Eyeing millions in savings, Dixon keeps working on bonding public safety pensions

DIXON – The city is getting closer to making a decision on bonding up to $22.75 million of its public safety pension debt.

The Dixon City Council is hoping refinancing its unfunded police and fire pension liability will lead to saving more than $5 million across the next two decades. The city began pursuing the idea after speaking with Sterling officials, who issued bonds about a year ago.

The council contracted with Bernardi Securities as the bond underwriter and is looking to issue up to $22.75 million in bonds if it can secure a low enough interest rate.

By refinancing the debt, the city could start to see savings after four years and save $1.5 million a year after 17 years, according to estimates presented in April.

Short-term interest rates have gone up, but long-term rates have stayed flat or decreased in some cases, City Manager Danny Langloss said Monday. City officials met with the bond consultant last week and are continuing conversations this week, he said.

“There’s still some things to look at, but there’s many options,” Langloss said.

Bonds paid back across 18 years would put the city’s fire and police pensions at a 90% funded level.

As of April 2021, fire pensions were at about 64% funded and the police at about 55%. There’s a state mandate in place calling for all municipalities to fund their pension systems at 90% by 2040.

Mayor Li Arellano Jr. said they should consider having a special work session on the project.

Once approved by the council, locking in the bonds would be part of a 45-day process, which could happen in October, Langloss said.

The city, like municipalities across the state, has been trying to find ways to lessen the growing cost of bond obligations for years including injecting $3 million into the fire pension fund four years ago to save on payments and have better investment options.

“To do nothing, those payments start to grow and grow and grow to something we, quite frankly, can’t afford,” Langloss said.