SEC official warns on governance gaps in California JPA bond financings
A speech by the SEC's municipal securities chief to a California public finance conference lays out specific concerns about bond-issuing joint powers authorities, citing fee structures, board composition and disclosure failures, before turning briefly to risks in the fast-growing energy prepay bond sector.
- One JPA financed 14 essential housing projects with $2.5 billion in bond financing, and half have defaulted, dipped into reserves, or reported impairment.
- Another JPA has a 1% default rate, which the speech says is over 30 times the overall municipal bond default rate and over 100 times the default rate for general governmental bonds.
- Firms advising California JPAs received fees ranging from around $3.1 million to over $11.9 million per JPA for the fiscal year ended June 30, 2025.
- The two largest California statewide JPAs have retained almost $125 million in issuer fees since 2010.
- Energy prepay bonds have surpassed $100 billion outstanding in 2025 and now exceed 5% of the Bloomberg Municipal Index, with 37% average annual issuance growth.