The mission of the Master Equipment Lease/Purchase Program (the program) is to provide District agencies with access to low cost, tax-exempt financing for short-term capital equipment needs. The program also enables the District to improve its asset/liability management by matching the useful life of the asset being financed to the amortization of the liability.
Under the District of Columbia Home Rule Act, the District may issue various obligations to finance its capital needs. The equipment finance program finances rolling stock (e.g., automobiles, trucks, public safety vehicles) and computer hardware and software. Financing through the program begins with a financing company paying for the purchase of equipment for the District’s use. The District makes lease payments to the financing company for such equipment, which are in effect principal and interest payments on the amount financed, and the District gains ownership of the equipment upon completion of the payments.
Equipment financed through the program must have a useful life of at least five years. The repayment (amortization) will not exceed the useful life of the financed equipment. The maximum financing term that may be requested is ten years.
Appropriations for the program are budgeted from Local funds in amounts sufficient to meet the required payments. Timely payments are necessary to satisfy the District’s commitments to its investors and creditors and to maintain a good credit standing in the financial markets.
As of September 30, 2017, the District financed approximately $537 million of its capital equipment needs through the program. Currently, $35 million is outstanding. The final payment associated with this program is due on June 25, 2020. The capital improvement plan for Fiscal Years 2018 through 2023 initiated a short-term financing program that will replace the current equipment finance program.