WHAT ARE THE BENEFITS OF PARTICIPATING IN THE PROGRAM?
Lower Overall Lease Purchase Financing Costs to State Agencies
DFA established and designed the Program to provide each State Agency with competitive interest rates and low financing costs for lease purchase transactions. The interest rates paid under the Program are typically below those that historically have been achieved by lease purchase agreements entered into by State Agencies acting individually. DFA achieves this result by aggregating the lease purchase needs of all State Agencies into a single transaction that utilizes standardized documentation and procedures. Due to its aggregated dollar volume, the transaction can be insured or rated, which further reduces the interest rate to the State Agencies. DFA can then access the public markets through the competitive or negotiated sale of insured and/or rated Lease Revenue Certificates of Participation (“COPs”). The COPs are tax-exempt municipal securities, and they represent the investor’s interest in the lease payments. Alternatively, DFA can give local, Mississippi banks the opportunity to bid on the Program for financing through a negotiated, competitively-bid process reducing the cost of issuance and timing of the financing. Participation in the Program creates an economy of scale such that each participating State Agency can take advantage of factors such as increased dollar volume, standardized documentation and procedures, insurance, rating and the ability to access the public markets.
Ease of Access and Administration
The centralized procurement, documentation and financing process offered by the Program simplifies and minimizes the costs of administration relating to equipment financing for both DFA and the State Agencies while providing the State Agencies with quick and easy access to the financial benefits of the Program. Access to the Program is simplified by establishing DFA as a central source for contact with respect to the lease purchase financing needs of State Agencies. The Financial Advisor and Lessor work closely with DFA and the participating State Agencies to ensure that benefits are enjoyed by all State Agencies. DFA, the Financial Advisor and the Lessor are available to answer any Program questions or to discuss any upcoming equipment needs. All required documentation is drafted by the Financial Advisor and approved by DFA and its counsel prior to being forwarded to the State Agencies.
Financial Certainty and Flexibility
The structure of the Program provides flexibility to State Agencies by making funds available to pay for the purchase, delivery and installation of equipment acquired from each vendor when needed or desired. This allows State Agencies to take advantage of prompt payment discounts or to make necessary progress payments to vendors if those payments result in overall savings to State Agencies. The financing structure of the Program also provides a degree of flexibility which allows each State Agency to make lease payments over a lease purchase term appropriate to the useful life for each particular item of equipment acquired under the Program and each State Agency’s budgetary needs or constraints. The Financial Advisor will work with each State Agency to develop a customized amortization schedule of lease payments that will fit each State Agency’s needs under the Program. The Program also provides each State Agency with potential opportunities to refinance existing lease purchase obligations at current market rates.
Types of Equipment Eligible to Lease-Purchase
The State Agencies have a wide range of equipment that may be financed using the Program. Representative items of equipment include:
- rolling stock including sedans, trucks, vans and buses
- farming and agriculture equipment and implements
- energy management equipment
- computer equipment including hardware and software
- printers, scanners and copiers
- modular office and classroom furniture
- portable radios and related hardware
- fiber optic cable systems
- telecommunication equipment
- equipment used in crime analysis
- research and medical equipment
- printing presses
- heavy road equipment
- modular buildings