City to issue $1.25 million in bonds

In a consent agenda item, Portsmouth City Council voted on Dec. 28 to provide for the issuance of bonds in the amount of $1,250,000 to provide funds for the city’s accrued liability to the State Police and Firemen’s Disability and Pension Fund.

In the mid-1960’s the state adopted legislation which abolished all local police and fire pension systems, and transferred the rights and obligations of those systems and their members to the Police and Firemen’s Disability and Pension Fund (PFDPF); and municipalities were given the choice of either immediately paying to the fund the present value of their unfunded pension liabilities, or paying those liabilities over a 68-year term (ending in 2035) with interest at 4.25 percent. The city opted for the extended payment plan; and on Sept. 1, 2001, the city issued its $2,090,000 Police and Fire Pension Refunding Bonds (the “2001 Bonds”) to permanently finance notes previously issued in the amount of $2,000,000 to provide interim financing for providing funds to prepay, at a discount. The city has determined that in the current interest rate climate they will be able to receive substantial cost savings.

“It will be good and the interest rates are going to be lower as well,” Third Ward Councilman Kevin E. Johnson said.

In an agreement between the city and U.S. Bank the city will receive an indicative rate of 2.52 percent per annum and that rate is being held as a courtesy to the city until Feb. 1, 2016.

The City Auditor was authorized to award and sell the bonds to U.S. Bank National Association at private sale, at the price of par, as set forth in their offer to purchase.

In other action taken by City Council an issue arose concerning the usual practice of the city adopting a temporary budget to get the city through for a couple of months.

“There was some question on that, the way the (City) Charter is worded,” Johnson said.

Council voted to not pass an ordinance to make appropriations necessary for the current expenses of the city for the months of January and February 2016, because of issues City Auditor Trent Williams brought up about an ordinance that will not allow council to vote on a budget for a year that isn’t in session.

City Manager Derek K. Allen threw out the idea of considering a change in the ordinance, because he has never worked for a city where you cannot approve a budget for the coming days. As it stands, the city could be working without an approved budget until Jan 19, 2016.

By Frank Lewis

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Reach Frank Lewis at 740-353-3101, ext. 1928, or on Twitter @franklewis.