The "Nuts & Bolts" of municipal leasing for government agencies like yours--step-by-step.  It's easier than you think to save a lot and spread the cost of big-ticket expenses over multiple annual budgets.

Step #1: Municipal leasing begins with your vendor price quotes  (exact, or your best estimates) on the vehicles and/or equipment -- including any accessories you need for a 100% turnkey solution.

Select any vendors of your choice--including state contract providers; one source or 10, whatever it takes to get exactly what YOU need. Your pricing estimates may change--and that's fine; we'll keep fine-tuning until it's perfect.

Step #2:  Request a one-page municipal lease-to-own quote from us.

800-541-0114  x-22

Step #3: Our one-page quote will be on your desk the same day and will clearly show the payment amounts and our extraordinarily low government interest rates. We will provide rates for multiple terms  (e.g. 3, 4, 5, 6, or more years, monthly, quarterly, semi, or annual payments) starting on the dates you select.

Step #4: Have we answered all of your questions? Great!  Email (or fax) us the two-page credit application along with a copy of the quotations from your vendors, a current budget, and the last 3 years of audits.

(For municipal leases under $100,000 and 5 years, all we'll need is a one-page application and a vendor quotation.  Seriously, No audits, No financial statements required!  E-A-S-Y-!)

Step #5: Municipal lease contract documents will be drafted and overnighted for your review and approval. (We even provide a prepaid overnight return envelope) 

Upon receipt of your executed municipal leasing documents, the full amount of the lease is deposited into an account in your city's name, at our bank.  Our bank will disburse lease funds directly to your vendors on your behalf. We work fast! A bank wire transfer or cashiers check to pay your vendors can be released within three business days of your receiving the equipment.

You are 100% in control of every step.  NOTHING happens without your "OK" upfront.   A confirmation copy of every disbursement that you authorize (via bank wire transfer or bank cashier's check) is provided on the next business day.

We’ve Got You Covered!

800-541-0114  x-22
(On your phone?  Click to call! Select Ext.  22 for Government  Leasing)

(A non-technical/non-legal overview)

Tax-exempt municipal leasing is sometimes misunderstood.  Municipal leasing is an umbrella phrase that applies to state, county, and municipal governments, special districts, and authorities, not just local governments. (very generally, entities funded with tax dollars).  “Tax-exempt” municipal leases (subject to annual appropriation) and municipal bonds (debt) are financial “first cousins.” Both financing methods are very low-cost financing tools (created by the IRS as incentives for financial institutions and investors)  to offer very low-interest financing to qualifying governments for essential-use equipment like vehicles, hardware, software, police & fire stations, jails, schools, public works, and maintenance facilities. The financial institutions get valuable tax exemptions, while governments like yours benefit from well-below-commercial interest rates and other benefits.  (The tax exemption described here is not related to sales, use, or, other taxes a government may be obligated to pay.)

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Questions about "tax-exempt" financing?

Call Now 800-541-0114  x-22
(Using your phone? Click to call! Press ext. 22 for Government Leasing)

There are a lot of important differences between municipal and commercial leases.  For example, the equipment is being sold directly to the government entity (not to the financial institution). Your government "owns" the equipment the day it is delivered, and it remains in your government's name after the last lease payment has been made.  Equipment is never turned back. Our municipal leases are based on super-low tax-exempt municipal interest rates, which are almost always the lowest-cost type of borrowing available to government entities like yours.

With a commercial vehicle or equipment lease, the equipment is sold to the financial institution (which cannot take advantage of the government contract pricing that your agency is eligible for). A commercial lease is based on significantly higher commercial interest rates. Most commercial leases are effectively structured as rental agreements with residual buyouts, mileage restrictions, and nominal or fair-market-value purchase options on the back end.

Any "purchase option" in the lease is a clear indication that your agency is not the owner and that you are likely not benefiting from the very low-interest rates that you are eligible for.

