ROGERS CITY – Rogers City officials continue to move forward with their plans to issue bonds to address the city’s pension debt.

The City Council agreed to hire Hilltop Securities as the underwriter of the bonds, which Mayor Scott McLennan said came at the recommendation of PFM, the city’s financial planning representatives.

“It’s just one more step in the multiple steps of preparing to issue bonds,” he said.

The city’s pension obligations to current and future retirees are only about 50 percent funded.

That 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.

City officials want to issue up to $7 million in bonds, which would help cover the debt because bonds can be repaid at a more manageable pace over several years.

City Manager Joe 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.

McLennan said the city is still within the 45-day timeframe that allows citizens to pass such a petition. Those 45 days are up on May 28.

Moving forward, McLennan said council members will meet with the Michigan Department of Treasury on June 17 to discuss their application. The city would like to execute the bond purchase agreement on July 17 and would like to close on the bond on Aug. 1, which is when the funds would be issued.

The City Council previously approved a notice of intent and adopted a comprehensive financial plan for the city. The financial plan is available on the city’s website. State law requires the city to publish that plan before selling bonds.

McLennan said council memebers have heard from several residents wanting to know why the city is adding to the debt. In reality, he said, the council isn’t adding any debt.

“What we are doing is refinancing the debt that we already have in place, so there’s no additional money — or debt — that will be added,” he said.

He said its equally important for residents to know that, starting July 1, they are closing the defined benefit plan to new employees. The city closed its defined benefit plan to new hires because officials don’t want to take on any more debt for pensions.

It’s important to McLennan that the city keeps the process as transparent as possible.

“We feel that this is absolutely the best — and really the only course of action — to avoid bankruptcy,” he said.

Crystal Nelson can be reached at 989-358-5687 or cnelson@thealpenanews.com.