Fort Bragg authorizes bonds to repay CalPERS debt
On October 12, the Fort Bragg City Council authorized the sale of lease revenue bonds to raise $11 million. The raised funds have two proposed purposes: restructure Fort Bragg’s debt with CalPERS, and to acquire the southern portion of the Mill Site. While the council did vote to move forward with restructuring the debt, it has not made any final decisions on acquiring the Mill Site South at this time.
Last week, the city had a credit rating presentation with Standard and Poor’s. The city will obtain a General Fund credit rating within the next few weeks; after this, the city can start going through the process of marketing the lease revenue bonds.
Once the bonds are sold and the revenue is raised, the council will deal with the CalPERS debt. CalPERS is the pension agency for California public employees. Many cities in California have refinanced their CalPERS debt in recent years as it is a large part of many city budgets.
Currently, Fort Bragg owes CalPers $11 million, with an interest rate of 7%. However, due to CalPERS 2021 discount rate, this number is projected to soon be between $8.4 million and $9.8 million. The Council will be applying $7.5 million in bond proceeds towards this debt.
With a General Fund credit rating, the city can restructure this debt and trade it for new debt with a lower interest rate. With interest rates at historical lows, the council hopes to get a loan at less than 3.5%.
There are tentative plans to use $3.5 million of the raised funds to acquire the Mill Site South from Georgia Pacific; however, this has been met with resistance from Mendocino Railway, the owners of the Skunk Train. Mendocino Railway is currently trying to acquire the Mill Site for development, filing an eminent domain lawsuit against Georgia Pacific for the site.
Mayor Bernie Norvell specifically didn’t want to agree to authorize the bonds if it was tied to the purchase of the Mill Site South.
“I don’t think we have enough information to address some of those concerns in our community,” Norvell said. “We haven’t made a deal with Georgia Pacific. We haven’t obligated the people of Fort Bragg to purchase the property.”
If the city chooses not to acquire the Mill Site South, it has other options for the $3.5 million, such as upgrading the broadband, solar, microgrid, or water systems. The city can even return the $3.5 million without penalty, as the new restructured loan will have no penalty for early payments.