In a time of economic uncertainty and some would say financial crisis, The City of Freeport is currently on the hook for just over 48 million dollars of unfunded Police and Fire department pensions. Obligations for the Police department are about $26.2M, and another $21.7M in pension obligations for the Fire department. At the City Council of the whole meeting that took place on August 10th, a presentation was given by Steven Roberts of Baird Public Finance to address funding these pension
obligations. The option being proposed is for the City to issue a general obligation bond not to exceed $55M. This would replace high liability debt with low interest bonds, allowing the City to borrow at a rate of 3.78 percent instead of the current rate of 6.75 percent, saving the City roughly $15M in interest costs over the next 20 years.
In a memo sent to the council by City Manager Randy Bukas on August 7th, it is stated that the city currently levies $2,487,900 in property taxes to fund Police, Fire, and IMRF (Illinois Municipal Retirement Fund) pensions. The total obligation for all 3 is about $53M. Bukas states that by borrowing $55M the City’s first year payment would be $2.9M, which is just over $400,000 more than the city is currently levying. Bukas says that with this move a home valued at $100,000 would see an increase in property tax of about $67 a year. This would be the largest bond issued in Freeport’s history.
The first reading of Ordinance #2020-45 was heard at the August 17th City Council meeting. The Voice of Freeport was in attendance and live video coverage is available for those interested in viewing the discussion. The Ordinance reads as follows:
“An Ordinance providing for the issuance of not to exceed $55M taxable general obligation bonds, series 2020, of the City of Freeport, Stephenson County, Illinois, for the purpose of all or a portion of the unfunded liability of said City’s Police and Fire Pension funds, a budget stabilization fund for such unfunded liability, the levy and collection of a direct annual tax for the payment of the principal and interest on said bonds and the sale of said bonds to Robert W. Baird & Co. Inc.”
We were informed by City Clerk Dovey Anderson that there will be a second reading of the ordinance at the next City Council meeting. This is not to be confused with the City Council of the Whole meeting taking place this Monday, as of press time this issue is not on the agenda for this meeting. The date of the next regular Council meeting has not yet been posted on the City website, though we do plan to be in attendance and will bring you any updates as we continue to follow this story.
This report was brought to you by Nick Nunez our City Hall correspondent.