Quincy mayor says pension obligation bond and DIF growth ease long-term debt pressure

Mayor Thomas Peacock told the Quincy City Council on Oct. 20 that the city's $475 million pension obligation bond (POB), downtown District Improvement Financing (DIF) and recent capital projects have changed the city's long-term debt picture and are projected to reduce pension-related costs by about $168.5 million over the life of the bond.

The mayor opened a wide-ranging fiscal presentation that grouped the city's liabilities into three buckets'the POB, DIF-related borrowing and general obligation debt for schools and infrastructure'and explained how each affects the tax base, the operating budget and capital planning.

Peacock said the POB was issued in late 2022 after state approval and market work with Milliman (actuarial consultant), Ramirez & Company (senior manager) and a S&P rating process that produced an AA long-term rating with a stable outlook. The city obtained a 2.62% interest rate on the POB, Peacock said, and invested the proceeds with the state's PRIM fund. "The $4.75 would bring us up to a 100%," Peacock said when describing how the $475 million issuance completed the funding needed to fully finance the system under the state schedule.

Peacock said the POB sets annual debt service at about $37 million beginning in 2026 and continuing through the city's statutory amortization target in 2040; by contrast, he said, without the POB the actuarial-required contribution in 2026…