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Public Sector - Municipal Leasing
Basically there are two type of leases available to a public entity - operating or lease purchase. The operating or true lease is an arrangement in which the Lessee (government entity) uses, but does not obtain ownership of property for a term that is shorter than the asset's useful life. In contrast, the lease-purchase agreement is essentially an installment sales contract providing for the acquisition of property by a government entity. At the end of the contract term, provided all payments have been made, the Lessee owns the property for a nominal sum - usually one dollar.
Because a public entity is unable to commit funds from one fiscal year to the next, all of these leases must contain a Non-Appropriation Funding provision. Basically, this enables the Lessee to terminate the contract if funds are not allocated from one fiscal year to the next.
Sun has worked with all of these leas types and can structure a transaction to meet a customer's requirement. |
