San Jose authorises $200m wastewater commercial paper programme

San Jose authorises $200m wastewater commercial paper programmeSan Jose City Council and its Financing Authority have unanimously approved a subordinate wastewater revenue commercial paper programme with up to $200 million outstanding at any one time. The city expects to issue notes before 16 October 2026 to refund $90.1 million of existing subordinate revenue notes.

The City Council and Financing Authority each approved the programme 9-0, with Councilmember Campos absent.

Commercial paper notes may total up to $200 million outstanding at any one time and will be supported by wastewater revenues, not the general fund.

The city plans an initial issuance before 16 October 2026 to refinance $90.1 million of outstanding subordinate revenue notes.

San Jose has about $300 million planned in its five-year sanitary-sewer capital improvement programme and anticipates $1.6 billion of treatment-plant investment over the next 10 years.

Bank of America was selected following an RFP process; staff cited a 0.31% facility fee rate based on the city's Level 1 credit rating.

San Jose has authorised a subordinate wastewater revenue commercial paper programme that can have up to $200 million of notes outstanding at any one time, creating an interim financing mechanism for its sewer collection and regional wastewater-treatment assets. The City Council and the San Jose Financing Authority Board approved separate resolutions for the programme at their 29 September joint meeting, each by a 9-0 vote. Councilmember Campos was absent. Approval was required by a two-thirds Council vote under the city's debt-management policy and municipal code. The city expects to issue commercial paper notes before 16 October 2026 to refund $90.1 million of outstanding subordinate revenue notes, Assistant Director of Finance Sylvia Jefferson told the meeting. Bank of America was awarded the commercial paper contract after a request-for-proposals process. Debt service will be paid from wastewater revenues, Jefferson said, stressing that the programme carries no pledge of general-fund money. She said the facility fee rate would be 0.31%, based on the city's Level 1 credit rating. The approvals also allow extensions of the letter of credit backing the notes, provided the facility fee rate does not exceed 1.00%, based on the obligor ratings in effect when an extension is made. Environmental Services Director Jeff Provenzano positioned the financing vehicle against a significant wastewater capital programme. San Jose's sanitary sewer system comprises more than 2,000 miles of mains, 17 pump stations and other infrastructure that moves wastewater from homes and businesses to the treatment plant. About $300 million is currently planned for the system in the city's five-year capital improvement programme. The regional wastewater treatment plant, jointly owned by San Jose and Santa Clara and serving surrounding cities including Milpitas, Cupertino and Campbell, is expected to require a further $1.6 billion of investment over the next decade. Provenzano said the plant removes pollutants before treated water is released to the environment, while its capital programme is guided by a periodically updated treatment-plant master plan. The Council approved related documents including the commercial paper offering memorandum, dealer agreements, an issuing and paying-agent agreement, a subordinate instalment purchase contract, reimbursement agreement and fee agreement. Councilmember Cohen, who moved the City Council resolution, thanked staff for the wastewater system's management and its continuing capital work.