, 2024
Fiscal year 2023-24
Measurement Date June 30, 2024
Measurement Period July 1, 2023 to June 30, 2024
Actuarial valuation date
(1)
June 30, 2022
(1)
Update procedures were used to roll forward the Total OPEB Liability from the valuation date to the measurement date.
B. Contributions
The OPEB Plan trust annual contributions are based upon actuarial determine contributions. The contribution requirements are established and may be amended by the City Council. Plan members do not make contributions to the plan; the plan is funded entirely by employer contributions. For the fiscal year ending June 30, 2025 and June 30, 2024, SVP contributed $865 thousand and $812 thousand, respectively.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
64 C. A ctuarial Assumptions
The June 30, 2025 total OPEB liability was based on the following actuarial methods and assumptions:
Significant Actuarial Assumptions Used in Total OPEB Liability Actuarial Assumption June 30, 2025 Measurement Date
Actuarial valuation date June 30, 2024
Discount rate 4.50% at June 30, 2025
Crossover analysis showed benefit payments always fully funded by plan assets
Inflation 2.50%
Salary increases Aggregate 2.75%
Investment rate of return 4.50% at June 30, 2025
Funding policy Full pre-funding to PARS trust, PARS portfolio: Moderately Conservative Mortality, Disability,
Termination, and Retirement
CalPERS 2000-2019 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2021 Healthcare cost trend rates Non-Medicare - 7.9% for 2026 scaling down to 3.45% for year 2076 Medicare(Non-Kaiser) - 6.9% for 2026 scaling down to 3.45% for year 2076 Medicare(Kaiser) - 5.65% for 2026 scaling down to 3.45% for year 2076 Healthcare participation for future
retirees - Cash subsidy
PEMHCA minimum only: Currently covered: 50% Waived: 25% Other plans: Currently covered: 80% Waived: 40%
Healthcare participation for future
retirees - PEMHCA implied
subsidy
PEMHCA minimum only: Currently covered: 50% Waived: 25% Other plans: Currently covered: 80% Waived: 25%
The June 30, 2024 total OPEB liability was based on the following actuarial methods and assumptions:
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
65 Significant Actuarial Assumptions Used in Total OPEB Liability Actuarial Assumption June 30, 2024 Measurement Date
Actuarial valuation date June 30, 2022
Discount rate 4.50% at June 30, 2024
Crossover analysis showed benefit payments always fully funded by plan assets
Inflation
2.50%
Salary increases Aggregate 2.75%
Investment rate of return 4.50% at June 30, 2024
Funding policy Full pre-funding to PARS trust, PARS portfolio: Moderately Conservative Mortality, Disability,
Termination, and Retirement
CalPERS 2000-2019 Experience Study
Mortality Improvement Mortality projected fully generational with Scale MP-2021 Healthcare cost trend rates Non-Medicare - 8.5% for 2024 scaling down to 3.45% for year 2076 Medicare(Non-Kaiser) - 7.5% for 2024 scaling down to 3.45% for year 2076 Medicare(Kaiser) - 6.25% for 2024 scaling down to 3.45% for year 2076 Healthcare participation for future
retirees - Cash subsidy
PEMHCA minimum only: Currently covered: 50% Waived: 25% Other plans: Currently covered: 80% Waived: 25%
Healthcare participation for future
retirees - PEMHCA implied
subsidy
PEMHCA minimum only: Currently covered: 50% Waived: 25% Other plans: Currently covered: 80% Waived: 25%
D. Net OPEB Liability, OPEB Expenses and Deferred Outflows/Inflows of Resources Related to OPEB
SVP’s net OPEB liability for the Plan is measured as the proportionate share of the City’s net OPEB liability as of June 30. The total OPEB liability for the Plan used to calculate the net OPEB liability for the fiscal year 2024-25 was determined by an actuarial valuation as of June 30, 2024, rolled forward to June 30, 2025 using standard actuarial methods, based on actuarial methods and assumptions. The total OPEB liability for the Plan used to calculate the net OPEB liability for the fiscal year 2023-24 was determined by an actuarial valuation as of June 30, 2022, rolled forward to June 30, 2024 using standard actuarial methods, based on actuarial methods and assumptions.
SVP’s proportion of the net OPEB liability was based on a projection of SVP’s long-term share of contributions to the OPEB plan relative to the projected contributions of all funds of the City.
SVP’s proportionate share of the net OPEB liability for the Plan as of June 30, 2025 and 2024 was
19.32%.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
66 For the year ended June 30, 2025, SVP reported a net OPEB liability of $6.727 million and r
ecognized OPEB expense of $606 thousand. For the year ended June 30, 2024, SVP reported a net OPEB liability of $6.898 million and recognized OPEB expense of $403 thousand. At June 30, 2025 and 2024, SVP reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources (in thousands):
June 30, 2025
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Changes of assumptions 68$ 75$
Differences between expected and actual experience 372 175 Net differences between projected and actual earnings
on OPEB plan investments - 174
Total 440$ 424$
June 30, 2024
Deferred Outflows
of Resources
Deferred Inflows
of Resources
Changes of assumptions 121$ 135$
Differences between expected and actual experience - 248 Net differences between projected and actual earnings
on OPEB plan investments 190 -
Total 311$ 383$
Other amounts reported as deferred outflows of resources related to OPEB will be recognized as expense as follows:
Annual Annual
Measurement Period Amortization Measurement Period Amortization Ended June 30 (in thousands) Ended June 30 (in thousands) 2026 122 $ 2025 13$
2027 (87) 2026 121
2028 (108) 2027 (88)
2029 (7) 2028 (110)
2030 69 2029 (8)
Thereafter 27 Thereafter -
2025 2024
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
67 E. D iscount Rate
The discount rate used to measure the total OPEB liability was 4.50% as of June 30, 2025 and June 30, 2024. The projection of cash flows used to determine the discount rate assumed that City contributions will be made at rate equal to the actuarially determined contributions rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability.
Asset Class
Target
Allocation
Long-Term Expected
Real Rate of Return
Gloabal Equity 30% 4.56%
Mutual Funds - Fixed Income 65% 0.78%
Cash and equivalent 5% -0.50%
100%
Expected Inflation 2.50%
Discount Rate 4.50%
2025 and 2004
F. Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following table presents the net OPEB liability of the Plan as of June 30 as well as what the plan’s net OPEB liability would be if it were calculated using a discount rate that is 1% point lower or 1% point higher than the current rate.
June 30, 2025
(In Thousands)
June 30, 2024
(In Thousands)
1% Decrease 3.50% 3.50%
Net OPEB Liability 8,529$ 8,601$
Current Discount Rate 4.50% 4.50%
Net OPEB Liability 6,727$ 6,898$
1% Increase 5.50% 5.50%
Net OPEB Liability 5,229$ 5,486$
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 8 – OTHER POST EMPLOYMENT BENEFITS (continued)
68 G. S ensitivity of the Net OPEB Liability to Healthcare Cost Trend Rates The following table presents the net OPEB liability of the City, as of June 30, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% point lower or 1% point higher than the current rate.
June 30, 2025
(In Thousands)
June 30, 2024
(In Thousands)
Net OPEB Liability
1% Decrease $4,907 $5,084
Net OPEB Liability
Current Rate $6,727 $6,898
Net OPEB Liability
1% Increase $8,979 $9,149
NOTE 9 – WHOLESALE ACTIVITIES
A. Long-term Power Purchase Contracts
SVP purchases wholesale electric power from various participants of the Western Systems Power Pool (WSPP), NCPA, MSR Public Power Agency (Note 6), Western Area Power Administration, and other sources to supply the power requirements of Silicon Valley Power’s electric utility customers under long-term power purchase agreements (PPAs). SVP actively manages the financial risks inherent in these PPAs, including the risks arising from the changing spot market prices that move above and below the contract prices and from contract disputes that may arise from time to time. The proceeds and costs related to generation, either owned or under PPAs, except ancillary services are included in purchased resource expense and excluded from wholesale resources purchases from wholesale resources purchases and sales.
