Government Financing


Tax-Exempt Leasing
    Municipalities across the nation, large and small, often face the difficulty in meeting their capital equipment and facility needs. Tax-exempt lease purchase financing is a technique that allows a municipality to purchase equipment and make periodic lease payments over the useful life of the asset. The payments under a lease arrangement are subject to the annual budgetary process and are included as a line item in the operating budget. This results in yearly obligation, thus eliminating the need for a referendum to approve long-term debt.  If structured properly, the interest portion of the lease payments is exempt from federal income tax resulting in a low tax-exempt interest rate to the borrower.    

Lease Purchase generally not considered a debt?
    A lease purchase agreement is a yearly obligation renewable at the option of the municipality. The obligation is subject to the annual appropriation of funds by the district.  If funds are not appropriated for a given year, the lease agreement may be terminated.  Due to the one year obligation, a voter referendum and approval is generally not required to enter into a lease purchase agreement.

Who is eligible to utilize Tax-Exempt Leasing?
    Basically, any municipality or political subdivision that can use tax-exempt securities can utilize tax-exempt leasing.

What can be financed?
  • A New City Hall
  • A New Fire Station
  • A New School Building
  • A New Synthetic Turf Soccer or Football Field
  • Audio/Visual Equipment
  • Computer Equipment 
  • Copiers/Printing Equipment 
  • Furniture
  • Fire/Rescue Equipment
  • Heating and Lighting Upgrade
  • Medical/Laboratory Equipment 
  • Modular Buildings
  • Public Works Equipment
  • Vehicles 
  • School Buses Real Estate Improvements
  • Telecommunication Equipment 
  • Waste Transfer Station
  • Water Treatment Plant Upgrades
  • and more . . . . .

Benefits of Tax-Exempt Leasing
  • No Cash Down Payments - 100% equipment cost financing
  • Flexible terms structured to meet cash flow requirements.
  • Term, normally 3 to 10 years.
  • No Debt Creation - payments are subject to annual appropriations and the obligation is not subject to statutory debt limitations in most states.  Since debt is not created, voter approval is not generally required.
  • Matches Cost with Revenue - payments correspond to the useful life of the asset being financed.
  • The documentation required to close a lease purchase agreement is substantially less than a traditional bond financing.  Hence, lease financing can be accomplished in a shorter time frame.
  • Low Up-Front Costs  - a private placement of the lease eliminates underwriting expenses, trustee fees, and expensive legal fees.