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MASTER LEASE PROGRAM April 2017

MASTER LEASE PROGRAM April 2017. What Is Master Lease?. Capital Lease/Lease-Purchase Agreement for Capitalized Assets Not an Operating Lease Centralized Lease Program Administered by Department of Administration Capital Finance Office Available to ALL State Agencies

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MASTER LEASE PROGRAM April 2017

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  1. MASTER LEASE PROGRAM April 2017

  2. What Is Master Lease? • Capital Lease/Lease-Purchase Agreement for Capitalized Assets • Not an Operating Lease • Centralized Lease Program • Administered by Department of Administration Capital Finance Office • Available to ALL State Agencies • Created in 1992; Has Financed Nearly $730 million of Leased Items

  3. Examples of Capitalized Assets • Ordinary Capitalized Assets • Personal Computers • Mobile Computers • Systems Furniture • Info Tech Infrastructure (Servers) • Agriculture Research Equipment (UW) • Medical Research Equipment (UW) • Trucks • Golf Course Maintenance Equipment (UW) • IPADS/Tablets • Airplane Engines

  4. Examples of Capitalized Assets • Unusual Capitalized Assets • Systems Development - Costs of Contractor Developing a “System” for Agency • Agency Accountants Need to be Involved - Is System Going to Be Capitalized Asset? • Examples – STAR Project, Vital Records, Call Center • Pre-paid Service Contracts • Energy Performance Contracts - WEI-3 Program

  5. Master Lease Cannot Be Used For • Operating and Maintenance Expenses • Real Estate/Buildings Occupied By State • Cash Management • Items Presenting Challenges to Master Lease (Need Case-by-Case Review) • Reimbursement of Costs Previously Paid • Procurement of Equipment from State Agency (BSI) • Wages/Fringe Benefits of State Workers Developing a System

  6. Why Lease? • Spread Acquisition Costs Over Expected Useful Life. Maximum of Seven Years (Long Term Will Be On a Case by Case Review). • Unanticipated or Large One-Time Purchases • Match Financing Costs to Depreciation or Replacement Cycle

  7. If Lease, Master Lease Required? • NO! Encourage “Shopping” For Other Options • Vendor Financing

  8. Benefits of Master Lease • Centralized Program – Minimal Paperwork! • Nearly 18 Months to Resolve Third-Party Lease Agreement. • Use Agency’s Procurement Procedures • Large Lease Program; Competitive Rates • July 2016 Financing; 1.426% (TIC) for Seven-Year Financing. • Current Variable Interest Rate is based upon 1-month LIBOR. • Prepayments At Anytime/No Penalty

  9. Approval Process • Agency Makes Decision to Use Master Lease Program • Agency Submits “Master Lease Request for Use and Approval Form” to DOA Capital Finance • DOA Capital Finance, State Budget Office, and (for IT Items) Division of Enterprise Technology Review/Approve Master Lease Request • PRELIMINARY APPROVAL; Deputy Secretary of Administration • Agency Completes Procurement Process • Agency Accepts Equipment; Forwards Invoice and “Master Lease Notice of Equipment Acceptance Form” to DOA Capital Finance Office • Acceptance Form Signed by DOA Capital Finance, Legal Opinion Signed by DOA Legal Counsel, and Lease Schedule signed by Lessor and Agency • FINAL APPROVAL; DOA Capital Finance Signs Lease Schedule

  10. Master Lease Repayments • Semi-Annually on September and March 1 • Agency Agrees to Payments Being “Automatically” Withdrawn by State Controller’s Office

  11. Master Lease Prepayments • Prepayments Allowed Any Time; No Penalty. • Requested Prepayments Approved by State Budget Office. • Sources; Budgeted Funds, Unexpected Federal Grants, Other.

  12. State of Wisconsin Master Lease Program State of WisconsinDepartment ofAdministration(Lessee) Third Amended And RestatedMaster Lease #1992-1 Firstar Bank, National Association(Lessor) Master Indenture Firstar Trust Company(Trustee) Cross-Collateralized Pool of Leased Items Supplemental Indenture Supplemental Indenture Supplemental Indenture Supplemental Indenture COPs- RevolvingFacility COPs COPs COPs Note: U.S. Bank National Association is currently successor to Firstar Bank, National Association and Firstar Trust Company

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