Any U.S. state, territory, local government, or municipality is eligible to use tax-exempt leasing from MCM for correctional facilities, including:

• States

• Counties

• Cities

• Agencies, Authorities, Divisions, Departments of a U. S. State, Territory, Possession or Political subdivision

To qualify, borrowers must:

• Prepare annually audited financial statements

• Be legally organized as certified by the borrower’s attorney

• Operate their entity within reasonable range of the budget each year

The Challenge of the 21st Century for Correctional Facilities Today’s Municipal Financing managers are faced with a diverse array of challenges. Across the nation, public officials at the local, county and state levels of government are searching for new resources to expand tight operating budgets to meet the immediate and long-term needs of our communities. Reductions in federal and state aid are creating a new reality for towns, cities, counties, school districts, hospitals, and many other public authorities. This economic environment calls for tough decisions, greater self-reliance, and innovative approaches. The demand for alternative financing methods is growing along with the need for equipment and facilities.

Lease Purchase financing is one of the most successful methods developed in recent years to address immediate needs for capital improvements and acquisitions to provide for essential services while improving the management of cash flow. The tax-exempt feature of Lease Purchase financing has proven to be attractive to both Lessees and investors.

Municipal Capital Market Groups, Inc. is a registered broker dealer, regulated by the Securities and Exchange Commission and Municipal Securities Rulemaking Board and Financial Industry Regulatory Authority. Our finance professionals pioneered lease-financing programs to meet the diverse requirements of Lessees at all levels. Our exclusive MuniLease® Programs allow state and local governments to acquire essential equipment and facilities in a timely and economical fashion. They are specifically designed to address the cash flow restrictions of municipalities. The extensive experience of our professionals in having structured over $2 billion in tax-exempt leases ensures quality service and market sophistication for our leasing clients.

The MuniLease structure offers many advantages including flexibility and the establishment of an equity interest with every payment. It allows for the financing of equipment and facilities without creating long-term debt. It is designed to cover a term that closely matches the useful life of the building or equipment, and provides for ownership at the end of the repayment term.

Municipal Capital Markets will tailor a MuniLease® program to meet the varied needs and special requirements of your community. We invite you to talk to us and our clients to learn more about how we can serve your needs. 

MuniLease® is a registered trademark of Municipal Capital Markets Corporation.

• The requirement for annual appropriations of lease payments allow a lease purchase not to be treated as debt.
• Costs are competitive with more traditional debt financing.
• MuniLease financing is also considered less complex, and can be completed in a much shorter time frame.
• MuniLease financing allows the municipality an alternative source of capital, thereby expanding access to the capital markets.

• 100% Financing: Financing may be provided for 100% of the cost of the asset. This can include reasonable costs for freight and installation. No down payment is required. Issuers or “Lessees”, are effectively cash buyers, and all vendors are promptly paid.
• Lease to Own: Each payment creates equity (ownership) in the asset. There is no additional cost, residual value, or balloon payment due at the end of the lease term.
• Competitive Interest Rates: Lower interest rates is the benefit passed along to the issuer when the interest portion of the lease agreement is exempt from federal income taxes. The low-cost financing plan protects against future rate increases by providing fixed installments for the term of the lease.
• Practical Terms: The financing term is matched to the useful life of the asset. No large capital outlay is required, and current taxpayers pay for the facility, equipment, and improvements only as they are used.
• Simple Approval Process: When compared with the process involved in a bond referendum, lease financing is far more simple and flexible. Time and transactional costs are reduced. Many of the costs typically associated with bond financing are reduced or eliminated.
• Product Specification and Vendor Guarantees: You select the desired design team, contractor and/or equipment, specific features and the design to meet current needs. All warranties and guaranties are directly available to the Lessee.
• Delivery for Immediate Use: The financing can be accomplished in a short period of time, providing the opportunity for ownership at the current acquisition price, and for the immediate use of the required asset.

Annual Cancellation & Voter Approval: U. S. States, Territories, municipalities, and local governments are granted the option to cancel the lease, due to lack of appropriations, at the end of each of the Lessee’s fiscal years. This clause normally exempts the lease from voter approval. If the lease is canceled, you lose the use of the property. There are no other financial penalties; however, the Lessee for a limited period of time may not lease or purchase substitute property for the property returned. (This cancellation clause is not available to not-for-profit organizations.)

Default by Lessee/Lessee: Default by the Lessee/lessee includes nonpayment of the lease payments or not complying with the terms of the lease agreement. If the Lessee defaults, all of the remaining payments become immediately due and payable. Possession of the leased property must be returned to MCM at the Lessee’s expense and may be sold or leased by MCM to someone else. The Lessee must pay any deficit remaining after the sale or lease of the property. We may also enforce our rights in court. A cancellation of the lease agreement by the Lessee per its annual cancellation right will not constitute an event of default.

General Provisions: The lease agreement is a financing or capital lease; that is, at the end of the lease, the government entity (The Lessee) owns the leased property without further payments. The leased property must be used as part of the Lessee’s governmental or not-for-profit function.

Length of the Lease: The Lessee selects a repayment period, expressed in months. The maximum period is, however, limited to the useful economic life of the leased property.

Obligation to Pay: The lease agreement requires the Lessee to pay unconditionally, unless the lease is canceled as described above. The lease payment is due regardless of whether or not the leased property is in working condition or performs the tasks it was acquired to perform. MCM does not warranty or guarantee the leased property, its operation or serviceability. Lease payments may not be reduced or eliminated due to a problem with the leased property or for any other reasons.

Operating Costs & Insurance: All operating costs of the leased property such as maintenance, insurance, taxes, utilities and fuel must be paid by the Lessee. In many states, the leased property is exempt from real and personal property taxes. Lessees that self-insure are not required to carry insurance on the leased property, but must agree to replace the leased property if it is destroyed. Before the lease is funded, Lessees not self-insuring must provide MCM with a certificate of insurance demonstrating that the leased property is insured.

Payments: The lease is payable in monthly installments. Each payment is comprised of principal and interest components, which are itemized by month in the lease agreement. The total amount of the payment is the same amount each month. Title to leased Property: During the lease, title to the leased property is held in the Lessee’s name and the Lessee agrees to return the title to the property to MCM if it defaults or cancels the lease. The Lessee must grant MCM a security interest in the leased property, normally evidenced by a mortgage financing statement filed with the U.S. state or territory where the property is located. The Lessee must pay any liens placed on the leased property by someone else.

MuniLease® is a registered trademark of Municipal Capital Markets Corporation.