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Keizer considers using property-sale proceeds to reduce PERS liability; staff says side account could save millions
Summary
City staff told the Long Range Planning Task Force that using proceeds from planned property sales to create a PERS side account could save an estimated $6.3 million in employer contributions over 20 years, and described a working assumption of applying about $3.5 million of expected proceeds to that strategy.
At the March 10 task force meeting, city finance staff outlined options for addressing Keizer’s Public Employees Retirement System (PERS) exposure, including using part of planned property-sale proceeds to create a PERS side account (a prepayment vehicle that can reduce future employer contribution rates).
Tim Wood said the city expects combined gross proceeds of about $5.5 million from property sales and presented an illustrative plan that would use roughly $3.5 million to seed a side account. “If we do that, the city could save $6,300,000 in contributions over the next 20 years,” Wood said, adding the state match tied to such a side account would be up to $300,000.
Why it matters: Keizer faces rising employer retirement contributions. Wood showed PERS-related employer costs at about $2.6 million for the last two years and projected they could rise to roughly $3–3.1 million starting July 1, 2025, creating ongoing pressure on operating budgets.
Details presented
- Property-sale proceeds: Staff said the city has properties slated for sale with combined gross proceeds of about $5,500,000; the staff example used $3,500,000 as the amount to place into a PERS side account. - State match: Wood said the state contribution program would add up to $300,000 matching funds, raising the program value. - Projected savings: The illustration showed a present-value-style outcome of about $6.3 million in reduced city contributions over 20 years, roughly $314,000 per year. - Alternative: Using proceeds to avoid issuing debt would save an estimated $4.8 million in principal and interest over 15 years, Wood said — an apples-and-oranges comparison staff presented to help the council weigh options.
Council and staff remarks
Councilor Christopher and others questioned which proceeds would be committed where; staff said one property sale’s proceeds (approximately $1 million) are already planned to repay the street fund for earlier purchases, leaving roughly $2.5 million in the illustrative example if the council chose to repay that street fund first. Council members asked that staff present finer-grain scenarios before final council decisions.
Next steps
Wood said staff will return to the council with more precise numbers and recommended options as the property sale process advances; any final decision to create a side account or to issue/avoid debt would require council authorization.
