(II) "The MUNICIPAL Lease".
This lease option is used to acquire more expensive equipment. CSURF
administers the transaction but is not a party to it. This year to year
cancelable lease agreement is between the University as lessee and a
bank, leasing company or underwriter as lessor. The lessor is chosen
by competitive bids submitted by interested parties to the CSU Purchasing
Department. The lease agreement is signed between the University and
the successful bidder and upon full payment of the lease, title passes
to the University. The interest rate on a Municipal Lease is reflective
of market conditions and is usually around 75-80% of the prime lending
rate. An administrative fee is paid to CSURF of 1.5% - 3% of the total
amount financed, depending upon the size of the transaction. In the
Municipal Lease, the University makes clearly defined payments of principal
and interest and the lessor is allowed to treat the interest portion
of the lease payments as tax exempt income. The municipal lease term,
as with the CSURF lease, is on a fiscal year to year basis with renewal
options to assure the University's liability is limited to the present
lease term and thereby complies with Colorado law.
Features of a municipal lease are:
| • |
Available for equipment
valued over $50,000. |
| • |
Payments are made semi-annually. |
| • |
The 1.5% to 3% administrative
fee is based upon the size of the lease and is paid at time of closing. |
| • |
Payback period is generally
5 years or less. |
| • |
The lease is put out for bid to
obtain the lowest competitive interest rate. |
The leasing process (CSURF or Municipal) begins when
an interested department determines a need for a specific piece of equipment
and submits a lease/purchase request form to the University Representative
or the CSURF office. The lease/purchase request form is signed and verified
by the Request Originator, Department Head, and Dean of the College
to indicate the awareness of all individuals and entities of the financial
obligation of the lease arrangement. Requests for computer equipment
must also receive the approval of the University's Computer Center.
If indication is given on the lease request that payments will be made
from research contracts and/or grants, approval of the proper contract
and grant administrator is also required to determine that 1) adequate
funds are available, 2) the lease payments are allowable charges to
the contract or grant. The request is then reviewed by the CSURF leasing
officer, the University Representative, and the Vice President for Administration/University
Controller to develop a needs assessment and an analysis of the department's
ability to make the lease payments, based upon the projected sources
of repayment.
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