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Fire Trucks and Fire Stations
Lease Purchase Financing
New and Used Fire Trucks
New Fire Station Financing Construction and Renovation
Fire Trucks & Stations
or Why Choose Lease Purchase Over Traditional Bond Financing?
Both methods of financing provide a
municipality with the opportunity to own and use an asset immediately
while payments are distributed over the asset's useful life. When
properly structured, the interest portion of both bonds and Lease
Purchase payments are also considered tax-exempt income for the
investor.

 | Properly structured Lease Purchase
Agreements avoid being classified as debt obligations.
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 | Costs of issuance are often
substantially less than traditional bond financing.
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 | Lease Purchase financings are also considerably
less complex, and can be completed in a much shorter time.
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 | Lease Purchase financing allows the
municipality an alternative source of capital, thereby expanding
access to the capital markets.
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 | Links to Fire Equipment
Manufacturers and Dealers
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Alexis
Fire Equipment
American
La France
Aerialscope
Attack
1
Boise
Mobile Equipment
Colet
SVD
Crash
Rescue & Snozzle
CSI
Emergency Apparatus
Dennis
Emergency
One, Inc.
Emergency
Vehicles of Texas
Fastlane
Emergency Vehichles
Freightliner
General
Fire Apparatus
H&W
Fire Trucks
Hackney
HME
Fire Trucks
KME
Fire Apparatus
LDV
(Command & Speciality Trucks)
Luverne
Fire Apparatus
Marion
Body Works
Oshkosh
Pierce
Quality
Manufacturing
Road
Rescue
Saulsbury
SVI
Trucks
Spartan
Sutphen
Corp
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Frequently Asked Questions About Tax-Exempt Municipal
Leasing
- What is a
tax-exempt lease?
A tax-exempt lease or lease-purchase agreement is an
installment purchase, conditional sale or lease with
an option to purchase for nominal value. It may also
be referred to as a municipal lease.
- Who qualifies
for tax-exempt financing?
The issuer of a tax-exempt obligation, including a
tax-exempt lease, must be a State or possession of
the U.S., the District of Columbia, or a political
subdivision thereof. Political subdivisions include
cities, towns, counties and other municipalities.
They may include other state entities such as school
districts, special purpose districts (fire, parks,
utility, water, etc.), hospitals, agencies,
authorities, boards and commissions.
Not-for-profit organizations created under Section
501 (c) (3) of the Internal Revenue Code do not
qualify directly as issuers of tax-exempt
obligations but may be eligible with a sponsoring
governmental unit. Not-for-profit organizations
benefiting from tax-exempt leasing include:
 | Health
Care (Hospitals, Clinics, Nursing Homes, Life Care
Centers) |
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Education (Colleges and Universities, Preparatory
Schools) |
 | Museums
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 | Research
Centers |
What are some
of the benefits of tax-exempt leasing?
The benefits of a tax-exempt lease include:
 | Preservation
of capital dollars for other projects for which
leasing is not an option |
 | Preservation
debt limitations does not create long-term debt on
the entity's books |
 | Enables
improvement of cash flow |
 | Incorporates
flexible structuring to meet budget needs
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 | Low rates
resulting from tax-exempt basis |
 | Offers an
alternative financing option without voter
approval |
 | Provides
project financing (including soft costs)
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 | Spreads out
the cost of an asset over the useful life of that
asset or project. |
What can be
financed on a tax-exempt basis?
Tax-exempt financing is typically utilized for
equipment acquisitions. It may also be used for
other capital expenditures, e.g., purchasing
property, implementing of a specific project, or
expanding existing facilities. Both personal
property and real property can be leased. This
includes personal property such as:
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Telecommunications Systems |
 | Computers
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 | Vehicles
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 | Energy
Management Systems |
 | Recreational
Equipment |
 | Emergency
Services Equipment |
 | Medical
Equipment |
 | Software
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 | Modular
Buildings |
and real
property such as:
 | Schools
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 | Courthouses
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 | Correctional
Facilities |
 | Central
Offices |
 | Recreational
Facilities |
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Environmental Facilities. |
Equipment may
include:
 | Hardware
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 | Installation
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 | Training
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Infrastructure wiring |
 | Maintenance
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 | Video &
multimedia equipment |
 | Software
applications |
How are
tax-exempt leases structured?
Tax-exempt leases are structured as a series of
one-year renewable obligations that are subject to
the governmental entities ability to appropriate
funds for the continuation of lease payments.
Payments constitute a current expense of the lessee
and, in the event that sufficient funds are not
available for payment, the agreement is terminated
and the equipment is delivered to the lessor.
What is a
non-appropriation clause?
A non-appropriation clause enables the lessee to
terminate the lease agreement at the end of the
current appropriation period without further
obligation or penalty. This may be done only in
cases where the lessee was unable to obtain funding
for future payment obligations on the lease.
Typically, the clause will contain a 'best efforts'
requirement whereby the lessee must use its best
efforts to obtain the necessary appropriation for
the lease payments. The non-appropriation clause
enables the lessee to account for the lease
obligation as a current expense instead of debt.
What is a
non-substitution clause?
A non-substitution clause maintains that if a lease
is terminated for non-appropriation, the lessee may
not replace the leased equipment with equipment that
performs the same or similar functions.
Who owns the
equipment under a tax-exempt lease?
Title may either be retained by the lessor until all
payments have been received or may be granted to the
lessee at lease inception. In this case, the
obligation is secured by a 'perfected' first
security lien on the equipment. In most cases it is
preferable to pass title up front to avoid any
potential tax issues.
Who is
responsible for maintenance, insurance, property tax
and other operating expenses?
A tax-exempt lease is a 'net lease,' which means
that the lessee is responsible for these types of
expenses. However, the lessee may contract with the
equipment supplier to provide maintenance and other
services. These costs may be included in the
financing.
What is the
maximum finance term?
The term of the lease may not exceed 120% of the
average reasonable expected economic useful life of
the property or project being financed.
How is
tax-exempt lease financing arranged?
Tax-exempt financing is typically arranged by means
of a formal bid process.
What factors
should be considered in deciding when to use a
tax-exempt lease?
For any asset acquisition decision, the principal
financial objective is to obtain the use of the
asset for the lowest possible total cost, as
measured over the period the asset is to be used.
Other factors affecting the selection of a financing
option which should be considered by a governmental
entity include:
 | Availability
of cash at the time of procurement;
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 | Competing
demands on capital resources; |
 | Essentiality
of the asset to the basic functions of the entity;
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 | Useful life
of the asset; |
 | Desirability
of matching costs and benefits over time
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 | Ability to
improve bargaining positions with vendors; and
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 | Political
attitudes toward debt financing. |
For a variety
of needs and circumstances, tax-exempt lease
financing provides a governmental entity with an
alternative to purchasing an asset with cash,
acquiring its use for a period of time through a
true lease or issuing bonds
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Municipal Asset Management Inc.
Golden Colorado and Pittsburgh Pennsylvania
fheeg@mamgt.com
800--949-6685
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Send us an email at
Finance
No Obligation.
Frank Heeg our Municipal Lease Specialist will provide you a quote
good for 30 days and renewable. Or call us at 800-949-6685
New and used equipment qualifies. To receive a no obligation
proposal email or fax us a copy of your proposal with a
complete description of the equipment
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Municipal Asset Management, Inc.
Golden, Colorado
800-949-6685
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