Why is it called a tax-exempt municipal lease? We can not authorize the use of a lease.

Yes you can use Municipal financing! The term municipal lease is derived from the another financial instrument for government financing “the Municipal Bond” Both are very low cost methods of financing the acquisition of essential-use equipment, vehicles, hardware and software exclusively for state, county and municipal governments, special districts and authorities.  “Municipal leasing” is an umbrella term applicable to all of the aforementioned entities. There are big differences between these however.

First and foremost Bonds are based on an unconditional pledge of the “full faith and credit” of the municipal entity, including a pledge to levy property taxes on every tax-payer in the jurisdiction. This is why most bonds require public consent in the form of complicated, time-consuming and expensive voter referendums.

A tax-exempt municipal lease however are subject to the annual appropriation of funds in all jurisdiction that require it. So if funds are not available to make the payments for any legal reason, in any budget year, the government entity would have the legal right to terminate the lease after the current budget period without legal penalty and to return the equipment/vehicles.

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