MUNICIPALITY & GOVERNMENT FINANCING

 

Buses purchased by state and local governments can benefit from tax-exempt financing provisions, with a municipal lease purchase agreement being the most common financing option. Here are some Tax-Exempt Financing Advantages:

  • You take full advantage of your tax-exempt financing status

  • Tax-exempt interest rates, which are lower than commercial interest rates

  • Generally avoids personal property tax and sales tax (exceptions exist in certain jurisdictions)

  • Benefits of asset ownership and control

 
 
 Download the Municipal Financing Brochure

 

WHAT IS A TAX-EXEMPT MUNICIPAL LEASE PURCHASE AGREEMENT?

  • A Capital Lease Purchase Agreement

  • Nominal Purchase Option (usually $1.00)

  • Interest paid by Borrower is exempt from Federal Income Tax which results in lower interest rates

  • Intent is ownership of asset being financed

  • Alternative to FMV/Rental/Taxable lease financing

  • Most preferred method of equipment financing for State and Local Governments

WHAT ARE THE BENEFITS OF USING A TAX-EXEMPT MUNICIPAL LEASE?

  • Avoids excessive costs of issuing traditional bonds

  • Voter approval usually not required

  • Non-debt financing instrument (payments subject to annual budgetary appropriation)

  • Will not impact bonded debt limits or spending limits (most states)

  • Interest rates on transactions much lower than taxable leases

  • No property tax (exceptions exist in certain jurisdictions)

  • Sales tax is generally not applicable (exceptions exist in certain jurisdictions)

  • Lower interest cost, lower debt service = lower payments

  • Flexible payment options (monthly, quarterly, semi-annual, annual)

  • Acquire needed equipment at today’s costs, avoid price increases, lower maintenance costs and pay for the equipment as it is used

  • Stretch budgets and maximize available capital

WHO IS ELIGIBLE TO USE A TAX-EXEMPT MUNICIPAL LEASE?

  • Any State or Local Government

  • Special Purpose Taxing Districts

  • Constituted Authorities

  • Entities utilizing Tax-Exempt Municipal Lease Purchase Financing must have at least one of the following:

    1. Power to levy taxes

    2. Power of eminent domain

    3. Police powers

     

*Subject to minimum transaction size and term.

WHAT ARE THE REQUIREMENTS FOR USING A TAX-EXEMPT MUNICIPAL LEASE PURCHASE AGREEMENT?

  • Must be legal, valid and binding under local, State and Federal laws

  • Equipment must be “essential” to government operation

  • Borrower must be eligible under Section 103 of the U.S. Tax Code

  • Principal and Interest are depicted in the contract

  • 8038 G/8038GC IRS Form must be completed and filed

  • Must be a “Capital Lease” (intent to own equipment)

  • Title to equipment must pass to Borrower at contract funding or at contract end

  • Documentation acceptable to both Lender/Borrower

  • Credit acceptable to Lender

  • Documents signed by “authorized signatory” of Borrower

To find out more about the benefits of Municipal Financing or financing in general from Blue Bird Capital Services, just call 800-366-1538 or fax us at 866-287-1176.

 

Apply for Municipal FinancingBenefits of Bus Financing
This was my first experience purchasing buses for our school. During the process of choosing a company to accommodate our financing needs, the representative for Blue Bird Capital Services took the time to answer my questions and walk me through all of our options. Their excellent customer service and competitive financing supported our decision to choose Blue Bird Capital Services. Thank you!
Lisa Starner-Sturz, M. Ed.
Assistant Principal
Imagine School at North Port
North Port, FL

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