Municipal

Overview

A municipal leasing is similar to standard commercial leasing with a few differences:

• In a municipal lease, the intent of the lessee is to purchase and take title to the equipment. The financing is a full payout contract with no significant residual or balloon payments at the end of the lease term.
• The lease payments include the return of principal and interest, with the interest being exempt from Federal income taxation to the recipient. Typically, a tax-exempt interest transaction will be financed at interest rates lower than equivalent commercial financing.
• The municipal lease provides for termination for non-appropriation of funds by the Government Agency.

Termination for non-appropriation distinguishes a Municipal Lease from all other types of leases. The clause normally is required so that the lease does not constitute a long-term debt instrument (which would require a lengthy process for issuance). The obligation to pay is subject to appropriations being made annually over the term set forth in the lease.

• Real Property
• Fire, Police & Street/Service Dept. Equipment & Vehicles
• Software & Technology
• Medical & Office
• Energy

• States, Counties and State & County Agencies
• Cities, towns, villages or other municipal entities
• Subdivisions of State
• Public Education
• Volunteer Fire Departments

• Simpler and faster alternative to bond issue
• No voter approval required
• Normalize capital budget
• Avoid deferred maintenance
• Flexible and customizable payment structures