Another critical difference is that Commercial leases are "firm term" obligations that do not include the non-appropriation of funds language that is required in almost all jurisdictions. And they create balance sheet debt.

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Call Now 800-541-0114 x-22

(Click to call! Press Ext.  22 for more on the differences and what they mean to your agency)

* Note: First Capital will only retain a security interest during the term of the lease (N/A in Florida and Tennessee)

Why is non-appropriation language so important?  Great question!   This unique municipal-lease contract language effectively relieves the government entity of the obligation to pay in the event funds are not appropriated in any subsequent budget period, for any legal reason.  Our municipal leases automatically include non-appropriation (or "funding out") language wherever required by law.  Try getting that from a commercial lender!

Every governing body must reaffirm their "willingness" and their financial "ability" to pay a municipal lease, every year.

The government entity does this by simply including the lease payments in each budget (no special paperwork).   With just a handful of exceptions, most government entities aren't allowed under state and local laws, to incur a multi-year municipal obligation that doesn't include non-appropriation language.  Most governments treat multi-year municipal lease obligations (with non-appropriation provisions) as expenses rather than debt.  That's a crucial distinction for governments.

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Do you have additional questions about how non-appropriation works?

Call Now!  800-541-0114 x-22
(Using your phone? Click to call! Press ext. 22 for Government Leasing)

My agency's budget year starts on July 1st.  (or September 1st or January 15th, or next year). Do I have to delay municipal leasing until then?  No!

That's one of the many benefits of First Capital's municipal leasing--As an example, your agency can sign the municipal lease documents today.  Lock in rates today.  You can take delivery from your vendor tomorrow, and we can pay your vendor in full within three business days.

Your agency's first lease payment can be any day that you pick. 30, 90, 180 days, or even 12 months from today!  Payments can be monthly, quarterly, semi-annually, or annually.

When First Capital pays your vendor, is NOT LINKED to when you make lease payments to us!

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Do You Have Municipal Leasing Questions? Call Now!
800-541-0114  x-22
(Using your phone? Click to call!  Press ext. 22 for Government & Municipal)

Is there an early purchase option? Of course!   All of our municipal leases can be prepaid after any lease period.  Every lease agreement automatically includes an amortization schedule that shows the interest, principal, and early payoff amount for each period of the lease.  Early payoff amounts are guaranteed (locked in) upfront for the term of the lease.  No surprises!

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Do you have questions about the early payoff options on our leases?
Call Now 800-541-0114 x-22
(Using your phone? Click to call! Press ext.  22 for Municipal Leasing)

The municipal government is responsible for maintenance and insurance--exactly as it is with any vehicles or equipment it owns.  (You can include extended warranties in an lease quote that we prepare for you)  Your government owns all of the vehicles and equipment under a municipal lease from the day the vendor delivers.  No equipment is returned; there are no buyouts. 

Vehicles and equipment are registered by and titled to your government (that's a key difference compared to a commercial lease).  Vendor invoices will show the "Bill To" and "Ship To" as your government (our name does not appear on the invoice).

We’ve Got You Covered!

Questions about maintenance, insurance, and municipal leasing?

Call Now 800-541-0114  x-22
(Using your phone? Click to call! Press ext. 22 for Government Leasing)

Your government OWNS all of the vehicles and equipment financed under one of our municipal leases--from the day it is delivered.

Every vendor invoice is "Bill To:" and "Ship To:" your agency, not us.  Every purchase is 100% direct between your agency and the vendors YOU HAVE SELECTED.   All vehicles are registered by your government, titled in your government's name remain in its name and possession at the end of the lease; no equipment is returned.

No buyouts, balloons, or lease-end payments due.  Ever.

You order the vehicles and equipment directly from the vendors of your choice.  Local dealer, state contract, buying group; whatever works best for you.  At your direction, our bank pays your vendors on your behalf.

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Do you have any purchase or ownership questions?

