RC pursues pension bond sale
ROGERS CITY — The Rogers City City Council will publish a notice of intent, letting taxpayers know they plan to sell up to $7 million in bonds to raise money for the city’s pension debt.
The council on Tuesday unanimously approved the notice of intent as part of a resolution that also adopted a comprehensive financial plan for the city. State law requires the city to publish that plan before selling bonds.
The city’s pension obligations to current and future retirees are only about 50 percent funded, which means that, if all retirement benefits were claimed today, about half of the retirees would receive what they are owed. The further behind a government is on its pension debt, the more it must set aside each year to catch up.
Rogers City hopes to sell bonds to cover that debt because bonds can be repaid at a more managable pace over several years.
To help control long-term costs, the city also stopped offering pensions to employees hired after July 1, instead offering a 401(k)-style retirement plan.
Last month, the council agreed to pay Standard and Poor’s $15,000 to evaluate the city’s credit rating, which must be an A or better for the city to issue bonds.
“We did get the rating indicator letter last week that said you would be in the … A category from Standard and Poor’s,” Kari Blanchett, managing director of PFM, the city’s financial manager, told council members Tuesday. “We will move into getting the formal rating letter.”
Blanchett said she would return at a future meeting at which the council would consider the adoption of the bond authorization resolution, which would set forth the details of the bond sale. Once that is complete, an application must be submitted to the Michigan Treasury.
“Once that approval is issued, then we can publish an official statement and sell the bonds. Those are the steps that will take place,” she said, adding her team is estimating the sale will happen about mid-July.
In his report to the council, City Manager Joe Hefele said that, while the notice approved Tuesday includes the city’s intent to issue up to $7 million in bonds, the plan is to issue between $5 million and $6 million. City officials have previously said they would like to issue about $5.8 million in bonds.
Hefele previously told The News taxpayers will not see their taxes increase if the city issues bonds, nor will they have to vote for the city to be able to issue the bonds. Voters can, however, petition the city to allow them to vote on the sale.
Hefele said issuing the bonds is the only option that gives the city a chance to come out solvent, but they aren’t out of the woods, yet.
“This is the only thing that gives us a chance,” he said. “There’s still going to need to be things that go well and there’s still at least a decent likelihood that we’re going to be sitting at a bargaining table having to still make changes to the existing plan if the market takes a dump.”
The city’s comprehensive financial plan will be available for taxpayers to view online today at rogerscity.com.
Crystal Nelson can be reached at email@example.com or 989-358-5687.