Tax-Exempt Lease-Purchase Financing Options for Local Governments

摘要

In today's uncertain economic climate, it's important for local agencies to use the best tools available to secure needed financing. As local budgets are reduced, funding the immediate and long-term needs of local government becomes more difficult. Consequently, local agencies are seeking more flexible and efficient options for funding. Tax-exempt lease-purchase financing is one solution local agencies use to leverage time and resources. It can be used for 100 percent financing of real property, land and buildings or for personal property projects, such as equipment and vehicles. The benefits of lease-purchase financing include: 1. Faster funding; 2. Lower costs of issuance; and 3. A simpler process requiring fewer finance team participants. For example, under a lease structure, a third party acquires the property and leases it back to the local agency for payments that cover the principal and interest on the acquisition of the property. Once the terms of the lease are completely fulfilled, the local agency acquires the property free and clear of any lien or restriction and without any residual value payment.