Call Now 800-541-0114  x-22

(Using your phone? Click to call! Press ext. 22 for Government & Municipal)

Vendors are paid upon receipt of your signed municipal lease-to-own contract.  Immediately after the lease contract is signed, the full amount of lease amount is deposited into a separate account in your government's name, at our bank, for the express purpose of paying your vendors.

Vendors are paid directly by our bank, on your behalf via wire transfer (or cashier's check) three (3) business after our timely receipt of your contract documents, your payment request authorization, including insurance and titling documentation etc, vendor delivery, and your unqualified acceptance of all vehicles and equipment.  All post-contract documentation is completed by email or fax.  It's Easy.  It's Fast, and It's Secure.

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Question about how vendors & suppliers get paid?
Call Now!  800-541-0114  x-22
(Using your phone? Click to call! Press Ext.  22 for Government & Municipal Leasing)

Does your government agency qualify?  Virtually any state, county, city & municipal entity qualifies for municipal leasing under IRS Section 103. This includes Public Works, Public Safety, Fire, Rescue, EMS, Water, Public Schools, Ports & Parking Authorities, and a variety of "special districts."

QUICK TEST.  To be designated as "qualifying," the IRS requires that a government entity be a "political subdivision" with one or more of the following: 

1. The power to police;
   OR
   
2. The authority to levy and collect taxes;
   OR
   
3. The power of an eminent domain.

If your government has one or more of these three legal powers, you're good to go with our municipal leasing programs.

The IRS has also carved out one special exception for Volunteer Fire Departments looking to finance fire trucks and (new or renovated) firehouses.

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Do You Have Questions About Qualifying for Municipal Lease Rates?
Call Now 800-541-0114 x-22
(Using your phone? Click to call! Press ext. 22 for Municipal Leasing)

Municipal Leases and Municipal Bonds are both are types of multi-year, low-interest financing for governments.  There are some critical differences.  Municipal bonds create debt and are structured around an unconditional “full faith and credit” pledge to pay by the municipal entity.

This pledge includes the obligation to levy taxes on every resident to pay bond obligations, should funds be otherwise insufficient.  This is why most bonds require public consent in the form of complicated, time-consuming, and expensive voter referendums.

Municipal leases are generally treated as expenses because they are subject to the annual appropriation of funds in most jurisdictions.

Should funds be insufficient (or not appropriated for any legal reason) in any future budget year, the government body would have the legal prerogative to terminate the lease and in essence, “walk away.” Leases are much faster to set up and much less expensive to issue.

We’ve Got You Covered!

Call Now 800-541-0114  x-22
(Using your phone? Click to call! Press ext. 22 for Government Leasing)

IMPORTANT NOTES:
1) The discussion above is a non-technical, non-legal overview only.  2) First Capital Equipment Leasing Corp. ("FCELC”) does not act as a municipal advisor, municipal financial consultant, fiduciary, or agent to any person or entity pursuant to Section 15B of the Securities Exchange Act of 1934 and the municipal advisor rules of the SEC.  FCELC is not recommending that you take an action with respect to the information contained on this page or website. You should review and discuss anything presented herein with such independent financial, tax, legal, and other advisors as you deem appropriate.

Public, Charter, and Private schools differ on everything from tuition to admissions to funding formulas.  Here are the differences in how essential hardware, software, vehicles, and equipment can be financed at the lowest available rates.

Public School Leasing

Public schools and independent school districts are eligible for the same very low, tax-exempt municipal interest rates and terms as any city and local government.  Public School leases automatically include non-appropriation of funds language as required.  Vehicles and equipment are titled in the municipal entity's or district's name upon vendor delivery.

Charter School Leasing

Charter Schools are a special kind of tuition-free public school funded by tax dollars.  Charter Schools generally exist under state rules ("charters") that vary significantly from jurisdiction to jurisdiction.  Although charter school leasing is ultimately funded with tax dollars;  legally, they are not part of any state, county, or municipal government; rather, they generally exist as 501c3 non-profit corporations with their own budgets.