B. Restructuring of the California Electric Industry
Deregulation Legislation and Direct Access
The passage of AB1890 in 1998 triggered fundamental changes in the structure of the electric industry in California. Generally, AB1890 provided for creation of the California Power Exchange (Cal PX), which was to be a clearinghouse for energy transactions among investor-owned utilities, independent generators and power marketers, who in turn would serve so called direct-access customers. AB1890 also created the California Independent System Operator (CAISO), which was to manage the state’s bulk transmission grid.
Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 9 – WHOLESALE ACTIVITIES (continued)
69 However, in 2000 and 2001, the price of electricity at the Cal PX became extremely high, and i
nvestor-owned utilities were unable to pay for the energy that they needed from the Cal PX.
Eventually the Cal PX filed for bankruptcy and was dismantled. Investor-owned utility PG&E and several energy marketers would also file for bankruptcy and over a decade of litigation ensued.
The CAISO, however, continues to manage the state’s bulk electric system and the day-ahead and day-of markets, and it has implemented various price controls and tariffs in an effort to avoid repeating the mistakes of 2000 and 2001. Along with balancing control area responsibility, the CAISO has also announced that it will take on the role of reliability coordinator for the region.
Energy Wholesale Trading and Risk Management
SVP participates in the wholesale gas and power market and the CAISO’s centralized market.
Since CAISO’s Market Redesign and Technology Upgrade (MRTU), CAISO has become the ultimate buyer and seller in the California day ahead market. Therefore, SVP engages in the trading of commodity forward contracts (gas and electric energy contracts) to secure fuel supply and hedge daily power purchase/sales from/to CAISO. The primary type of forward contracts SVP currently engages in is the futures contracts SVP transacts on Intercontinental Exchange (ICE).
Activities during the fiscal year were substantially considered hedging transactions and, as such, have been accounted for using the settlement method of accounting. Accordingly, wholesale resources gross sales and purchases totaling $14.6 million and $8.5 million, respectively, for fiscal year ended June 30, 2025; wholesale resources gross sales and purchases totaling $11.5 million and $9.8 million, respectively, for fiscal year ended June 30, 2024, have been separately reported on the statement of revenues, expenses and changes in net position.
The restructured electric wholesale market exposes SVP to various risks including market, credit and operational risks. Active and effective management of these risks associated with the power trading activity is critical to its continued success and contribution to the entire utility. A Risk Management Committee administers and monitors compliance with the Council approved risk policies and the related procedures on a regular basis. The City and SVP believe that it has the resource commitment, effective policies and procedures, and is continuing to improve the control structure and oversight for evaluating and managing the market and credit risks to which it is exposed.
Credit Arrangements
SVP has risk policies, regulations, and procedures that help mitigate credit risk and minimize overall credit risk exposure. The policies include transacting only with investment grade counterparties, evaluating of potential counterparties’ financial condition and assigning credit limits as applicable. These credit limits are established based on risk and return considerations under terms customarily available in the industry. For counterparties below investment grade or Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 9 – WHOLESALE ACTIVITIES (continued)
70 lack of solid financial records, SVP requires collateral in the form of parental guarantee, surety b
onds, letter of credit, or cash prepayment. Additionally, The City is a signatory to the WSPP netting agreement supplement and otherwise, enters into master netting arrangements whenever possible and, where appropriate, obtains collateral prior to trade execution. Master netting agreements incorporate rights of setoff that provide for the net settlement of subject contracts with the same counterparty in the event of default.
NOTE 10 – MAJOR SUPPLIERS
SVP purchases electric energy through its participation in the NCPA and M-S-R Public Power Agency joint powers agencies, from the Western Area Power Administration, from the market via the California Independent System Operator (CAISO), and from other sources to supply its retail electric utility customers. Additionally, SVP purchases transmission services through its participation in the TANC and from the CAISO.
The purchases of energy and transmission services that represent 5% or more of the total purchased power costs are shown in the table below:
Supplier
June 30, 2025
Power Purchased
% of the Total
Purchased Power
NCPA 240,570,434$ 55.62%
Tri-Dam Project 45,270,021 10.47%
M-S-R Public Power Agency 21,920,657 5.07% Supplier
June 30, 2024
Power Purchased
% of the Total
Purchased Power
NCPA 201,619,042$ 49.63%
Tri-Dam Project 40,670,953 10.01%
M-S-R Public Power Agency 21,687,301 5.34%
NOTE 11 – COMMITMENTS AND CONTINGENCIES
Commitments and contingencies, undeterminable in amount, include normal recurring pending claims and litigation. In the opinion of management, based upon discussion with legal counsel, there is no pending litigation, which is likely to have a material adverse effect on the financial position of the fund.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 11 – COMMITMENTS AND CONTINGENCIES (continued)
71 SVP has future commitments under construction projects as stated in Construction in Progress in No
tes to Financial Statements 4B.
NOTE 12 – NET POSITION AND STABILIZATION AGREEMENTS
A. Net Position
Net Position is the excess of all SVP’s assets and deferred outflow of resources over all its liabilities and deferred inflow of resources. Net Position is divided into three categories that are described below:
Net investment in capital assets describes the portion of Net Position which is represented by the current net book value of SVP’s capital assets, less the outstanding balance of any debt issued to finance these assets.
Restricted for other agreements describes the portion of Net Position which is restricted as to use by the terms and conditions of agreements with outside parties, governmental regulations, laws, or other restrictions which SVP cannot unilaterally alter.
Unrestricted describes the portion of Net Position which is not restricted as to use.
SVP reported net position at June 30 as follows:
2025 2024(A)
Net investment in capital assets: 502,836,449$ 575,817,583$ Restricted:
Pension benefits 11,792,344 10,065,874 Unrestricted:
Capital projects 289,806,547 212,222,222 Rate stabilization 352,000,000 261,000,000 Operations 414,617,549 231,273,482
Total Unrestricted 1,056,424,096 704,495,704 Total Net Position 1,571,052,889$ 1,290,379,161$ (A)
Certain amounts have been restated due to the implementation of GASB101, as discussed in Note 2I Draft
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
NOTES TO FINANCIAL STATEMENTS
For the years ended June 30, 2025 and 2024
NOTE 12 – NET POSITION AND STABILIZATION AGREEMENTS (continued)
72 B. S tabilization Agreements
Rate Stabilization Fund
In 1996, SVP established the Rate Stabilization Fund and Cost Reduction Fund to assure that the rates were set properly with sufficient operating cash as well as cost reduction and financial stability of the Electric Utility. In December 2010, Council approved to transfer the Cost Reduction Fund as a subaccount to the Rate Stabilization Fund and continued to be used to offset Electric Utility costs in essentially the same manner. As of June 30, 2025, the balance of the Rate Stabilization Fund was $352 million.
Pension Stabilization Fund
In fiscal year 2016-17, the City established an irrevocable pension trust as a way to address unfunded pension liabilities. As part of the year-end process for 2016-17, City Council approved SVP to designate and make an initial deposit of $3.5 million in fiscal year 2018 toward prefunding pension obligations. As of June 30, 2025, the balance of the Pension Stabilization Fund was $11,792,344.
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CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
REQUIRED SUPPLEMENTARY INFORMATION
73 Th
is part of the City of Santa Clara Electric Utility Enterprise Fund Financial Statements provides detailed information to better understand the data presented within the financial statements and note disclosures.
SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY AND
RELATED RATIOS
Discloses the proportionate share of the net pension liability and related ratios, including the proportionate share of fiduciary net position as a percentage of the total pension liability, and proportionate share of the net pension liability as a percentage of covered payroll.
SCHEDULE OF CONTRIBUTIONS – PENSION PLAN
Contains information of the employer’s contractually required contribution rates, contributions to the pension plan and related ratios.
SCHEDULE OF PROPORTIONATE SHARE OF THE NET OPEB LIABILITY AND
RELATED RATIOS
Discloses the proportionate share of the net OPEB liability and related ratios, including proportionate share of fiduciary net position as a percentage of the total OPEB liability, and the proportionate share of the net OPEB liability as a percentage of covered employee payroll.
SCHEDULE OF PLAN CONTRIBUTIONS - OPEB PLAN
Contains information of the employer’s contractually required contribution rates, contributions to the OPEB Plan and related ratios.
