Bonds, Banks & Municipal Leases. The laws in most localities generally prohibit state, county & municipal governments from borrowing (incurring debt) that extends over multiple budget periods. Until those future annual budgets are formally approved, the current governing body has no legal authority to bind the next governing body into making payments. Because of these special restrictions, the non-traditional paperwork, low-interest rate yields, municipal leasing is a bit of a financial specialty area. For many bankers, it’s just not their cup of tea.
Bonds are very complicated legal documents (read: expensive, time-consuming, loaded with compliance requirements, town meetings, referendums and interest rate risk). And with bonds you never know the exact rates you’ll be paying until the bonds are sold to investors.
Bonds are generally best suited to the largest 7-8 figure projects, extending over 15, 20, or even 25 years, like sewers, roads, bridges, and building projects, etc.
Unlike leases, bonds are backed by “the full faith and credit” of your city. BONDS CREATE DEBT and the bond covenants generally stipulate that the city will be required to raise taxes as necessary to pay the bond obligation should the city’s fortunes change. This guarantee can reach directly into the pockets of every single tax-payer–requiring them to ante up their share of any shortfall. It can get ugly.
There are VAST DIFFERENCES between a municipal lease that includes non-appropriation provisions (generally treated as an expense) and bonds that create debt for your community.
Let us show you the numbers in a matter of hours on any combination of vehicles & equipment. You’ll know within 60 seconds of receiving our quote if municipal leasing is the best choice for your agency!
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Questions About Municipal Leases, Bonds & Banks?
Call 800-541-0114 x-22
(On your phone? Click to call! Press ext. 22 for Police Car Leasing)
