“A tax-exempt municipal lease empowers public agencies and nonprofits to acquire the essential equipment they need now — with lower costs, flexible payment options, and no voter referendum required — all while preserving budget and borrowing capacity.”
A tax-exempt municipal lease is a powerful and flexible financing tool that allows public agencies and qualifying nonprofits to acquire the equipment and infrastructure they need now, without waiting for the next budget cycle or issuing bonds.
Because interest earned on a tax-exempt lease is exempt from federal income tax to the lender, the interest rate charged to you is substantially lower. These savings reduce the total cost of ownership over the life of the lease and stretch taxpayer dollars further.
Unlike general obligation bonds, tax-exempt leases are considered annual appropriation obligations rather than long-term debt. This means they typically do not require voter approval or lengthy bond issuance processes, helping you avoid legal costs, delays, and political hurdles.
Leases are structured around your organization’s budget cycle and cash flow needs. You can choose monthly, quarterly, semi-annual, or annual payments — and even defer the first payment until your next fiscal year if necessary. This flexibility allows you to acquire essential equipment or facilities now, without upfront capital outlays.
Unlike traditional operating leases, most tax-exempt municipal leases are structured so that ownership of the equipment or project automatically transfers to you at the end of the lease term for $1 or nominal consideration. You’re building equity in an asset while you pay for it.
Tax-exempt leases are easier and faster to implement than bonds or other long-term financing. Approvals often require only board action or governing body resolution, and documentation is streamlined, allowing projects to move forward without delay.
Municipal leases can finance virtually any essential-use asset, including:
- Vehicles and fleets
- Technology and software
- Buildings, facilities, and infrastructure
- Emergency services and public safety equipment
- Renewable energy projects
- School equipment and classroom technology
Because municipal leases are typically not considered “debt” under state laws, they do not impact your debt ceiling or limit your ability to pursue future bond-funded projects. This preserves your organization’s financial flexibility.
A tax-exempt municipal lease enables your organization to do more with less, acquiring the essential assets you need today with lower costs, greater flexibility, and fewer administrative burdens. It’s a proven, widely used financing tool for public agencies, schools, and nonprofits nationwide.
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