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 two originals of the Lease Supplement, and submit them with the invoice(s) to TPFA, to the attention of the MLPP Program Administratior. One 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 return one of the signed originals of the Lease Supplement to the agency after the vendor has been paid, along with a copy of the state warrant issued to the vendor and an amortization schedule applicable to that Lease Supplement. Each Lease Supplement generates its own amortization schedule and related rent payment.

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 will have to incorporate that into its schedule.

After the agency has adopted its resolution and all approvals have been obtained, the time needed to sign a Master Lease 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 MLPP is a short-term, variable rate (ie, commercial paper), 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. TPFA tries to maximize interest rate savings by issuing the notes for varying periods, depending on market conditions. Commercial paper may be issued for up to 270 days, at which time it must be paid off or "re-issued." Thus, to ensure that sufficient funds are available to pay the actual interest due on the commercial paper notes, the TPFA assesses agencies a flat program interest rate of 5%. In addition, the TPFA charges agencies 1% to meet TPFA’s costs of administering the program.

The total charge to agencies is currently 6%. Prior to each regular debt service payment date (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 is "rebated" to the agencies in the form of a credit against the agency’s rent payment.

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