The Memphis City Council plans to vote for a restructuring of how the city will plan to repay their debts. The Memphis Mayor, A C Wharton Jr., has proposed the restructuring in order to postpose a future payment in 2020 that would cause the city’s annual payment go from $15 million the year before, to $30 million.

The payment in 2020 would fall in the same year that the city is also supposed to begin making its full annual payment of $74 million to the city’s pension fund. However, some members of the council believe that the city should have to pay the annual pension contribution in two years, without having to push it past 2020.

As a result, the council has hired PFM, a municipal finance firm, to advise them on the restructuring proposal. PFM put together a PowerPoint presentation aimed at helping the council to make a decision. The last slide of the presentation read, “restructuring the debt provides an opportunity to focus paying the pension obligation.”

PFM argues that not only would a restructure lower the gap between revenues, pensions, debt service, the combined annual debt service and pension costs in 2020, it would do so by $104 million. However, if the city fails to act, then the gap could grow to about $172 million, and Memphis movers are not sure how the inevitable ripple effect would hinder residents.

On the other hand, a restructure would add roughly $12.7 million to the city’s debt service expense, noting that “higher interest rates will increase financing costs and mitigate some of the benefit of the restructure.