Most significantly (with regard to leasing), a charter school's continued government funding is subject to periodic review and renewal by the chartering authority.  If a charter school loses its charter, it loses its funding and source of revenue.

Key Considerations for Charter School Leasing:

1. Charter school lease terms cannot exceed their most recent charter renewal term; and
2. Lease contracts for charter schools do not include non-appropriation of funds language, rather charter school leases are "firm term" obligations; and
3. Charter school leases are priced at our "non-profit" rates*. 

*(Non-profit interest rates are well below commercial interest rates but somewhat higher than municipal rates)

Private School Leasing - Summarized

1. Designated non-profit, non-government private schools would be eligible to lease vehicles and equipment at our non-profit rates (below commercial, above municipal). Non-appropriation language is not available to non-government entities.
2. For-profit, non-government private schools would be eligible to lease vehicles and equipment at our commercial (business) rates.  Non-appropriation language is not available.

We can have real numbers on your desk today–you’ll know within 60 seconds of receiving our quote if municipal leasing is the best choice for your agency!

We’ve Got You Covered!

Do You Have Public, Private, or Charter School Leasing Questions?
Call Now at 800-541-0114  x-22
(Using your phone? Click to call! Press ext. 22 for School Leasing)

Aren't all leases "pretty much" the same?  Isn't the lowest interest rate the best deal?  Here are ten things you should consider when comparing a First Capital municipal lease offer to any other--municipal, commercial or personal lease. Any one of these factors, even the smallest variations, can make a significant difference in the final amount your government ends up spending.

10 characteristics that can significantly affect your actual rate, payments, and, exactly how good, that "great deal" really is.  Put these topics on your "check it out" list :

1. Actual Amount Being Financed (net of deposits and advances)
   
2. Lease Execution Date
3.  First Payment Due Date
   
4.  Required Down Payments
5.  Points, Closing Costs & "Hidden" Fees
6.  Bank Compensating Balance Requirements
7.  Periodic Rate Resets or Rates That Float
8.  Debt vs. Our Non-Debt Structure
9.  End-of-Lease Residuals & Buyouts
10.  Availability of Lease Pre-Payment Options

Apples & Oranges?

Do You Have Questions About Comparing Leases?

We've got you covered!
Call Now 800-541-0114 x-22
(Using your phone? Click to call! Press ext. 22 for Government & Municipal Leasing)

Absolutely!   It's about useful life.   Many different kinds of equipment and vehicles remain in service and function reliably for years for governments like yours.   While the maximum lease term may be adjusted slightly based on the age of the used equipment at the beginning and the end of the lease.  We CAN finance most used vehicles and equipment.  Call with the details for these specialized municipal leasing quotes.

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Do You Have Questions About Used Equipment Financing?
Call Now! 800-541-0114 x-22
(Using your phone? Click to call! Press ext. 22 for Government Leasing)

Note: Municipal leasing is not available for used high-tech, telecommunication, and electronics, e.g., computers, copiers, communications gear, etc. (nor is it available for supplies or other consumables)

Municipal Bonds, Municipal Leases, and Balance Sheet Debt.  Bonds and their associated "covenants" create municipal obligations that are legally backed by the "full faith and credit" of your government.  That's a bit of "legalese," which means your government is making an unconditional promise to pay--including raising taxes to do so in the event of a budget shortfall.  (That is debt by definition, and it must be recorded as debt on the balance sheet)  This can get unpleasant for taxpayers if things don't go as planned fiscally.

The vast majority of our municipal leases contain what is called "non-appropriation of funds" language.  Non-appropriation (aka "funding out") language makes the payment of the lease subject to the availability of funds in each budget year.

If the funds are not available in any subsequent budget year, for any legal reason, the government entity has the legal prerogative to return the equipment and terminate the municipal lease.

For most jurisdictions, this is the difference between taking on debt and incurring an expense.

IMPORTANT NOTE:  *This is a very abbreviated explanation of a complicated question.  You should seek the guidance of your own accounting, tax, and legal counsel on such matters.

