Page 194 - Alternative Energy Systems in Building Design

170 CALIFORNIA SOLAR INITIATIVE PROGRAM

type, generally known as an energy-efficiency lease or a power-purchase agreement is
used most often on equipment being installed for energy-efficiency purposes that has a
life expectancy of more than 7 years. Most often this type of lease applies to equipment
classified for use as a renewable-energy cogenerator, such as solar PV and solar thermal
systems. The other common type of application that can take advantage of municipal
lease plans includes energy-efficiency improvement of devices such as lighting fixtures,
insulation, variable-frequency motors, central plants, emergency backup systems, energy
management systems, and structural building retrofits.
The leases can carry a purchase option at the end of the lease period for an amount
ranging from $1 to fair market value and frequently have options to renew the lease at
the end of the lease term for a lesser payment than the original payment.

TAX-EXEMPT MUNICIPAL LEASE
A tax-exempt municipal lease is a special kind of financial instrument that essentially
allows government entities to acquire new equipment under extremely attractive terms
with streamlined documentation. The lease term is usually for less than 7 years. Some
of the most notable benefits are

■ Lower rates than conventional loans or commercial leases
■ Lease-to-own (there is no residual and no buyout)
■ Easier application, such as same-day approvals
■ No opinion of counsel required for amounts under $100,000
■ No underwriting costs associated with the lease

ENTITIES THAT QUALIFY FOR A MUNICIPAL LEASE
Virtually any state, county, or city government and their agencies, such as law enforce-
ment, public safety, fire, rescue, emergency medical services, water port authorities,
school districts, community colleges, state universities, hospitals, and 501 organiza-
tions, qualify for municipal leases. Equipment that can be leased under a municipal
lease includes essential-use equipment and remediation equipment, such as vehicles,
land, or buildings. Some specific examples include

■ Renewable-energy systems
■ Cogeneration systems
■ Emergency-backup systems
■ Microcomputers and mainframe computers
■ Police vehicles
■ Networks and communications equipment
■ Fire trucks
■ Emergency-management service equipment
■ Rescue construction equipment such as aircraft and helicopters
■ Training simulators
■ Asphalt paving equipment