Thursday, Mar 30th

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Municipalities need fire trucks, phone systems, school buses, computer equipment and the like, even if they don't have the hard cash to buy them. Cash flow and the budgeting process most municipalities undergo are just two of the many reasons a municipality may find purchasing equipment outright to be quite prohibitive. Similar problems also exist within many Native American nations.

“Municipalities have limited tax dollars. They can't raise taxes because of high unemployment. It's just going to be a strain on people in the community,” said Robert Kalb, president of Lehigh Capital Access. Kalb's company was one of the first, and is still one of the few providing equipment leasing or lease/purchase programs on the federal, state and local level to municipalities, and also to hospitals, volunteer fire departments.

Interest earned on many of these leases is tax free or tax exempt, and Lehigh passes any savings back to the governmental entity in the form of lower leasing rates. Municipal leasing also avoids problems of buying equipment via bond issues, such as election costs, costs of issuing bonds and underwriting discounts.

The cost of specifically defined purchases are spread out over time, instead of struggling to pay up front with money a municipality might not be able to allocate or taxes they may not be able to raise. Kalb is also able to tailor each lease or lease/purchase program to fit into the many different types of budgeting processes and schedules that constrain governmental entities at all levels.

Lehigh Capital Access also helps Native Americans with economic development and infrastructure, respecting their sovereignty and working within their special requirements. “We were probably the first company in the country to do a tax-free financing for a Native American tribe,” Kalb said. “When they allowed the tribes to do gaming, the federal government set up a criteria for what they could do with the money. The money has to go back into health, education, welfare, to run the general fund of the tribal government. It's really their tax base in many cases.”

The federal government's tax-exempt borrowing program called TED (Tribal Economic Development) or TED bonds, created by the Economic Stimulus Act of 2009, also comes into play. Although Native American nations are exempt from federal income tax, Lehigh is not. By using TED bonds, Lehigh  reduces their own tax liability, passing those savings back to the borrowing nation as lower interest rates. TED bonds can help finance almost anything a state government can finance, but the projects must be on a reservation, and cannot finance property used in gaming.

As one of the leaders in the industry, Kalb often speaks on municipal leasing topics at conventions like the Association of Governmental Leasing and Finance. His distinguished list of clients is a very long one, including the District of Columbia, Annapolis Naval Academy, the governments and agencies of almost every state, more than 28 Native American nations, including tribes in the West, SouthWest and even Alaska, in addition to countless cities, counties, hospitals, schools, fire departments – the list goes on and on.

Think of that, the next time you see a fire truck go by.

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