Required Supplementary Information
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74 Measurement Date J une 30, 2024 June 30, 2023 June 30, 2022 June 30, 2021 Plan's Proportion of the Net Position
Liability/(Asset) 32.31% 32.31% 32.31% 32.31%
Plan's Proportionate Share of the Net
Pension Liability/(Asset) 103,868,311$ 108,269,790$ 105,823,291$ 73,533,480$ Plan's Covered Payroll 33,220,790$ 32,408,374$ 29,932,874$ 28,859,863$ Plan's Proportionate Share of the Net
Pension Liability/(Asset) as a Percentage
of it's Covered Payroll 312.66% 334.08% 353.54% 254.79% Plan's Proportionate Share of the Fiduciary
Net Position as a Percentage of the Plan's
T
otal Pension Liability 65.82% 63.05% 62.47% 72.48%
Schedule of Proportionate Share of the Net Pension Liability City of Santa Clara Electric Utility Enterprise Fund Miscellaneous Plan, a Cost-Sharing Defined Benefit Pension Plan
Last Ten Fiscal Years for the Measurement Periods Ended June 30 (1)
Schedule of Changes in the Net Pension Liability and Related Ratios Schedule of Proportionate Share of the Net Pension Liability
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75 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 June 30, 2015
32.31% 32.31% 34.97% 34.97% 34.97% 34.97%
98,396,395$ 92,007,139$ 94,238,259$ 92,735,319$ 84,615,916$ 74,516,387$ 28,818,319$ 28,630,755$ 26,407,732$ 24,928,548$ 21,661,244$ 20,300,577$ 341.44% 321.36% 356.86% 372.00% 390.63% 367.07%
61.90% 62.72% 62.97% 62.02% 62.18% 65.57%
Schedule of Proportionate Share of the Net Pension Liability City of Santa Clara Electric Utility Enterprise Fund Miscellaneous Plan, a Cost-Sharing Defined Benefit Pension Plan
Last Ten Fiscal Years for the Measurement Periods Ended June 30
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76 June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 Actuarially determined contribution 1 3,152,460 $ 11,871,745$ 11,321,067$ 11,026,399$ Contributions in relation to the
actuarially (13,152,460) (11,871,745) (11,321,067) (11,026,399) Contribution deficiency (excess) - $ -$ - $ - $ Covered payroll 35,727,992 $ 33,220,790$ 32,408,374$ 29,932,874$ Contributions as a percentage of
covered payroll 36.81% 35.74% 34.93% 36.84%
Notes to Schedule
Valuation date 6/30/2022 6/30/2021 6/30/2020 6/30/2019
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal
Amortization method Level percentage of payroll, closed Remaining amortization period 22 years as of valuation date Asset valuation method
Inflation
Salary increases
Investment rate of return
Retirement age
Mortality
(1)
Fiscal year 2014-15 was the first year of implementation.
Schedule of Contributions
C
ity of Santa Clara Electric Utility Enterprise Fund Miscellaneous Plan, a Cost-Sharing Defined Benefit Pension Plan
Last Ten Fiscal Years (1)
7.5% for 2015 to 2018, 7.375% for 2019, 7.25% for 2020, 7% for 2021 through 2 022, and 6.8% for 2023 to 2025, net of pension plan investment expense, including inflation.
2.75% for 2015 to 2019, 2.675% for 2020, and 2.50% for 2021 through 2022, 2.30% for 2023 to 2025
Fair value of asets
The probabilities of Retirement are based on the CalPERS Experience Study.
Varies by Entry Age and Service.
The probabilities of mortality are based on the 2021 CalPERS Experience Study for the period from 2000 to 2019. Pre-retirement and Post-retirement mortality rates are projected generationally for future years using 80% of Scale, MP-2020 published by the Society of Actuaries.
Schedule of Contributions (Pension Plan)
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77 June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 June 30, 2017 June 30, 2016 10,027,454$ 9,365,958$ 8,258,503 $ 8,832,105 $ 7,558,410 $ 6,484,674 $ (10,027,454) (9,365,958) (8,258,503) (8,832,105) (7,558,410) (6,484,674) - $ - $ - $ - $ - $ - $ 28,859,863$ 28,818,319$ 28,630,755 $ 26,407,732 $ 24,928,548 $ 21,661,244 $
34.75% 32.50% 28.84% 33.45% 30.32% 29.94%
6/30/2018 6/30/2017 6/30/2016 6/30/2015 6/30/2014 6/30/2013 Schedule of Contributions
City of Santa Clara Electric Utility Enterprise Fund Miscellaneous Plan, a Cost-Sharing Defined Benefit Pension Plan
Last Ten Fiscal Years
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78 Measurement Date
June 30,
2025
June 30,
2024
June 30,
2023
June 30,
2022
Liability/(Asset) 19.32% 19.32% 19.32% 32.31%
Plan's Proportionate Share of the Net OPEB
Liability/(Asset) 6,727,406$ 6,898,479$ 7,288,705$ 13,057,945$ Plan's Covered Payroll 39,475,246$ 37,402,861$ 34,795,415$ 54,801,960$ Plan's Proportionate Share of the Net OPEB
Liability/(Asset) as a Percentage of it's Covered Payroll 17.04% 18.44% 20.95% 23.83% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Plan's Total OPEB Liability 52.60% 48.40% 44.03% 40.25% June 30,
2021
June 30,
2020
June 30,
2019
June 30,
2018
Plan's Proportionate Share of the Net Position
Liability/(Asset) 32.31% 32.31% 34.97% 34.97%
Liability/(Asset) 11,860,957$ 12,076,500 $ 13,339,656 $ 16,285,879 $ Plan's Covered Payroll 52,857,221$ 53,127,656 $ 52,963,135 $ 47,313,294 $ Plan's Proportionate Share of the Net OPEB
Liability/(Asset) as a Percentage of it's Covered Payroll 22.44% 22.73% 25.19% 34.42% Plan's Proportionate Share of the Fiduciary Net Position as a Percentage of the Plan's Total OPEB Liability 44.03% 40.11% 37.14% 28.90% Notes to Schedule:
Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios City of Santa Clara Electric Utility Enterprise Fund
OPEB Plan, A Cost-Sharing Defined Benefit Plan
Last Ten Fiscal Years Ended June 30
(1)
(1)
Fiscal year 2017-18 was the first year of implementation.
Schedule of Proportionate Share of the Net OPEB Liability and Related Ratios
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79 June 30, 2025 June 30, 2024 June 30, 2023 June 30, 2022 Actuarially determined contribution 1 ,047$ 1,010$ 946$ 1,534$ Contributions in relation to the actuarially
determined contributions (865) (812) (758) (635) Contribution deficiency (excess) 182$ 198$ 188$ 899$ Covered payroll 39,475$ 37,403$ 34,795$ 54,802$ Contributions as a percentage of covered payroll 2.19% 2.17% 2.18% 1.16% June 30, 2021 June 30, 2020 June 30, 2019 June 30, 2018 Actuarially determined contribution 1 ,559$ 1,512$ 1,856$ 1,911$ Contributions in relation to the actuarially
determined contributions (570) (638) (748) (886) Contribution deficiency (excess) 989$ 874$ 1,108$ 1,025$ Covered payroll 52,857$ 53,128$ 52,963$ 47,313$ Contributions as a percentage of covered payroll 1.08% 1.20% 1.41% 1.87% Notes to Schedule:
(1)
Fiscal year 2017-18 was the first year of implementation. (
In Thousands)
Schedule of Proportionate Share of Contributions
City of Santa Clara Electric Utility Enterprise Fund
OPEB Plan, A Cost-Sharing Defined Benefit Plan
Last Ten Fiscal Years Ended June 30 (1)
Schedule of Proportionate Share of the Contributions (OPEB Plan)
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80 Actuarial valuation date June 30, 2022
Actuarial cost method Entry Age Normal, Level Percentage of Payroll Amortization method Level percent of payroll
Unfunded liability amortization
Asset valuation method
Discount rate 4.50%
General inflation 2.50%
Healthcare trend
Mortality CalPERS 2000-2019 Experience Study
Mortality improvement
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
Notes to Schedule of Employer Contribution (OPEB Plan)
Post-retirement mortality projected fully generational with Scale MP-2021
Methods and Assumptions for 2023-24 Actuarially Determine Contributions 15 years (open period) for method, assumption, plan changes, and gains and losses
Maximum 30-year combined period
Investment gains and losses spread over a 5-year rolling period.