We’ve Got You Covered!

Do You Have Municipal Leasing Expense vs. Debt Questions?
Call Now 800-541-0114 x-22
(Using your phone? Click to call! Press ext. 22  )

IMPORTANT:
1) The discussion above is intended as a non-technical/non-legal "overview" only.  2) First Capital Equipment Leasing Corporation ("FCELC”) does not act as a municipal advisor, municipal financial consultant, fiduciary, or agent to any person or entity pursuant to Section 15B of the Securities Exchange Act of 1934 and the municipal advisor rules of the SEC.  You should review and discuss anything presented herein with such independent financial, tax, legal, and other advisors as you deem appropriate.

Banks & Bonds.  The laws in most localities generally make it impossible for state, county & municipal governments to borrow (incur balance sheet debt ) that extends over multiple fiscal years.  The current governing body rarely has the legal authority to bind a future governing body into making a lease or loan payment from a future budget.

Due to these budget constraints, the unique and non-traditional paperwork, the extremely low-interest-rate yields, the required non-appropriation language, and commensurate risks to the financial institution (lender), municipal leasing is something of a financial specialty area.  For many bankers, municipal leasing simply isn't their "cup of tea."

Bonds are also low-interest but are very complicated legal documents. (read: expensive, time-consuming, loaded with legal, issuance, and compliance costs and a measure of interest rate risk).  Bonds are generally reserved for the largest 7-8 figure, 15-25 year projects like sewers, highways, and bridges.

Unlike a municipal lease, bonds are backed by "the full faith and credit" of the municipality.  Bonds create balance sheet debt, and that matters.  If the municipal budget falls short for any reason, the municipal borrower will be required to raise taxes as necessary from every taxpayer to cover the bond payments.  Politically, it can get really ugly.  Not so, with municipal leases.

There are VAST DIFFERENCES between a municipal lease that includes non-appropriation provisions and bonds that create municipal debt.

We’ve Got You Covered!

Do you have questions about Leasing vs. Bonds vs. Bank financing?
Call Now! 800-541-0114  x-22
(On your phone? Click to call! Press x-22 for Govt. Lease vs. Bond Questions)

IMPORTANT:
1) The discussion above is intended as a non-technical/non-legal "overview."  2) First Capital Equipment Leasing Corporation ("FCELC”) does not act as a municipal advisor, municipal financial consultant, fiduciary, or agent to any person or entity under Section 15B of the Securities Exchange Act of 1934, the municipal advisor rules of the SEC, or otherwise.  You should review and discuss anything presented here with such independent financial, tax, legal or other advisors as you deem appropriate. 

YES!  A volunteer fire department (VFD) CAN use the same low TAX EXEMPT-MUNICIPAL interest rates as government entities, but specifically for new or used fire trucks ("equipment that puts out fires") or fire stations-- new, used or renovated. But nothing else, e.g., turnout gear,  rescue tools, radios, or command vehicles--all of which can be financed at low non-profit rates, just not at municipal government rates.

To be "IRS qualified," the VFD must also be a 501c3 corporation  and be able to document the following:

1. A written agreement to provide firefighting services with the city, town or county it services, and;

2. Be the only provider of firefighting services in that area OR have provided fire-fighting services to that area continuously since 1981.  (Even if there is another firefighting group that covers the same area, your VFD can still qualify if it has been operating since 1981.

If the volunteer fire department is qualified as described above, the IRS requires that the VFD provide the following:

The complete instructions are included with our VFD Leasing Application.  There are several steps to the qualification process (it is the IRS, after all), but most chiefs tell us the interest rate savings over the years make it well worthwhile if you can qualify.

We've Got You Covered!

Do You Have Questions About Volunteer Fire Department Leasing?

Call Now 800-541-0114  x-22
(Using your phone? Click to call! Press ext. 22 for Volunteer Fire Departments)

NOTE: We only offer municipal lease pricing on VFD transactions over $125,000.  Other programs are available for transactions under $125,000.