Benefits of Municipal Leasing
There are several (general) types of leasing used to finance the acquisition of hardware, software, equipment and vehicles. These include personal, commercial, non profit, operating, tax, finance and municipal leases. They are all different and target the specific needs of borrowers with different tax and legal requirements. The only type of lease specifically designed for the unique requirements of governments are “municipal leases.”
Does My Agency Qualify for Municipal Leasing?
Municipal leasing is an “umbrella” term that includes state, county and local governments (and their agencies and departments) including towns, villages, counties, boroughs, public schools, public safety agencies, authorities & special districts. Collectively these are sometimes referred to as “political subdivisions.” The municipal designation seems limiting, but this type of specialized government financing applies to almost all the entities mentioned above. Municipal leases cannot be used by private or commercial entities.
Why Is It Called “Tax Exempt” Municipal Leasing?
Very favorable tax rules were created by the IRS years ago to incentivize financial institutions to make very low interest funds available to municipal entities to acquire almost any kind of new or used, essential-use equipment, real estate, hardware, vehicles or software at the significantly lower interest rates and under significantly more favorable terms. (The “tax-exempt” part of municipal leasing is not related sales, use or other taxes. Read more about tax-exempt here.
Non-Appropriation Language…No Problem!
Our state, county & municipal leasing programs have non-appropriation of funds language built-in for any state or jurisdiction that requires it by law. In the event funds are not available for any legal reason, the equipment is returned to First Capital and the lease can be terminated. (Often the difference between incurring a “full faith and credit” backed debt and an incurring an annual expense.)
Police Leasing Rates are Much Lower.
Here are some of the reasons; the interest income to the funding source (e.g. First Capital, its banks and investors) is generally exempt from certain federal income taxes and receives other favorable treatment–when lending to qualifying government entities. In short, when our cost of funds starts lower and the government entity’s cost of borrowing is significantly lower too!
Police Leasing is Lease-To-Own
Our police vehicle leases are “lease-to-own” by (legal) definition and will not have so-called “residuals” or end-of-lease buyouts. Vehicles and equipment are “Sold To” the government entity (unlike a commercial lease, for example).
Title passes directly from the vendor to your government agency at delivery, not at lease end.
With vehicles for example; your agency will register the vehicles and apply for titles in the agency’s name as soon as they are delivered. At that end of a municipal lease you can sell, trade, re-task or continue using the vehicles and equipment (literally) forever. If you don’t own the equipment, you don’t have a municipal lease.
Police Departments “Do More, With Less”
Yes, you can! Its all about maximizing the buying power of the budget dollars you have now, for what you need today and tomorrow. S-p-r-e-a-d the cost of expensive capital equipment over multiple budgets– instead of trying to shoehorn 100% of every expense dollar into this year’s budget alone. Too many governments get caught in budget trap of only spending from the current budget. Municipal leases and their unique non-appropriation language allow you to sidestep those constraints. Most agencies don’t have enough spare cash to pay in advance for assets they will benefit them for years.
Acquire 4-5 Times As Much With the Same Budget
Here’s how: Municipal leasing provides the financial leverage (buying power) that allows government agencies to multiply the purchasing power of the appropriations they do have, by a factor of 4-5 times! The total budget cash needed is only what is due in the current budget year, not the total cash-in-advance price. Municipal leasing allows the cost of new equipment to be matched against (timed) to tax revenue that will be received over multiple budget periods.
What You Need…When You Need It! There’s still is no free lunch…but there are some MUCH SMARTER WAYS to get what you need–a lot sooner!
Some Cash Flow Math…
Will it be two or three new police cars acquired with cash this budget year…or a small fleet of 10-12 new vehicles, for the same out-of-pocket amount spread over the next 3-6 budget years…as your use them?
Fleet Leasing is EASIER and FASTER too!
Unlike complex bond financing or conventional financing, municipal leasing is a very streamlined process that provides access to the most aggressive rates available for government fleets. From as small as $35,000 to $20 million or more!
We’ve Got You Covered!
Do You Have Leasing Questions?
Call Now 800-541-0114
(Using your phone? Click to call! Press ext. 22 for Government & Municipal)
View all of our FAQ’s here!