It is the policy of the BOCC for the County to plan issuance of lease obligations and other long-term financing agreements according to the following guidelines:
- Lease financing is appropriate in the following situations:
- Whenever the introduction of leased equipment or a capital improvement results in verifiable operating savings that, properly discounted, outweigh the lease financing costs.
- To purchase important capital equipment or finance improvement projects for which lease financing costs can be paid for by:
- existing non-general fund revenues; or
- new, earmarked revenues approved by the voters; or
- incremental general fund revenues that can be specifically attributed to the introduction of the capital project.
- To finance projects deemed important enough (for safety, legal requirements, efficiency, or other reasons) to justify a reallocation of existing revenues.
- The Budget and Financial Planning Department and Treasury and Financial Management will determine and document the justification for each proposed lease transaction. The justification should include the following:
- detailed explanation of the factors listed in the capital improvement guidelines;
- reasons for not recommending a “current payment” alternative;
- explanation for not recommending financing through general obligation or other non-lease revenue option or non-lease revenue bond issuance.
The Budget and Financial Planning Department will advise the respective department with the appropriate financing mechanism using short-term general obligation bonds/notes as the first financing option and lease-purchase option as a subsequent option. The analysis shall be conducted using appropriate analytical tools to make such evaluations.
- The project lease payments and a cash flow statement over the life of the transaction are required for every proposed lease agreement.
- The scheduled maturity should be less than the expected useful life of the capital project or asset(s) financed.
- An analysis of various financing strategies should be performed to allow for the lowest possible costs to the County.