Mad River Union
ARCATA/McKINLEYVILLE – The Arcata Fire District is considering refinancing its pension debt in an effort to save money. It’s also looking at buying the Arcata Fire Station from the non-profit volunteer organization that owns it.
On June 8, the district’s Board of Directors voted 3-1, with David Rosen dissenting and Elena David absent, to enter into a contract with the Weist Law Firm and California Municipal Advisors LLC to conduct a financial analysis on refinancing the fire district’s pension liabilities.
The district has more than $6 million that it owes CalPERS to pay for the pensions of current and former employees. The district makes regular payments to the pension fund. However, the interest rate for CalPERS is about 7 percent.
Weist said that the district should look at its pension liabilities as debt and should have a plan for managing it.
If the district refinances the pension debt and pays it off over a period of 15 years, it could save as much as $2.5 million, based on data from CalPERS.
Weist Law Firm and California Municipal Advisors LLC will crunch the numbers and return to the district at a later date with refinance options.
When the agenda item was presented, it included a proposal to purchase the Arcata Fire Station at 631 Ninth St. from the non-profit Arcata Volunteer Firefighters Association (AVFA). The AVFA owns the building and leases it to the district for about $8,000 a month.
The AVFA uses the lease payments to pay down the $1,770,000 loan its owes Redwood Capital Bank. The non-profit is paying about 4.5 percent interest on the loan and recently notified the district that it will need to increase the monthly rent on the building.
District board members Randy Mendosa and Nicole Johnson recently met with representatives of the AVFA and the idea of the district buying the building was brought up.
The district could potentially include the cost of the building in the bonds it would use to refinance its pension debt. The interest rate may be about 3.5 percent rather than the 4.5 percent now paid by AVFA.
Director Rosen objected to the proposal from the start of the meeting, even voting against the approval of the evening’s agenda.
“We’re putting the cart before the horse,” said Rosen, who pointed out that the board hasn’t even discussed whether buying the building is in the district’s best interest.
“I feel like we’re jumping the gun here,” Rosen said.
Johnson disagreed, saying that the board needs information on the cost of refinancing and buying the building before it can make a decision.
The board ultimately agreed to make the purchase of the Arcata Fire Station a topic to be discussed at a future meeting.