Master Lease Purchase Program Requirements
Overview | Requirements | Documents | Payment Estimator | Rules | Seminar Materials
Participation Requirements and Program Documents
1. After the agency’s governing board has adopted its resolution and BRB and/or other agency approvals have been obtained if required, a Master Lease Purchase Agreement ("Master Lease") must be signed by the authorized agency representative who is named in the Resolution. The Master Lease is the financing agreement between the agency and the TPFA and is not subject to revision. A current signed Master Lease must be in effect and on file before any acquisition may be financed. Once signed, the Master Lease will serve as the agreement for subsequent financings, which will be added by signed Lease Supplements.
2. The agency must follow its normal procurement procedures to acquire the property that is to be financed, including acceptance and inspection, and establishing the terms of payment. TPFA has no involvement in the procurement process. Furthermore, no changes to the agency’s routine procedures are required except for the purchase of motor vehicles; TPFA must be registered as lienholder on the original motor vehicle title issued by the Department of Transportation.
3. When the agency has received and approved an invoice for the financed purchase, it will complete and sign a “Lease Supplement,” and submit the original form with the invoice(s) to TPFA, to the attention of the MLPP Administrator. A single Lease Supplement may include multiple purchases.
4. TPFA will promptly initiate payment to the vendor based on the information provided in the Lease Supplement. TPFA will provide a copy of the Lease Supplement to the agency after the vendor has been paid, along with a copy of the purchase payment issued to the vendor and an amortization schedule applicable to that Lease Supplement. TPFA generates a new amortization schedule (related rent payment) for each Lease Supplement.
Time Requirements
MLPP financing should not add significant additional time to an agency’s equipment procurement process. However, if BRB approval is required, the agency should plan to attend the BRB planning meeting at which the project will be considered.
After the agency has adopted its resolution and all approvals have been obtained, the time needed to sign a Master Lease Purchase Agreement is minimal. Following the establishment of a lease, the payments to vendors are processed within two to four business days.
Agencies are required to make Rent Payments twice a year, on February 1 and August 1, but may prepay a lease at anytime without penalty.
Costs and Payment Requirements
Because project financing is funded with a short-term, variable rate (i.e., commercial paper) debt instrument, the actual interest rate on the state’s borrowings is not known until the notes are issued, and the interest cost to agencies varies over time. Thus, to ensure that sufficient funds are available to pay the actual interest due on the commercial paper notes, TPFA assesses agencies a flat program interest rate. In addition, TPFA charges agencies an administrative fee to meet TPFA’s costs of administering the program.
Prior to February 1 and August 1 of each year, the TPFA determines the actual interest cost of the program and the difference between the actual cost and the rate assessed. The difference is "rebated" to the agencies in the form of a credit against a participating agency’s next subsequent rent payment.