Lease Revenue Bonds Vs Certificates Of Participation

Nearly all local indiana lease bonds are payable from unlimited property taxes.

Lease revenue bonds vs certificates of participation. The certificate of participation is a financial document that is often employed when a municipal government or other government entity creates a bond issue. State law governs the issuance of cops and specifi es which municipalities may issue cops. Office buildings public administration buildings courthouses police and fire stations civic center complexes museums and convention centers. Lease back bonds certificates of participation.

Introduction this memorandum provides a brief explanation and overview of tax exempt lease purchase financing and certificates of participation cops in georgia. Cops are tax exempt lease financing agreements that promise investors a share of whatever revenue is derived from the lease or lease purchase of the property or equipment to which the cop is tied. Leases to finance not only minor equipment procurements but also the construction or acquisition costs of major capital projects such as schools and courthouses. Lease fi nancing can take different forms the most prevalent being certifi cates of participation cops but lease revenue bonds are also used.

In this application tax exempt leasing often involving the sale of certificates of participation cops serves as an alternative to issuing municipal bonds. Counties cities and school districts referred to as local governments in this overview are authorized by georgia law to obtain tax exempt lease purchase financing as described below. Ii list of exhibits exhibit a diagram of certificates of participation financing structure exhibit b diagram of lease revenue bonds financing structure exhibit c cash flow diagram for lease revenue bonds and certificates of participation exhibit d example of nonappropriation clause exhibit e example of covenant to seek appropriations exhibit f example of covenant to. Lease purchase agreements conditional sales contracts and certificates of participation.

Among state and municipal governments certificates of participation cops are the most popular form of appropriation supported debt. A certificate of participation cop is a type of financing where an investor purchases a share of the lease revenues of a program rather than the bond being secured by those revenues. The primary difference between the two kinds of districts is that revenue bonds must be issued for ulids assessments must be deposited in a fund to pay off the revenue bonds and the bonds are backed both by assessments and by utility revenue. Rather than paying interest on the bonds or guaranteeing a face value at the end of the project the investor receives a return based on the lease revenues associated with the offering.