The Municipal Lease/Purchase Agreement was developed as a financing alternative to cash purchases and the outright issuance of long-term municipal bonds. The use of municipal leasing by state and local finance officers has increased substantially over the last several years because of the flexibility of the lease purchase as a financing instrument and the ability to spread the cost of the equipment or capital asset acquisition over a period of time.

The Municipal Lease/Purchase Agreement is in effect an installment purchase agreement whereby the municipality acquires title to the equipment. The municipality makes periodic lease payments of principal and interest. Upon receipt of the final payment, a bill of sale is released to the municipality, free and clear of any lien or security interest.

The Municipal Lease/Purchase Agreement can be set on monthly, quarterly, semiannual or annual payments. This flexible payment mode will allow the municipality to plan their budget in a more realistic way. The municipal lease is also subject to annual budgeting appropriations. The municipality has the right to terminate the lease if nonappropriation for the equipment being leased should occur.

Eligibility
Lease purchase financing can work for numerous municipal and governmental entities. They include:

• Local, County and State Governments
• Public Service Districts
• Public Utilities
• Paid and Volunteer Fire Departments
• Emergency Rescue Units
• Boards of Education
• Hospitals