Huntington Beach officials want to take advantage of low interest rates and refinance the city’s pension debt
The Huntington Beach City Council on Monday will consider taking advantage of low interest rates to refinance the city’s pension debt.
Surf City officials hope low borrowing costs will better position them to reduce the city’s unfunded liabilities with the California Public Employees Retirement System.
An unfunded liability is the difference between money CalPERS has on hand for Huntington Beach — $913.96 million — and what’s been promised to retirees — $1.35 billion.
CalPERS charges the city 7% on the difference, $436 million, which is treated like a loan, and the rate is set to increase over the next 10 years, City Manager Oliver Chi explained in a Nov. 10 report.
Chi wants to take advantage of low borrowing costs and refinance the debt.
Huntington Beach can refinance the debt at a rate of around 3% without extending its repayment terms, Chi wrote.
The city will consider a pension obligation bond, which Chi projects could save the city $8.5 million a year and nearly $200 million over the 24-year loan period.
“We have been diligent and thoughtful in further assessing this overall approach to see if we can find consensus on addressing this challenging issue,” Chi wrote.
Monday’s council meeting begins at 6 p.m. at City Hall, 2000 Main St.
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