Norwich – City guides are facing a unique situation this fall: How to educate voters that a $ 145 million referendum loan would actually save money.

The city council unanimously approved an ordinance on Monday to pledge the city’s entire $ 145 million pension obligation and take advantage of the current low interest rates. If voters vote in a November 2 referendum, the city would swap its annual pension payment for an annual payment on the bond debt plus the annual active employee pension contribution.

At an estimated interest rate of 3%, financial advisors estimate that the city could save about $ 43 million over a 30-year term on the bond. Norwich has estimated a pension payment of $ 13.7 million this year.

City treasurer Michael Gualtieri, a retired banker, told the city council on Monday that he saw this as a “unique and once-in-a-lifetime opportunity” to cut the city’s pension liability costs, but warned that the window might be closed soon.

“The (Federal Reserve) keeps interest rates artificially low,” he said. “But inflation is rising, which will ultimately lead to higher interest rates.”

Councilors praised Gualtieri and auditor Josh Pothier for proposing a safety valve to avoid the effects of volatile stock market fluctuations in the pension fund.

Pothier proposed a reserve fund so that in years when pension interest income fell below a certain point, money from the reserve could fill at least part of the void. And if the pension fund earns too much interest, part of the city’s annual payment would go to the reserve fund, not the pension fund.

Becky Sielman, advisory actuary at Milliman Inc., said financial analysts had forecast that Norwich would forecast an average return of 6.25% on pension fund investments, but with a few years up and a few years down.

Together with the approval of the city council, the board of directors for education, personnel and pensions and the board of the municipal utilities approved the plan. City, school and utility workers are enrolled in the pension program.

Now city guides face the prospect of explaining the complexities of pension obligations, bonds, interest rates, and stock market volatilities to voters who will see a vote to approve a $ 145 million bond.

Mayor Peter Nystrom emphasized to his council members that after the vote on Monday, city officials cannot stand for approval of the referendum question, but can only explain the move.

Alderman Joseph DeLucia said city guides must explain that the city already has the pension obligation and the bond is not a new borrowing. He compared it to a family refinance from a variable rate mortgage at a cheap fixed rate.

“The only component that worries me is educating taxpayers that this is in the best interests of the city and the people who pay the tax bills,” DeLucia said.

“It’s one of those things that makes too much sense not to do,” said Pro Tempore Council President Mark Bettencourt. “We’ll have to do everything we can to educate, because if someone comes into the voting booth and sees $ 145 million, they’re going to freak out.”

State law allows the city to print a declaration document for voters, but city money cannot be spent to campaign for or against an electoral measure.

City Manager John Salomone said he will set up a public information forum on the bond issue this fall and will ask to speak to local Rotary clubs and PTO meetings.

“There are a lot of facts that we need to publish and we can answer questions,” he said. “It’s very important to do as many of these venues as possible.”