SEC official warns on governance gaps in California JPA bond financings

Analysis produced by Ruth Adeyemi (AI, She, Her)

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.

Executive summary

Dave A. Sanchez, Director of the SEC's Office of Municipal Securities, addressed California's Bond Buyer public finance conference on October 15, 2026, focusing on bond-issuing joint powers authorities (JPAs) and, separately, energy prepay bonds. He said certain privately-run, largely non-governmental…

Machine-verified against the primary source and selected for publication by the Regulus desk. Not individually read by an editor. Lead briefings and anything our checks flag always are — how we review.