The "Nuts & Bolts" of municipal leasing for government agencies like yours--step-by-step.

Step #1: Municipal leasing begins with your vendor price quotes  (exact, or your best estimates) on the vehicles and/or equipment -- including any accessories yo make it 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!

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

800-541-0114  x-22
or request Quick Quote Now.

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 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)

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.

That's It!

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.

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.  It is an umbrella phrase that applies to state, county, and municipal governments, special districts, and authorities, not just municipalities. (very generally, entities funded with tax dollars).

“Tax-exempt” municipal leases and municipal bonds are financial “first cousins.” Both are very low-cost methods of financing created by the IRS as incentives for financial institutions and investors to provide very low-interest financing to qualifying governments to acquire essential-use equipment including vehicles, hardware, software, police & fire stations, jails, and maintenance facilities. The financial institutions get valuable tax exemptions, while governments like yours benefit from below-market interest rates.  (The tax-exemption 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)

Great question.  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 only 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 either residual buyouts, mileage restrictions, 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 so important?  Great question!  Our municipal leases automatically include non-appropriation (or "funding out") language wherever required by law.  This unique 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.  (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)

Early purchase option?  Of course!   All of our municipal leases can be prepaid after any lease period.  Every lease agreement includes an amortization table that shows the interest, principal, and early payoff amount for each period of the lease.

Early payoff amounts are guaranteed (locked in) up front.

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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 other vehicles or equipment purchased for cash.  (You can include extended warranties in the lease amount)

Your government owns all of the vehicles and equipment under a municipal lease from the day the vendor delivers.  Vehicles and equipment are registered in and titled to your government (that's a key difference compared to 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.  (Our name does not appear on any vendor paperwork.)

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 government agency.  At your direction our bank pays your vendors on your behalf.  Vehicles are titled by you, in your agency's name.

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Do  you 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)

How and when do my vendors get paid?  Upon receipt of your signed municipal lease-to-own contract, 100% of the lease amount is deposited into an account in your agency's name, at our bank.

Vendors are paid directly by our bank, on your behalf via wire transfer (or cashiers check) three (3) business days after delivery, your unqualified acceptance and receipt of your payment authorization for that equipment.  Easy. Fast!

We’ve Got You Covered!

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 my 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 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”) 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 are open to all, tuition-free and are funded with federal, state, and local tax dollars.  Jurisdictions (local or regional) are mandated by law to provide and fund public schools.  As part of a municipal or county government, or as an independent school district, public schools enjoy all the same borrowing authority as other municipal entities and are eligible for the same very low, tax-exempt municipal interest rates and terms.  Public School leases automatically include non-appropriation of funds language wherever required by law.  Vehicles and equipment are titled in the municipal entity'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.

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 school loses its charter, it loses its funding.

Considerations for Charter School Leasing:

1. Charter school lease terms cannot exceed the current charter renewal; 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. 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.
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.

Let us prepare a quick quote now on any combination equipment & terms. 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 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 10 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 the :

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

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

Absolutely!  The maximum lease term may be adjusted based on the age of the used equipment at the beginning and the end of the lease.  Call us 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 a 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 the bond--up to and including raising taxes as required to do so.  (That is debt by definition, and it must be recorded as debt on the balance sheet)  This can get unpleasant 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 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 budget (fiscal) periods.

The current governing body has no legal authority to bind a future governing body into making lease payments from a future budget.

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

Bonds 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, roads, bridges, etc.

Unlike a municipal lease, bonds are backed by "the full faith and credit" of the municipality and every taxpayer.  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 to cover the bond payments.

Bond payment shortfalls can "reach into the pockets" of every tax-payer in the jurisdiction and can get really ugly.  Not so, with municipal leases.

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

We’ve Got You Covered!

Do you have questions about Leasing vs. Bond 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 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. 

A volunteer fire department (VFD)  can use the  same low tax exempt-municipal leasing rates as government entities to acquire either new or used fire trucks ("equipment that puts out fires") and/or firehouses or fire stations new or renovated, but not turnout gear,  rescue tools, radios or vehicles--all of which we can finance, just not at municpal rates.

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

Complete detailed instructions and suggested wording are include with our VFD Leasing Application.  There are several steps to the qualification process (it is the IRS, after all); but the interest rate savings over a period of years can be very substantial if your VFD qualifies.

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 pricning on VFD transactions over $125,000.  Other programs available for transactions under $125,000.