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Master Lease Purchase Program Requirements
Payment Estimator |
Participation Requirements and Program Documents
1. After the agency’s governing board has adopted its resolution and BRB and/or
other agency approvals have been obtained if required, a
Master Lease Purchase Agreement ("Master Lease") must be signed by the
authorized agency representative who is named in the Resolution. The Master
Lease is the financing agreement between the agency and the TPFA and is not
subject to revision. A current signed Master Lease must be in effect and on
file before any acquisition may be financed. Once signed, the Master Lease will
serve as the agreement for subsequent financings, which will be added by signed
2. The agency must follow its normal procurement procedures to acquire the
property that is to be financed, including acceptance and inspection, and
establishing the terms of payment. TPFA has no involvement in the procurement
process. Furthermore, NO changes to the agency’s routine procedures are
required except for the purchase of motor vehicles; TPFA must be registered as
lienholder on the original motor vehicle title issued by the Department of
3. When the agency has received and approved an invoice for the financed
purchase, it will complete and sign two originals of the
Lease Supplement, and submit them with the invoice(s) to TPFA, to the
attention of the MLPP Program Administratior. One Lease Supplement may
include multiple purchases.
4. TPFA will promptly initiate payment to the vendor based on the information
provided in the Lease Supplement. TPFA will return one of the signed originals
of the Lease Supplement to the agency after the vendor has been paid, along
with a copy of the state warrant issued to the vendor and an amortization
schedule applicable to that Lease Supplement. Each Lease Supplement generates
its own amortization schedule and related rent payment.
MLPP financing should not add significant additional time to an agency’s
equipment procurement process. However, if BRB approval is required, the agency
will have to incorporate that into its schedule.
After the agency has adopted its resolution and all approvals have been
obtained, the time needed to sign a Master Lease is minimal. Following the
establishment of a lease, the payments to vendors are processed within two to
four business days.
Agencies are required to make Rent Payments once a year, on August 1, but may
prepay a lease at anytime without penalty.
Costs and Payment Requirements
Because MLPP is a short-term, variable rate (ie, commercial paper), the actual
interest rate on the state’s borrowings is not known until the notes are
issued, and the interest cost to agencies varies over time. TPFA tries to
maximize interest rate savings by issuing the notes for varying periods,
depending on market conditions. Commercial paper may be issued for up to 270
days, at which time it must be paid off or "re-issued." Thus, to ensure that
sufficient funds are available to pay the actual interest due on the commercial
paper notes, the TPFA assesses agencies a flat program interest rate of 5%. In
addition, the TPFA charges agencies 1% to meet TPFA’s costs
of administering the program.
The total charge to agencies is currently 6%. Prior to each regular debt
service payment date (August 1 of each year) , the TPFA determines the actual
interest cost of the program and the difference between the lower actual cost
and the flat program rate assessed is "rebated" to the agencies in the form of
a credit against the agency’s next rent payment.
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