Not less that 80% nor greater than 120% of fair value
Non-Medicare - 8.5% for 2024, decreasing to an ultimated rate of 3.45% in 2076
Medicare (non-Kaiser) - 7.5% for 2024, decreasing to an ultimated rate of 3.45% in 2076
30 years (closed period) for initial UAAL
(16 Years remaining on June 30, 2023)
20 years (closed period) for implied subsidy on 06/30/2019 (16 years remaining on June 30, 2023)
Medicare (Kaiser) - 6.25% for 2024, decreasing to an ultimated rate of 3.45% in 2076
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81 Actuarial valuation date June 30, 2022
Actuarial cost method Entry Age Normal, Level Percentage of Payroll Amortization method Level percent of payroll
Unfunded liability amortization
Asset valuation method
Discount rate 4.50%
General inflation 2.50%
Healthcare trend
Mortality CalPERS 2000-2019 Experience Study
Mortality improvement
30 years (closed period) for initial UAAL
(15 Years remaining on June 30, 2024)
20 years (closed period) for implied subsidy on 06/30/2019 (15 years remaining on June 30, 2024)
15 years (open period) for method, assumption, plan changes, and gains and losses
Methods and Assumptions for 2024-25 Actuarially Determine Contributions
CITY OF SANTA CLARA ELECTRIC UTILITY ENTERPRISE FUND
(SILICON VALLEY POWER)
Notes to Schedule of Employer Contribution (OPEB Plan)
Post-retirement mortality projected fully generational with Scale MP-2021
Maximum 30-year combined period
Non-Medicare - 8.50% for 2024, decreasing to an ultimated rate of 3.45% in 2076
Medicare (non-Kaiser)- 7.50% for 2024, decreasing to an ultimated rate of 3.45% in 2076
Investment gains and losses spread over a 5-year rolling period.
Medicare (Kaiser)- 6.25% for 2024, decreasing to an ultimated rate of 3.45% in 2076
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C
ITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
FOR THE YEAR ENDED JUNE 30, 2025
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
For the Year Ended June 30, 2025
Table of Contents
Page
Memorandum on Internal Control ...................................................................................................... 1
City:
Schedule of Other Matters ..................................................................................................... 3
Status of Prior Year Other Matters ...................................................................................... xx
Santa Clara Stadium Authority:
Schedule of Material Weaknesses ....................................................................................... xx
Status of Prior Year Significant Deficiencies ...................................................................... 11
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MEMORANDUM ON INTERNAL CONTROL
To the City Council of
the City of Santa Clara, California
We have audited the basic financial statements of the City of Santa Clara for the year ended June 30, 2025 and have issued our report there on dated DATE, 2025. Our opinions on the basic financial statements and this report, insofar as they relate to the component unit of the Santa Clara Stadium Authority, and the Investments in Joint Ventures of the Northern Ca lifornia Power Agency (NCPA), the Transmission Agency of Northern California (TANC), M-S-R En ergy Authority (MSR EA), M-S-R Public Power Agency (MSR PPA) and the San Jose-Santa Clar a Regional Wastewater Facility and Clean Water Financing Authority (SJSC), are based solely on the reports of other auditors. In planning and performing our audit of the basic financial statements of the C ity as of and for the year ended June 30, 2025, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opi nion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control.
Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in inte rnal control that might be material weaknesses or significant deficiencies and therefore material weakne sses or significant deficiencies may exist that were not identified. In addition, because of inherent limita tions in internal control, including the possibility of management override of controls, misstatements due to error or fraud may occur and not be detected by such controls. However, as discussed below, we identified certain deficiencies in internal control that we consider to be material weaknesses.
A deficiency in internal control exists when th e design or operation of a control does not allow management or employees, in the normal course of performing their assigned func tions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City’s financial statements will not be prevente d, or detected and corrected on a timely basis. We consider the deficiencies in internal control incl uded on the Schedule of Material Weaknesses to be material weaknesses.
A significant deficiency is a deficiency , or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important e nough to merit attention by those charged with governance.
Included in the Schedule of Other Matters are recommendations not meeting the above definitions that we believe are opportunities for strengthening internal controls and operating efficiency.
Government Auditing Standards require the auditor to perform lim ited procedures on the City’s response to the findings identified in our audit and described in the accompanying Schedule of Material Weaknesses and Schedule of Other Matters. The City’s response was not subjected to the other auditing procedures applied in the audit of the financial statem ents and, accordingly, we express no opinion on the response.
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The Schedule of Material Weaknesses and Status of Prior Year Significant Deficiencies for the Santa Clara Stadium Authority was provided by the other aud itors, as we did not audit that entity, are based solely on the report of other auditors.
This communication is intended solely for the inform ation and use of management, City Council, others within the organization, and agencies and pass-through entities requiring compliance with Government Auditing Standards, and is not intended to be and should not be used by anyone other than these specified parties.
Pleasant Hill, California
DATE, 2025
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SCHEDULE OF OTHER MATTERS
2025-01 Mission City Memorial Park Payment Collection Procedures
Daily cash collections should be reconciled to invoi ces and deposits and the revi ew and approval of the documents should demonstrate the segregation of duties between those involved with the process.
We reviewed the cash collection procedures at the Mission City Memorial Park (MCMP) and the three items that the staff prepares related to cash collections to test for segregation of duties and timeliness of the review and approval process. The three items prepared include invoices, cashier deposit listing and monthly activity reports. We selected two copies of each item and noted the following:
1. Invoices – we noted the two invoices selected for testing from December 2024 and March 2025 include a “for office use” box for MCMP staff to ma nually check off if the goods or service is ready and approved for the administration aspect that involve checking for inventory, map (if applicable), details, work order (if applicable), inscription work order (if applicable), setting fee (if applicable), future need (if applicable), activity report, ta x report, database, and day schedule report. We understand for the checkoff mark, the invoices and paym ent receipt always happen on the same day, so the checkmark is not accompanied by the sign-off or date of the person that prepared the form and the person that reviewed and approved the form.
2. Cashier Deposit Listing – the listings selected fo r testing from October 2024 and January 2025 did not have any documentation of who prepared, reviewed and approved the documents.
3. Monthly Activity Reports – although the reports for December 2024 and March 2025 selected for testing included checkmarks showing someone had worked on the documents, there was no documentation to demonstrate who ha d prepared or reviewed the reports or the date the review was completed. We understand the review approval is verbally communicated.
Without documentation of the review and approval of invoices, cashier deposit listings and monthly activity reports, the timeliness of preparation and review a nd evidence of the segregation of duties cannot be confirmed.
Finance staff should work with MCMP staff to re view the cash collection procedures and implement documentation processes and procedures to ensure that segregation of duties is maintained over the cash collection process. Documentation of the preparation, review and approval process should be made in some formal manner, including the date each is completed.
Management’s Response:
The City agrees with the recommendation. Finance staff will work with Mission City Memorial Park (MCMP) staff to review and update the cash collec tion procedures to ensure appropriate segregation of duties and proper documentation of all signoffs on preparation, review, and approval steps.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SCHEDULE OF OTHER MATTERS
NEW GASB PRONOUNCEMENTS OR PRONOUNCEMENTS NOT YET EFFECTIVE
The following comment represents new pronouncements taking affect in the next few years. We cite them here to keep you informed of developments:
EFFECTIVE FISCAL YEAR 2025/26:
GASB 103 – Financial Reporting Model Improvements
The objective of this Statement is to improve key com ponents of the financial reporting model to enhance its effectiveness in providing information that is essential for decision making and assessing a government’s accountability. This Statement also addresses certain application issues.
Management’s Discussion and Analysis
This Statement continues the requirement that the basic financial statements be preceded by management’s discussion and analysis (MD&A), which is presented as required supplementary information (RSI). MD&A provides an objective and easily readable analysis of the government’s financial activities based on currently known facts, decisions, or conditions and presents comparisons between the current year and the prior year.
