The Columbus City Council last week increased bonding authorization to pay off the city's liability to a state pension fund.
The city council originally authorized $26 million of bonds, but increased the total to $28 million after the Ohio Police and Firemen's Disability and Pension Fund decided on a discount rate for money owned to the fund, according to Michelle Kelly-Underwood, executive assistant to Columbus' auditor.
The fund's board set a discount rate of 65 cents on each dollar last month. The decision prompted the city, which owes the fund about $41 million, to sign an agreement with the board' last week that allows the city to pay off its discounted liability in a single payment using bond proceeds.
The tax-exempt bonds should be issued by the end of the month, Kelly-Underwood said.
In 1967, the fund assigned an amount of liability to Columbus and other municipalities and gave them until 2035 to pay off the loans. A state law that took effect in June, permits Columbus and other cities to issue GO debt to pay off the $400 million in principal they owe the fund in a single discounted payment.
While some tax law concerns have been raised about the bonds Columbus plans to issue, city officials said they are comfortable with a special tax law counsel's opinion that the transaction would not violate any tax laws.