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Master Lease Purchase Program

Lease Purchases. Lease purchases are the purchase of an asset over time through lease payments that include principal and interest.Lease purchases are typically financed through a private vendor, or through TPFA's Master Lease Purchase Program.Examples: State prisons and office buildings have b

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Master Lease Purchase Program

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    1. Master Lease Purchase Program August 9, 2006 Master Lease Purchase Program Tracey Peńa, Program Coordinator tracey.pena@tpfa.state.tx.us 512.463.5695

    2. Lease Purchases Lease purchases are the purchase of an asset over time through lease payments that include principal and interest. Lease purchases are typically financed through a private vendor, or through TPFA’s Master Lease Purchase Program. Examples: State prisons and office buildings have been financed using lease-purchasing from nonprofit corporations; equipment, vehicles, software financed through the TPFA’s Master Lease Program

    3. Master Lease Purchase Program The Master Lease Purchase Program ("MLPP") is a lease revenue financing program established in 1992, primarily to finance capital equipment acquisitions by state agencies, Texas Gov’t. Code, §1232.103. MLPP also may be used to finance other types of projects that have been specifically authorized by the Legislature and approved by the TPFA Board. Texas Government Code §2166.406(g) provides specific authority for State agencies to finance an energy performance contract through the TPFA Master Lease Program. The financing vehicle for the MLPP program is a tax-exempt revenue commercial paper program.

    4. Who May Use MLPP? State agencies and Universities A "State Agency" is any board, commission, department, office, agency, institution of higher education, or other governmental entity in the executive, judicial, or legislative branch of state government. Not available to political subdivisions: junior colleges, community colleges, cities, counties, school districts

    5. MLPP - What May Be Financed? Examples include: Computer Hardware Computer Software Telecommunication Equipment Vehicles Energy Performance Contracts HVAC, chillers, boilers Heavy Machinery Office Equipment Furniture and Equipment

    6. MLPP Energy Projects University of North Texas $ 9,050,000 Energy Performance Contract UNT Health Science Center $ 3,200,000 Energy Performance Contract Texas State Tech. College-Harlingen $ 990,755 Energy Performance Contract Parks and Wildlife $ 1,350,000 Energy Performance Contract Lamar University $13,747,258 Energy Performance Contract DADS/DSHS overseen by HHSC $49,800,270 Energy Performance Contract Texas Woman's University $16,530,143 Energy Performance Contract Midwestern State University $ 3,700,000 Utility Infrastructure

    7. Eligibility Summary Project Cost (Purchase Price) $10,000 minimum Individual Item Cost $100 minimum Useful life 3 years minimum

    8. Master Lease Payments TPFA collects lease payments at 5.5% * 5% interest rate (initial estimated rate) 0.5% (one-half of 1%) administrative fee Lease payments are collected annually, on August 1st. Leases can be prepaid at any time without penalty

    9. MLPP Rebate A “rebate” is credited to each lease payment. The rebate is the difference between the interest rate charged and the actual rate paid by TPFA on the CP, plus any interest earnings on project and admin funds. Leases can be prepaid at any time without penalty

    10. Using MLPP For Energy Performance Contracts Timing of Lease Execution Timing of first lease payment (August 1) vs. realization of savings Term and Amortization of the lease. 15yr Max (Government Code § 2166.406)

    11. Steps to implement a Master Lease financing

    12. The Master Lease Process

    13. Bond Review Board Process Agency Submits Notice of Intent Agency Submits BRB State Lease Purchase Application Contact TPFA for debt repayment schedule Attend Board Planning Meeting Attend Board Voting Meeting Receive Approval Letter Final Report Calendar of Submission Deadlines and Meetings www.brb.state.tx.us/agency/calendar.html

    14. Draw Schedule Update TPFA’s Program Coordinator will contact you regarding your agency’s unused MLPP authorization on a semi-annual basis. This information is used to streamline the processing of leases and to keep the cost of borrowing at a minimum.

    15. Debt Service Summary Collected Annually on August 1st Designated Fixed Interest Rate* (currently 5%) Administrative Fee* (currently .5%) TPFA rebates or credits the difference between the actual short term rate and the designated fixed interest rate* TPFA will initiate the transfer in USAS. TPFA will forward copies of transfer.

    16. Questions & Answers

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