Local Government Leasing

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Local Government Leasing   
Georgeann Becker January 30, 2009
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Presenter

• Georgeann Becker, with more than 30 years
  practice in public finance, is a partner at Peck
  Shaffer with a focus on transaction structure and
  documents and disclosure

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Local Government Leasing

? Leases in General ? Basic Authority to
Lease ? Not Debt or Multiple Fiscal-Year
Financial Obligation ? The Lessor ? Local
Government Lease Features
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Various Structures

? Private Investor Lease (Vendor) ? Lease
Certificates of Participation ? Lease Revenue
Bonds
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Leases in General

? Why Lease? ? Types of Leased Property ?
Lease of Project to be Provided ? Leased
Property other than Project ? Value of
Leased Property ? Site Leases/Sale and
Leaseback ? Length of Lease ? Weighted Average
Useful Life ? Base Rentals ? Additional Rentals
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Basic Authority to Lease

? Organic Authority ? Constitution ?
Statutes ? Charters ? Case Law
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Not Debt or Multiple Fiscal-Year Financial
Obligation

? Initial Term Plus Renewal Terms ? Subject to
Annual Appropriation by Lessee ? Renewal Through
Budget Process ? Reasonable Rentals ? Avoid
Economic Compulsion to Renew ? For example
Nonsubstitution Clause ? Lessee Not Grant
Mortgage
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The Lessor

? Nonprofit Organizations ? Traditional Building
Authorities ? Other Nonprofits ? Commercial
Organizations/Leasing Companies ? Trusts
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Lease Transaction in Graphics

Lessee
Base Rental Payments
Lease
Lessor
Trustee
Trust Agreement
PI Payments
COP Investors
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Lease Features

? Series of One-Year Terms ? Initial Term ?
Renewal Terms ? Renewal Through Budget
Process ? Lessees Right to Not Appropriate ?
Triple or Absolute Net ? Acquisition,
Construction and Maintenance of Leased
Property ? Taxes and Assessments
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Lease Features (Continued)

? Environmental Audits and Covenants ?
Provisions re Federal/State Income Tax
Exemptions ? State Real Estate Property and
Sales Tax Exemptions
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Lease Certificates of Participation
? Certain Vendors/Lessors Take Whole Leases into
Own Portfolio ? May assign or participate
interest in lease(s) ? May bundle or pool
with other leases and/or syndicate ? Lessor
Assigns Lease to Trustee ? Trustee Executes and
Delivers Lease COPs to Investors ? COPs
Represent a Participation Interest in (Right to
Receive) Base Rentals ? Tax-Exemption based
on Lease with (for federal tax purposes,
constituting installment sale to) state or
political subdivision as lessee
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Lease Revenue Bonds

? Older Method ? On Behalf Of Lessors
Tax-Exemption derived from status of Lessor ?
Leases Are The Same ? Nonprofit Lessor Issues
Lease Revenue Bonds ? Lease Payments are Source
of Payment of Lessors Debt
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Presenters Information
Georgeann Becker Peck, Shaffer Williams
LLP Suite 1700 1801 Broadway Denver, Colorado
80202 [phone] Main [phone] WATTS
(Toll Free) [phone] Facsimile gbecker_at_pecks
haffer.com www.peckshaffer.com