This Statement requires that the information presented in MD&A be limited to the related topics discussed in five sections: (1) Overview of the Financial Statemen ts, (2) Financial Summary, (3) Detailed Analyses, (4) Significant Capital Asset and Long-Term Financing Activ ity, and (5) Currently Known Facts, Decisions, or Conditions. Furthermore, this Statement stresses that the detailed analyses should explain why balances and results of operations changed rather than simply presenting the amounts or percentages by which they changed. This Statement emphasi zes that the analysis provided in MD&A should avoid unnecessary duplication by not repeating explanatio ns that may be relevant to multip le sections and that “boilerplate” discussions should be avoided by presenting only the most relevant information, focused on the primary government. In addition, this Statement continues th e requirement that information included in MD&A distinguish between that of the primary government and its discretely presented component units.
Unusual or Infrequent Items
This Statement describes unusual or infrequent items as transactions and othe r events that are either unusual in nature or infrequent in occurrence. Furthermore, governments are required to display the inflows and outflows related to each unusual or infrequent item separ ately as the last presented flow(s) of resources prior to the net change in resource flows in the governme nt-wide, governmental fund, and proprietary fund statements of resource flows.
Presentation of the Proprietary Fund Statement of Revenues, Expenses, and Changes in Fund Net Position
This Statement requires that the proprietary fund stat ement of revenues, expenses, and changes in fund net position continue to distinguish between operating and nonoperating revenues a nd expenses. Operating revenues and expenses are defined as revenues and expenses other than nonoperating revenues and expenses.
Nonoperating revenues and expenses are defined as (1) subs idies received and provided, (2) contributions to permanent and term endowments, (3) revenues and e xpenses related to financing, (4) resources from the disposal of capital assets and inventory, and (5) investment income and expenses.
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MEMORANDUM ON INTERNAL CONTROL
SCHEDULE OF OTHER MATTERS
GASB 103 – Financial Reporting Model Improvements (Continued)
In addition to the subtotals currently required in a proprietary fund statement of revenues, expenses, and changes in fund net position, this Statement requires that a subtotal for operating income (loss) and noncapital subsidies be presented before reporting othe r nonoperating revenues and expenses. Subsidies are defined as (1) resources received from another party or fund (a) for which the proprietary fund does not provide goods and services to the other party or fund and (b) that directly or indirectly keep the proprietary fund’s current or future fees and charges lower than they would be otherwise, (2) resources provided to another party or fund (a) for which the other part y or fund does not provide goods and services to the proprietary fund and (b) that are recoverable through the proprietary fund’s current or future pricing policies, and (3) all other transfers.
Budgetary Comparison Information
This Statement requires governments to present budgetary comparison information using a single method of communication—RSI. Governments also are required to present (1) variances betw een original and final budget amounts and (2) variances between final budget a nd actual amounts. An explanation of significant variances is required to be presented in notes to RSI.
How the Changes in This Statement Will Improve Financial Reporting
The requirements for MD&A will improve the quality of the analysis of changes from the prior year, which will enhance the relevance of that in formation. They also will provide clarity regarding what information should be presented in MD&A.
The requirements for the separate presentation of unus ual or infrequent items will provide clarity regarding which items should be reported separately from other inflows and outflows of resources.
The definitions of operating revenu es and expenses and of nonoperating revenues and expenses will replace accounting policies that vary from government to government, thereby improving comparability. The addition of a subtotal for operating income (loss) a nd noncapital subsidies will improve the relevance of information provided in the proprietary fund statemen t of revenues, expenses, and changes in fund net position.
The requirement for presentation of major component unit information will improve comparability.
The requirement that budgetary comparison information be presented as RSI will improve comparability, and the inclusion of the specified variances and the explanations of significant variances will provide more useful information for making decisions and assessing accountability.
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MEMORANDUM ON INTERNAL CONTROL
SCHEDULE OF OTHER MATTERS
EFFECTIVE FISCAL YEAR 2026/27:
GASB 104 – Disclosure of Certain Capital Assets
State and local governments are required to provide detailed information about capital assets in notes to financial statements. GASB Statement No. 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments , requires certain information regarding capital assets to be presented by major class. The objective of this Stat ement is to provide users of government financial statements with essential information about certain types of capital assets.
This Statement requires certain types of capital assets to be disclosed separately in the capital assets note disclosures required by Statement 34. Lease assets re cognized in accordance with GASB Statement No. 87, Leases, and intangible right-to-use assets recognized in accordance with GASB Statement No. 94, Public- Private and Public-Public Partnerships and Availability Payment Arrangements , should be disclosed separately by major class of underlying asset in the capital as-sets note disclosures. Subscription assets recognized in accordance with GASB Statement No. 96, Subscription-Based Information Technology Arrangements, also should be separately disclosed. In addition, this Statement requires intangible assets other than those three types to be disclosed separately by major class.
This Statement also requires additional disclosures for cap ital assets held for sale. A capital asset is a capital asset held for sale if (a) the government has decided to pursue the sale of the capital asset and (b) it is probable that the sale will be finalized within one year of the financial statement date. Governments should consider relevant factors to evaluate the likelihood of the capital asset being sold within the established time frame. This Statement requires that capital assets he ld for sale be evaluated each reporting period.
Governments should disclose (1) the ending balance of capital assets held for sale, with separate disclosure for historical cost and accumulated depreciation by ma jor class of asset, and (2) the carrying amount of debt for which the capital assets held for sale are pledged as collateral for each major class of asset.
How the Changes in This Statement Will Improve Financial Reporting
The requirements of this Statement will improve financial reporting by providing users of financial statements with essential information about certain types of capital assets in order to make informed decisions and assess accountability. Additionally, the di sclosure requirements will im -prove consistency and comparability between governments.
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MEMORANDUM ON INTERNAL CONTROL
STATUS OF PRIOR YEAR OTHER MATTERS
2024-01 Review of Manual Fee Calculations
The rates charged in the City’s permit billing system should be consistent with the City’s Master Fee Schedule approved by the City Council and permit fee calculations should be reviewed for accuracy.
We tested twenty-five governmental cash receipts to recalculate fees using the City’s Master Fee Schedule and agree to supporting documentation, and noted one building permit for which the technology fee in the amount of $9.13 was charged twice. We understand that the technology fee entered manually with the “Building Permit Site Clearance – Minor” fee and should have been deleted, but the error was due to staff oversight. City staff later determined that the error affected other permits issued during the fiscal year and fees totaling $6 thousand had been ove rcharged and we understand the City will refund the excess charges to the customers during fiscal year 2025.
Errors in fee calculations or charging fees that are not in accordance with the Master Fee Schedule approved by the City Council could result in undercharging or overcharging customers and an understatement or overstatement of revenue.
The City should develop procedures to ensure that fees are not duplicated in the building permit fee calculations, which includes ensuring all manual fee calculations are reviewed and approved.
Current Status:
The City agrees with the recommendation. The ne w invoicing procedures in Accela, implemented in July 2025 have significantly reduced the risk of f ee duplication. Staff are currently being trained on the updated processes, including the review steps re quired to confirm that manually calculated fees and Technology Fees are assessed in accordance with the Master Fee Schedule. Ongoing monitoring and periodic audits will continue to verify that fees are invoiced correctly.
2024-02 Procurement Card Approval Documentation
The City’s Payment Options summary of the requireme nts for Procurement Card purchases indicates that Procurement Card statements should include the sign ature of the cardholder and the Department Statement Approver (Department Supervisor and/or Department Head ). In addition, the City’s procedures require that the Auditor’s Office Management Analyst review each st atement and backup individually and sign off with her initials showing her review on a log.
The Auditor’s Office reviews the statements after the Purchasing Department notifies them that a particular month is complete. Once purchasing has collected all of the statements and supporting documentation from the various departments and are satisfied that they ar e complete, they let the Auditor’s Office know via email and the Management Analyst conduct the review. Th e Management Analyst’s review normally happens within a few days of receiving that notice.
