Fox Point moves to refinance retirement liability

Fox Point - With a goal of saving money in the long run, village officials began preliminary discussions of paying off existing debt associated with the Wisconsin Retirement System benefits offered to employees.

The village enlisted the services of financial management firm Robert W. Baird to provide a list of options for the outstanding WRS debt. Vice President Steven Kornetzke came before the Village Board with a list of options.

The village's existing WRS debt, refinanced in 1982, hovers around $2.3 million. But Kornetzke said an existing 7.2 percent interest rate will make it next to impossible to pay off the debt by the targeted year 2032.

"This works more like a credit card," said Kornetzke, illustrating the challenges the village faces in paying off the debt at the existing rate and frequency. "The 7.2 percent rate is mind-boggling, given what current interest rates are."

Kornetzke presented the board with two options to paying off the existing debt.

The board favored a proposal that called for taking out a state trust fund loan over a 20-year period to pay off the existing debt. The loan would be taken out at a proposed interest rate of 3.75 percent.

Another option with less certainty could carry a slightly lower interest rate of 3.66 percent. It would entail taking out notes and refunding bonds. It would require short-term interim financing, followed by long-term refunding.

Fox Point is not alone in its quest to address mounting WRS debt. A number of municipalities and school districts across the state have or are in the process of addressing the issue.

While the board had an inkling of the WRS situations, several members expressed surprise at the true condition of the mounting debt when the issue was taken up.

"Here's a thought: When you're in the hole, it might be best to stop digging," Village President Mike West said. "I think (paying off the loan) would be an intelligent decision."

Paying off the existing WRS debt would come at a cost to Fox Point taxpayers.

Regardless of what the village does to its general operating budget, Village Manager Susan Robertson said there would be an estimated 1.22 percent increase in the municipal portion of a resident's tax bill.

"We've looked into this in the past, and this is the best value we've had," Robertson said of the proposals presented.

WRS payments are currently within the village's general operating budget. If plans do proceed to pay off the existing loan, the funds would be covered through a separate debt service fund and be taken off the general levy.

"This has the benefit of freeing up that end of the levy, even though it's not any less expensive for residents," Robertson said of the operating budget.

The board gave Robertson and Baird officials the authority to move forward on plans. Next steps include filing an application to take out a state trust fund.

A closing has tentatively been scheduled for Oct. 29.

NEW FACES

New Fox Point-Bayside School District staff: