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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.

bulletProperly structured Lease Purchase Agreements avoid being classified as debt obligations.
bulletCosts of issuance are often substantially less than traditional bond financing.
bulletLease Purchase financings are also considerably less complex, and can be completed in a much shorter time.
bulletLease Purchase financing allows the municipality an alternative source of capital, thereby expanding access to the capital markets.
bulletLinks to Fire Equipment Manufacturers and Dealers
bullet
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


Frequently Asked Questions About Tax-Exempt Municipal Leasing

  1. 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.
  2. 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:

     
    bulletHealth Care (Hospitals, Clinics, Nursing Homes, Life Care Centers)
    bullet Education (Colleges and Universities, Preparatory Schools)
    bulletMuseums
    bulletResearch Centers

     

  3. What are some of the benefits of tax-exempt leasing?

    The benefits of a tax-exempt lease include:

     
    bulletPreservation of capital dollars for other projects for which leasing is not an option
    bulletPreservation debt limitations does not create long-term debt on the entity's books
    bulletEnables improvement of cash flow
    bulletIncorporates flexible structuring to meet budget needs
    bulletLow rates resulting from tax-exempt basis
    bulletOffers an alternative financing option without voter approval
    bulletProvides project financing (including soft costs)
    bulletSpreads out the cost of an asset over the useful life of that asset or project.
     

  4. 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:

     
    bullet Telecommunications Systems
    bulletComputers
    bulletVehicles
    bulletEnergy Management Systems
    bulletRecreational Equipment
    bulletEmergency Services Equipment
    bulletMedical Equipment
    bulletSoftware
    bulletModular Buildings

    and real property such as:
    bulletSchools
    bulletCourthouses
    bulletCorrectional Facilities
    bulletCentral Offices
    bulletRecreational Facilities
    bullet Environmental Facilities.

    Equipment may include:
    bulletHardware
    bulletInstallation
    bulletTraining
    bullet Infrastructure wiring
    bulletMaintenance
    bulletVideo & multimedia equipment
    bulletSoftware applications

     

  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
  11. How is tax-exempt lease financing arranged?

    Tax-exempt financing is typically arranged by means of a formal bid process.
  12. 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:

     
    bulletAvailability of cash at the time of procurement;
    bulletCompeting demands on capital resources;
    bulletEssentiality of the asset to the basic functions of the entity;
    bulletUseful life of the asset;
    bulletDesirability of matching costs and benefits over time
    bulletAbility to improve bargaining positions with vendors; and
    bulletPolitical 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

Municipal Asset Management Inc.
Golden Colorado and Pittsburgh Pennsylvania
fheeg@mamgt.com
800--949-6685

 

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