Municipal Leasing

Equipment leasing is best alternative to traditional ways of financing. When we see at past few years, we will find that municipal leasing has come along way. Municipalities are discovering that municipal leasing is a very attractive and viable way to fund new equipment, technology and infrastructure upgrades. It provides simple methods to provide services like education, public safety, water ambulance etc while improving the state of cash flow. It is basically an installment sales contract that offers no debt conditions. This because the interest is exempted from the federal tax, offering cost savings when compared to conventional leasing.

Municipal Leasing is an effective and simple method for providing the capital equipment needed to provide essential services-education, public safety, water and sewer etc. while improving cash flow management. Types of municipal leasing-:

Tax-exempt municipal lease

This type of lease is offered only to the government (local and state) and their sub-divisions. This type of lease offers acquiring the current technology, lower interest rates, no bond policy, flexibility, connivance, 100% financing and wide range of assets. This type of lease is beneficial over the bond financing. It permits the government to acquire the capital goods without any to concern about the debts and the ask people to issue one. The tax-exempt leases don't have any records beyond local level, they are carried out privately.

Sale-Leasebacks

Under this, a local governing body or any tax-exempted institution sells the public property to a private entity and at that point of time, it leases it back. This local governing body or any tax-exempted institution could be a university, foundation or church which gets a cash payment and an opportunity to lease back the facility at a reduced rate. This will reflects the owners tax benefits. Sale-leasebacks involve at least four primary participants: a municipality, county, state, or tax-exempt organization, these participants own and will lease back the property, a private equity investor, an underwriter, or lender and a public authority which are responsible for the issue of tax-exempt industrial revenue bonds to finance acquisition and construction costs.

Safe-Harbor Leases

This type of lease is specially designed for the private transactions. The government sectors benefits from safe-harbor leasing when it comes to mass transit rolling stock vehicles that are financed completely or partially with the tax-exempt bonds. Generally, it is sold to the private firm.

To provide quality public services, leasing is a most viable and financially sound option for many municipalities to overcome their revenue shortfalls.