DIXON – The city is completing issuing up to $22.75 million in bonds to refinance the public safety pension debt.
The goal is to stabilize the growing annual pension obligation payment and to create savings for the city in future years. The idea came about earlier this year after Sterling bonded its pension debt.
The city has about $23 million in unfunded pension liability, and the bonds will pay for about $20.2 million, split with $12.4 million for police pensions and $7.8 million for fire pensions.
That would put the city at the 94.6% funded mark ahead of the state mandate requiring public safety pensions to be funded at least 90% by 2040.
The Dixon City Council began the bond process in March, made approvals in April and held a public hearing in May. The council made final approvals in August, also authorizing spending up to $25,000 to obtain a bond rating.
Dixon City Manager Danny Langloss said the city received an “A” bond rating, and the final step will be locking in on an interest rate. No further approval is needed by the council, but he said he would speak to each member before going forward.
The city’s annual pension payment has grown to about $2.3 million and is estimated to keep growing to $4.3 million by 2040.
[ Dixon council OKs refinancing $22.75 million pension debt ]
With refinancing the debt, the city could see savings of $126,650 the first year and $441,000 within the first few years, said bond consultant Bob Vail of Bernardi Securities, the same bond underwriter Sterling used. Savings could be $7 million to $9 million in the next two decades depending on the market.
