Benefit Now, Pay Later
Municipalities and wastewater agencies face a well-documented crisis with respect to the lack of funds required to maintain our collection systems. RedZone is proud to announce an alternative financing mechanism to help wastewater managers procure essential products and services.
Municipal Lease/Purchase Financing
Municipal lease/purchase financing is a special purpose financing instrument that meets the basic objective of debt (spreading the cost of financing over the life of an asset) while not violating the constitutional or statutory limitations regarding issuance of public debt. This allows the customer to buy what is truly needed, not just what is budgeted at any given time.
Benefits of RedZone Financing
- Multi-year payments for essential-use products and services
- Does not constitute debt
- Non-appropriation clause
- No required current year appropriations
Frequently Asked Questions:
Q: Does this constitute debt?
A: No. You should seek opinion of your attorney but it is designated to not constitute debt due to the non-appropriation clause.
Q: What is deemed to be essential use?
A: The customer/lessee must show an extremely strong “essential use” statement–why the software and services are needed and how they will enable the lessee to better perform its required services to its citizens
Q: How does this factor into my bidding process?
A: The same way you normally factor payment terms into your process. Some people include them and some people leave them for negotiation later. If you choose to include them then simple language is required that states your desire for extended payment terms coupled with a non-appropriation clause.
Q: Is everyone eligible for this financing?
A: No. Customers must be approved for this financing. Prior year’s audited financial statements are required for consideration. Requirements may vary from state to state.
Q: What is the rate?
A: Rates will vary based on a variety of factors to include bond rating, length of term and amount financed, etc.
Q: What if we don’t appropriate in one of the out-years?
A: If cancelled, the lessee must return the equipment/software. No further financial obligations exist.
Q: What is we don’t have appropriations in the year we contract?
A: That can be okay. Appropriations can commence with the next budget cycle.
Q: What happens at the end of the term?
A: Agreements contain a $1 purchase-option clause allowing the lessee to purchase/own the equipment once all payments are made.
