11/28/2006

Council considers bonds for pensions, land

Ann DeMatteo , Assistant Metro Editor

HAMDEN — Any way you slice it, it’s a lot of debt. Whether you’re talking about the possibility of the town buying pension obligation bonds to infuse the coffers of the Hamden employees’ retirement fund, or whether you’re talking about adding $2 million to an already-approved $4.5 million bond ordinance to buy the Dadio Farm on Putnam Avenue, the Legislative Council talked about a lot of debt Monday night. Council members heard a presentation from the town’s financial advisers on pension obligations bonds, Mayor Craig B. Henrici’s answer to bolstering the pension fund, which now has an unfunded liability of $196 million. Bill Lindsay — a director with IBIC, the town’s financial adviser — said that the town would save money over 30 years if it restructured current debt and purchased pension obligation bonds. Council members asked many questions and weren’t necessarily sold on the plan, but no decisions were made. Lindsay said that over 30 years, if $16 million was infused annually, the town would spend more than $1 billion for debt service and pension contributions. But if the town purchased $85 million in pension obligation bonds, only $973 million would be spent on debt service and pension contributions over 30 years. If the town were to purchase $85 million in bonds, then 60 percent of the liability would be funded, he said. Councilman James Pascarella, D-At large, asked for the advisers to provide the council in the future with information that would give the governing body "confidence and assurance" that the plan would work. Pascarella said that when it comes to other people’s money, institutions should "err on the side of caution." "Risks should be fairly conservative and here we’re discussing what I thought was a concept of borrowing money to invest it," Pascarella said. "That’s not conservative at all." Councilman Matthew Fitch, D-1, listened to what the advisers had to say but said he still doesn’t understand where the savings would be. Fitch said it seems as if debt that would be lowered now wouldn’t be paid off for 20 years under the change, a belief Lindsay tried to dispel. "But I’m keeping an open mind," Fitch said. Council Finance Committee Chairman Curt Leng, D-6, said he preferred the "slow and steady approach" of adding $3 million to the retirement fund annually. This year, the council set aside $9 million for the pension fund. "This approach seems less risky and will place our pension fund in a positive status in a mere two to three years," Leng said after the meeting. Also Monday night, the council’s Finance Committee approved the $2 million extra in bonding the town will need to purchase the Dadio Farm for a fire station and fire training facility. The town plans to sell about eight of the 11 acres to industrial concerns and would realize about $1 million in revenue from those sales.

©New Haven Register 2006