We selected the months of Septem ber 2023 and January 2024 and six empl oyee statements from each month for testing of documentation of timely review and approval. All of the statements selected for testing were reviewed during April 2024, or three to seven months after month end. In addition, two of the statements did not include the Management Analyst’s signature and on e statement did not have a date by the approving Department Supervisor’s signature.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
STATUS OF PRIOR YEAR OTHER MATTERS
2024-02 Procurement Card Approval Documentation (Continued)
While we understand the lack of signature and date are due the statement being returned to the Purchasing Department for additional informati on, we also understand the late revi ew by the Management Analyst was due to the statements not being ready for review in a timely manner.
Update for June 30, 2025 Audit:
We selected the months of October 2024 and February 2025 and six employee statements from each month for testing of documentation of timel y review and approval. The October statements selected for testing were reviewed by the Department Supervisor within thirty days of month end, but they were not reviewed by the Management Analyst until May 2025. The February 2025 statements selected for testing were reviewed by the Department Supervisor within thirty days of month end, but did not include documentation of the review by the Management Analyst.
We understand the late review of the October statements by the Management Analyst was due to the statements not being ready for review in a timely ma nner. We understand the Fe bruary statements were reviewed by the Department Supervisor, but the Mana gement Analyst was not told they were ready for review.
The timely review of the procurement card statements is important, because the City must pay the monthly procurement card balances when due, regardless of whether the transactions have been reviewed for accuracy, compliance and approval.
The City should develop procedures to ensure that the Procurement Card statements are submitted by cardholders timely and reviewed in a timely manner and the date of the review for all levels of review should be included in the documentation.
Current Status:
The City agrees with the recommendation. Employe es have been reminded of the requirement to submit complete procurement card documentation, including signatures and dates, promptly to ensure timely review by both the Finance Departme nt and the City Auditor’s Office. The City has provided refresher trainings to all cardholders em phasizing the importance of timely submission and complete supporting documentation.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SANTA CLARA STADIUM AUTHORITY
SCHEDULE OF MATERIAL WEAKNESSES
(Provided by Other Auditors)
SCSA 2025-001 Accounting Treatment fo r Stadium Builder Licenses Defaults
Criteria
Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles, a nd for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Management is required to determine whether the entity maintained, in all material respects. Effective internal controls over financial reporting based on the criteria established by a su itable framework, which is typically the Internal Control - Integrated Framework published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
The organization should select and develop control activit ies that contribute to the mitigation of risks to the achievement of objectives to acceptable levels.
Conditions Found
The Stadium Authority sells Stadium Builder Licenses (SBLs) for a fee, Which hol ders can pay upfront or through financing arrangements. When collected, these fees are recognized as unearned revenue and amortized into revenue over the life of the stadium. Under the te rms of the SBL agreement, when a default occurs, the customer loses their rights to any services under the agreement. As such, at the time of the default, the associated unearned revenue related to the SBL fees should be recognized as revenue.
The Stadium Authority’s accounting treatment related to the SBL defaults was to continue to amortize the fee over the remaining life of the stadium rather than recognize the remaining amount at the time of default.
Stadium Authority management did not sufficiently identify and evaluate the accounting impact of the defaults of SBL revenue agreements. The Stadium Authority had not historically assessed the SBL defaults to determine whether the impact of the accounting treatment would be clearly inconsequential.
During the testing of the fiscal year 2025 SBL revenue, the engagement team identified the error in accounting for SBL defaults has accumulated over time, since the inception of the entity and SBLs. to a consequential amount.
Cause
The deficiency was caused by the lack of a proper acc ounting policy and an effective process to identify and assess the impact of the SBL defaults on financial reporting.
The Stadium Authority did not design or implement a re view process for monitoring SBL defaults to ensure accurate financial reporting.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SANTA CLARA STADIUM AUTHORITY
SCHEDULE OF MATERIAL WEAKNESSES
(Provided by Other Auditors)
SCSA 2025-001 Accounting Treatment for Stad ium Builder Licenses Defaults (Continued)
Effect
The misstatement resulted in an overstatement of unearned revenue. and an understatement of net position. The correction resulted in a cumulative impact on net position of $23.1M at March 31, 2024.
Management determined the error was not material to the March 31, 2024 financial statements. To correct the prior year error. Management adjusted the 2024 amounts reported in the March 31, 2025 financial statements. and included note disclosure 2(m) in the March 31, 2025 financial statements to summarize the adjustments and effects of the correction.
Recommendation
We recommend that Management develop a process to ensure SBL defaults are properly assessed and appropriately recorded.
Management Response
Management agrees with the reco mmendation ana will work with its management company to obtain a complete and accurate SBL default report. This report will be used to perform an annual assessment of the SBL default revenue recognition in conformity with US generally accepted accounting principles.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SANTA CLARA STADIUM AUTHORITY
STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES
(Provided by Other Auditors)
SCSA 2024-01 Adoption of New Accounting Pronouncements
Criteria
Management is responsible for the preparation and fair presentation of the financial statements in accordance with U.S. generally accepted accounting principles, a nd for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.
Management is required to determine whether the entity maintained, in all material respects, effective internal controls over financial reporting based on the criteria established by a su itable framework, which is typically the Internal Control – Integrated Framework published by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission.
The COSO Framework views all five components and all 17 principles as relevant to an integrated system of internal controls, irrespective of the entity or its objectives. Controls must be designed and operating under each of the 17 principles to demonstrate that the principle has been achieved.
The component of internal control relevant to this finding is the Control Activities, specifically Principles 9 and 10 of the COSO Framework, which st ate that the organization identifies and assesses changes that could significantly affect the system of internal control, and that the organization se lects and develops control activities that contribute to the mitigation of risks to the achievement of objectives to acceptable levels, respectively.
Conditions Found
Governmental Accounting Standards Board Statement No. 87, Leases (GASB 87) established a new accounting framework for all lease transactions. The Stadium Authority adopted GASB 87 in the prior year, which ended March 31, 2023. While preparing the March 31, 2024 fina ncial statements, Management identified an error related to that adoption. Specifically, Management identified GASB 87 was not properly implemented because an existing deferred rent liability had not been evaluated and adjusted to beginning Net Position upon adoption of the new standard.
Cause
The deficiency was caused by the lack of an effective review process over the adoption of GASB 87 as the new accounting standard for leases. The review of the GASB 87 implementatio n for the company’s ground lease, the review of the journal entries to eliminate certain aspects of the lease on the balance sheet, and the review of interest income and expense for the ground and stadium leases as part of the adoption of the new standard did not appropriately detect and prevent the error from occurring or being reported on the financial statements for the period.
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CITY OF SANTA CLARA
MEMORANDUM ON INTERNAL CONTROL
SANTA CLARA STADIUM AUTHORITY
STATUS OF PRIOR YEAR SIGNIFICANT DEFICIENCIES
(Provided by Other Auditors)
SCSA 2024-01 Adoption of New Accounting Pronouncements (Continued)
Per our inquiries with Management, we understand that these errors were also precipitated by the late determination of the applicability of GASB 87 to the Stadium Authority on a stand-alone basis.
The review process for adopting new accounting standard s was not designed with sufficient precision or effectiveness to ensure accurate financial reporting wh ich subsequently caused the revision of prior year financial statements amounts in the 2024 report.
Effect
The misstatement resulted in an overstatement of tota l liabilities and understatement of total assets and net position. The correction of overstated expenses and understated revenues from previous periods, along with the adjustment to the deferred rent liability, resulted in a cumulative impact on net position of $8.7M at March 31, 2023.
Management determined the error was not material to the March 31, 2023 financial statements. To correct the prior year error, Management adjusted the 2023 amounts reported in the March 31, 2024 financial statements, and included note disclosure 2(l) in the March 31, 2024 financial statements to summarize the adjustments and effects of the correction.
The error in the adoption of GASB 87 indicates an increased risk of misstatement associated with the adoption of other new accounting standards.
Recommendation
We recommend that Management develop a process to ensure all new accounting pronouncements are properly assessed, accurately applied, and appropriately presented in the year of implementation.
Current Status
This has been completed.
