(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 CSU as lessee and a bank, leasing company or underwriter as lessor. The lessor
is chosen by competitive bids submitted by interested parties. The lease agreement is
signed between CSU 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 between 1 1/2% to 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
10 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
request 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 Director of Academic Computer and Network Services (ACNS) or 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 lease officer, the University Representative, and University
Administrators 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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