How Municipal Leasing Works

Overview

A municipal lease is similar to standard commercial leases 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.

What Equipment We Lease

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

Who We Serve

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

Benefits to Municipalities

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