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CITY
OF SANTA CLARA
REQUIRED COMMUNICATIONS
FOR THE YEAR ENDED JUNE 30, 2025
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CITY OF SANTA CLARA
REQUIRED COMMUNICATIONS
For the Year Ended June 30, 2025
Table of Contents
Page
Required Communications ................................................................................................................... 1
Significant Audit Matters .................................................................................................................. 1
Qualitative Aspects of Accounting Practices .............................................................................. 1
Difficulties Encountered in Performing the Audit .................................................................... 3
Corrected and Uncorrected Misstatements .............................................................................. 3
Disagreements with Management.............................................................................................. 4
Management Representations ..................................................................................................... 4
Management Consultations with Other Independent Accountants .......................................... 4
Other Audit Findings or Issues ................................................................................................... 4
Other Matters .................................................................................................................................... 4
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REQUIRED COMMUNICATIONS
To the City Council of
the City of Santa Clara, California
We have audited the basic financial statements of the C ity of Santa Clara for the year ended June 30, 2025.
We did not audit the component financial statements of the Santa Clara Stadium Authority as of and for the year ended March 31, 2025 which re present 35.3%, 8.1%, and 8.6% of th e assets, net position and revenues, respectively, of the business-type activities. We also di d not audit the components related to the Investment in Joint Ventures, which collectively include: Northern California Power Agency (NCPA), Transmission Agency of Northern California (TANC), M-S-R Energy Authority (MSR EA), M-S-R Public Power Agency (MSR PPA), and San Jose-Santa Clara Regional Wastewater F acility and Clean Water Financing Authority (SJSC) for the year ended June 30, 2025, which collectively represent 8.3%, 14.7%, and 0.3%, respectively, of the assets, net position and revenues of the business-type ac tivities. These component unit financial statements and component financial statements were audited by other auditors, whose reports thereon have been furnished to us, and our opinions, insofar as it relates to the amounts included for these entities, is based solely on the reports of the other auditors.
Professional standards require that we provide you with information about our r esponsibilities under generally accepted auditing standards and Government Auditing Standards and the Uniform Guidance, as well as certain information related to the planned sc ope and timing of our audit. We ha ve communicated such information in our meetings with the Mayor and the Chair of the A udit Committee on April 17, 2025. Professional standards also require that we communicate to you the following information related to our audit.
Significant Audit Matters
Qualitative Aspects of Accounting Practices
Accounting Policies – Management is responsible for the selection and use of appropriate accounting policies.
The significant accounting policies used by the City are described in Note 2 to the financial statements. No new accounting policies were adopted, and the applica tion of existing policies was not changed during the year, except as follows:
Accounting for Loans Receivable – During fiscal year 2025, the City changed its accounting policy related to the accounting for certain long-term loan s receivable in the governmental activities (entity- wide financial statements). Prior to fiscal year 2025, certain loans had been offset with an allowance for collectability in governmental activities. Effective July 1, 2024, those loans receivable are instead offset with net position in the governmental activities statement of net position. As a result of that change in accounting policy, be ginning net position of governmental activities was increased and adjusted in the amount of $25,183,246.
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In addition, the following Governmental Accounting Standards Board (GASB) pronouncements became effective:
GASB 101 – Compensated Absences
The objective of this Statement is to better meet the information needs of financial statement users by updating the recognition and measurement guidance for compensated absen ces. That objective is achieved by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures.
This Statement requires that liabilities for compensat ed absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that h as not been used if (a) the leave is attributable to services already rendered, (b) the leave accumulates, and (c) the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. Leave is attributable to services already rendered when an employee has pe rformed the services required to earn the leave.
Leave that accumulates is carried forward from the reporting period in which it is earned to a future reporting period during which it may be used for time off or otherwise paid or settled. In estimating the leave that is more likely than not to be used or otherwise paid or settled, a government should consider relevant factors such as employment polic ies related to compensated absences and historical information about the use or payment of compensat ed absences. However, leave that is more likely than not to be settled through conversion to define d benefit postemployment benefits should not be included in a liability for compensated absences.
This Statement requires that a liability for certain types of compensated absences—including parental leave, military leave, and jury duty leave—not be recognized until the leave commences. This Statement also requires that a liability for specifi c types of compensated ab sences not be recognized until the leave is used.
This Statement also establishes gui dance for measuring a liability for leave that has not been used, generally using an employee’s pay rate as of the date of the financial statements. A liability for leave that has been used but not yet paid or settled shoul d be measured at the amount of the cash payment or noncash settlement to be made. Certain salary-relate d payments that are directly and incrementally associated with payments for leave also should be included in the measurement of the liabilities.
The pronouncement became effective and, as disclo sed in Note 15E to the financial statements, required a prior period restatement for the cumulative effect on the financial statements.
The following pronouncement became effective, but did not have a material effect on the financial statements:
GASB 102 – Certain Risk Disclosures
Unusual Transactions, Controversial or Emerging Areas – We noted no transactions entered into by the City during the year for which there is a lack of authorit ative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period.
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Accounting Estimates – Accounting estimates are an integral part of the financial statements prepared by management and are based on manage ment’s knowledge and experience abou t past and current events and assumptions about future events. Certain accounting es timates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the City’s financial statements were:
Estimated Net Pension Liabilities and Pension-Related Deferred Outflows and Inflows of Resources:
Management’s estimate of the net pension liabiliti es and deferred outflows/inflows of resources are disclosed in Note 13 to the financial statemen ts and are based on actuarial studies and accounting valuations determined by the California Public Employees Retirement System, which are based on the experience of the City. We evaluated the key f actors and assumptions used to develop the estimate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Net OPEB Liability and OPEB-Related De ferred Outflows and Inflows of Resources:
Management’s estimate of the net OPEB liability and deferred outflows/inflows of resources is disclosed in Note 16 to the financial statements and is based on actuarial study determined by a consultant, which is based on the experience of the City. We evaluated the key factors and assumptions used to develop the estim ate and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Fair Value of Investments: As of June 30, 2025, the City held approximately $1.8 billion of cash and investments as measured by fair value as disclosed in Note 7 to the financial statements. Fair value is essentially market pricing in effect as of June 30, 2025. These fair values are not required to be adjusted for changes in general market conditions occurring subsequent to June 30, 2025.
Estimated Investment in Joint Ventures: Management’s estimate of the investment in joint ventures is disclosed in Note 12 to the financial statements and is based on the audited financial statements of the entities for the prior fiscal year. We evaluated th e key factors and assumptions used to develop the investment in joint ventures in determining that it is reasonable in relation to the financial statements taken as a whole.
Estimate of Depreciation: Management’s estimate of the depreciation is based on useful lives determined by management. These lives have been determined by management based on the expected useful life of assets as disclosed in Note 2I to the financial statements. We evaluated the key factors and assumptions used to develop the depreciation estim ate in Note 9 to the financial statements and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Leases Receivable, Right-to-Use Lease Assets, Leases Payable and Deferred Inflows of Resources Related to Leases: Management’s estimates of leases receivable, right-to-use lease assets and leases payable in Notes 4, 9 and 10H are based on the agreement term, including any assumptions related to whether extensions may be exercised, a nd the discount rate net present value calculation is based on the estimated borrowing rate at the measure ment date. We evaluated the key factors and assumptions used to develop the leases receivable , right-to-use lease assets, leases payable and deferred inflows of resources related to leases estima tes and determined that they are reasonable in relation to the basic financial statements taken as a whole.
Estimated Subscription Assets and Subscription Liabilities: Management’s estimate of right-to-use subscription based IT arrangements (subscription assets) and subscription liabilities in Notes 9 and 10I are based on the agreement term, including any assump tions related to whether extensions may be exercised, and the discount rate u sed in the net present value calcu lation is based on the estimated borrowing rate at the measurement date. We ev aluated the key factors and assumptions used to develop the subscription assets and subscription lia bilities estimates and determined that they are reasonable in relation to the basic financial statements taken as a whole.
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Estimate of Compensated Absences: Accrued compensated absences wh ich are comprised of accrued vacation, holiday, sick leave and certain other compensating time is estimated using accumulated unpaid leave hours and hourly pay rates in effect at the end of the fiscal year as disclosed in Note 2L to the financial statements. We evaluated the key factors and assumptions used to develop the accrued compensated absences and determined that it is reasonable in relation to the basic financial statements taken as a whole.
