NON-PROFIT INSTITUTION FINANCING
STRUCTURE FOR TAX-EXEMPT LEASING:
PRIVATE NON-PROFIT (501)(c)(3)) ORGANIZATION
- State or political subdivision (or one of its qualified agencies)
- Has power to lease as lessee and purchase the leased property and to lease as lessor and sell the leased property
- Participation is in furtherance of the Lessee’s purposes
Sublessee
- 501(c)(3) organization
- Its articles or bylaws may require approval of the Sublessee’s members or stockholders
Lease-Purchase Agreement
- Rental Payments with principal and tax-exempt interest components
- Lessee’s obligations payable solely from the payments by the Sublessee or proceeds of the leased property
- Non-appropriation normally not required
- Assigns Lessee’s rights under the Sublease
Sublease-Purchase Agreement
- Subrental Payments same as Rental Payments plus all fees and expenses of Lessee
- Agreements respecting maintenance of property, insurance, taxes, indemnity of Lessor and Lessee, tax covenants, etc.
- Grants security interest in the equipment leased
