The San Jose City Council on Dec. 2 approved staff recommendations to proceed with documents enabling a California Community Choice Financing Authority (CCCFA) clean‑energy prepayment transaction. City staff, bond counsel and financial advisers described a complex structure in which CCCFA would issue tax‑exempt revenue bonds (not to exceed $1.25 billion) that fund the prepayment of assigned power‑purchase agreements; Morgan Stanley would act as prepaid energy supplier and CCCFA would sell the energy to the city at a discount.

Maria Oberg (director of finance) and Zach Scribe (assistant director, Energy Department) presented the financing. Staff said the bonds would have an initial term of roughly 6–9 years with mandatory tender and remarketing cycles thereafter, and that the city requires a minimum 8% annual savings during the initial term. An initial day‑of estimate (Oct. 28) put bond proceeds at roughly $1 billion and true interest cost slightly over 4%; staff estimated a portion of proceeds set aside for capitalized interest (~$41 million) and financing costs including underwriter discount (~$6.2 million).

Staff outlined three categories of risk: volumetric risk (supplier underperformance), market/ repricing risk (post‑initial term remarketing could result in failing to meet negotiated discount and terminate the transaction), and counterparty risk (failure of commodity swap or banking counterparties). Mitigation measures include assigning a portion (not all) of PPAs to the transaction, substitution rights, diversified counterparties, and contractual obligations requiring termination payments from Morgan Stanley if the transaction terminates early.

Council members asked detailed questions about downside scenarios and timing; staff said the bond sale timing is market‑dependent with an aim to close no later than January (market permitting). Staff estimated near‑term savings flow monthly and gave a ballpark first‑year savings figure (~$2 million). No public commenters provided cards for the item. Council adopted the resolution and authorized city officers to execute related documents; the motion passed unanimously.

Provenance: Staff presentation and council Q&A (topic introduction: SEG 786; topic finish: SEG 1190).