Estimated Landfill Closure Liability: Management’s estimate of the landfill closure liability is disclosed in Note 11 to the financial statements an d is based on the City’s estimate of future post- closure maintenance and corrective action costs re quired by its agreement with CalRecycle. We evaluated the key factors and assumptions used to develop the landfill closure liability in determining that it is reasonable in relation to the financial statements taken as a whole.
Estimated Claims Liabilities: Management’s estimate of the claims liabilities payable is disclosed in Note 19 to the financial statements and is based on actuarial studies determined by a consultant, which are based on the claims experience of the City. We evaluated the key factors and assumptions used to develop the estimate and determined that it is reasona ble in relation to the basic financial statements taken as a whole.
Disclosures – The financial statement disclosures are neutral, consistent and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are clearly trivial, and communi cate them to the appropriate level of management.
Management has corrected all such misstatements. In addition, none of the misstatements detected as a result of audit procedures and corrected by management were ma terial, either individually or in the aggregate, to each opinion unit’s financial statements taken as a whole, except the post-closing entry to correct expenditures and unavailable revenue in the amount of $5.2 million in the Santa Clara Housing Successor Special Revenue Fund.
Professional standards require us to accumulate all know n and likely uncorrected misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. We have no such misstatements to report to the City Council.
Disagreements with Management
For purposes of this letter, a disagreement with manage ment is a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in a management representation letter dated DATE, 2025.
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Management Consultations with Other Independent Accountants
In some cases, management may d ecide to consult with other account ants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves the application of an accounting principle to the City’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City’s auditors. However, these discussions occurred in the normal course of our professional relati onship and our responses were not a condition to our retention.
Other Matters
We applied certain limited procedures to the required supplementary information that accompanies and supplements the basic financial statements. Our procedures consisted of inquiries of management regarding the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We did not audit the required supplementary information and do not express an opinion or provide any assurance on the required supplementary information.
We were engaged to report on the supplementary information that accompanies the financial statements, but is not required supplementary information. With respect to this supplementary information, we made certain inquiries of management and evaluate d the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America, the method of preparing it has not changed from the prior period, and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underl ying accounting records used to prepare the financial statements or to the financial statements themselves.
We were not engaged to report on the Introductory an d Statistical Sections whic h accompany the financial statements, but are not required supple mentary information. Such informa tion has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance them.
******
This information is intended solely for the use of C ity Council and management and is not intended to be, and should not be, used by anyone other than these specified parties.
Pleasant Hill, California
DATE, 2025
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Annual Comprehensive
Financial Report
(ACFR)
Fiscal Year Ended June 30, 2025
Audit Committee Meeting
November 24, 2025
AGENDA
• Overview
• Audit Results Presentation by Maze & Associates
• Recommendation
2 OVERVIEW
• Government Finance Officers Association (GFOA) Certificate of Achievement in Excellence in Financial Reporting
– Fiscal Year ended June 30, 2024 Comprehensive Annual Financial Report – 33 consecutive years
• Maze & Associates have completed the annual audit of the City’s ACFR and Silicon Valley Power Financial Statements
• The ACFR covers the 2024-25 fiscal year (July 1, 2024 to June 30, 2025) with comparative data from the 2023-24 fiscal year included in the MD&A
• Unmodified (i.e., “clean”) opinion expressed by auditors • Reports will be available on the City’s Finance Department’s webpage 3
AUDIT RESULTS PRESENTATION
BY MAZE
4 RECOMMENDATION
• Accept the City of Santa Clara Audited Annual
Comprehensive Financial Report and Silicon Valley Power Financial Statements for Fiscal Year 2024/25 and
recommend that the reports are forwarded for note and
file at the December 9, 2025 Council and Authorities
Concurrent meeting.
5 Independent Auditor Presentation –Audit of the Basic Financial StatementsFor the fiscal year ended June 30, 2025 Audit Committee November 24, 2025Amy Meyer, CPAAudit Partner1
AgendaBackgroundAudit Reports and Other ReportsResults of AuditKey Financial HighlightsReport on Memorandum on Internal Control (MOIC)Required CommunicationsResults of Agreed Upon Procedures2
BackgroundMaze & Associates – we are an independent CPA firm,independent from the City of Santa Clara and itsComponent Units.Audit was conducted in accordance with auditingstandards generally accepted in the United States ofAmerica andGovernment Auditing Standardsissued bythe Comptroller General of the United States of America.3
Draft Audit ReportsCity (Annual Comprehensive Financial Report)Silicon Valley Power (Electric Enterprise Fund) (Basic Financial Statements)Transportation Development Act Financial StatementsSingle Audit (federal award programs – later– due by 3/31/26)4
Draft Other ReportsSan Jose-Santa Clara Clean Water Financing Authority –Bond Compliance LetterAgreed Upon Procedures Reports:Investment Policy ComplianceGann Limit Calculation5
DraftResults of Audit – ACFR and SVP Independent Auditor’s ReportsPropose to issueUnmodified/clean opinions…fairly stated, in allmaterial respects…in conformity with accountingprinciples generally accepted (GAAP) in the USA.Includes Emphasis of a Matter –Adjustment for implementation of GASB 101,Compensated AbsencesAdjustment for change in accounting policy - loansRestatement of SCSA balances6
Results of Audit – ACFR and SVP (continued) Management’s Discussion and Analysis (MD&A) (page 5 of ACFR; page 5 of SVP)Prepared by Finance StaffDiscusses significant activity for the fiscal year7
Key Financial Highlights of ACFRManagement’s Discussion and Analysis (page 5):Introduces the basic financial statements and provides an analytical overview of the City’s financial activities Basic Financial Statements (page 28)Includes the financial activities of the City, the Santa Clara Housing Authority, the Santa Clara Stadium Authority, the City of Santa Clara Sports and Open Space Authority, and the City of Santa Clara Public Facilities Financing Corporation (legally separate but are component units of the City)Notes to the Basic Financial Statements (page 59)An integral part of the ACFR that provides information on significant financial transactions of the City (i.e. Note 13-PERS/Pension, Note 16-Other Post Employment Benefits, Note 10-Long-term Debt) 8
Key Financial Highlights of ACFR (continued)City Assets exceeded Liabilities by $3.1 billion in FY25The City’s net position increased by $404 million (after adjustments discussed in Note 18), or $443 million before Pension liabilities decreased $17 million (after significant fluctuations in the last few years)Outstanding long-term debt increased by $101 million ($1 million repayment in governmental funds, $27 million repayment in enterprise funds, $112 million issuance of Electric Revenue Bonds) General Fund’s fund balance increased $60 million to $241 million9
Key Financial Highlights of ACFR (continued)General Fund – Fund Balance (Note 18 page 140) 10 DescriptionAmountCategorySupplies, Inventory, Prepaids, Leases$8.3 millionNonspendableGrants, Donations, Pension Rate Stabilization39.8 millionRestrictedLand Sale Reserve, Historical Preservation12.8 millionCommittedEncumbrances17.0 millionAssignedBudget Stabilization Reserve, Capital Projects Reserve163.2 millionUnassigned$241.1 millionTotal Report on Memorandum on Internal Control and Required Communications (MOIC)Three possible categories for comments:Material WeaknessSignificant DeficiencyOther MattersNOTE – Although we do not audit the SCSA, MW or SD from SCSA audit are required to be included in the City’s MOIC11
Required CommunicationsNo Changes in Accounting Policies, other than:Implementation of GASB 101, Compensated Absences (Note 2L)GASB 102, Certain Risk Disclosures(related to disclosing vulnerabilities due to concentrations or constraints)(No Impact)Accounting for Unavailable Revenue Related to Loans in the Statement of Net Position and Statement of Activities12
Required Communications(continued)Unusual Transactions, Controversial or Emerging AreasAccounting EstimatesDisclosuresDifficulties Encountered in Performing the Audit –noneCorrected and Uncorrected MisstatementsDisagreements with Management –none13
Results of Agreed Upon ProceduresInvestment Policy ComplianceNo exceptionsGann Limit CalculationNo exceptions14
QUESTIONS?
15 “We are in the business to help our clients succeed”