OP 72.18: Lease Purchase of Equipment and Other Commodities
DATE: February 23, 2000
PURPOSE: The purpose of this Operating Policy/Procedure (OP) is to establish the procedures to be followed when lease purchasing equipment and other commodities.
REVIEW: This OP will be reviewed on January 15 of each odd-numbered year by the Director of Purchasing/Payables with recommendations for change forwarded through administrative channels to the Chief Financial Officer by February 15.
This policy will apply when lease purchasing all types of equipment and commodities regardless of the source of funds.
b. A "proposed lease purchase arrangement" for purposes of this operating procedure shall mean a proposed arrangement whereby the requisitioning department intends to obtain title to equipment whether by installment purchase or by lease with option to purchase and where the pay-off period extends beyond an existing appropriation period such as extending beyond a fiscal year.
c. Written justification for the lease purchase must be attached to the purchase order and shall include:
d. Any lease purchase obligation, regardless of the source of funds, which has a stated term of longer than five years or has an initial principal amount of greater than $250,000.00 will require prior approval by the Texas Bond Review Board.
(b) The statutory authorization for the lease purchase proposal;
(c) Evidence of all necessary approvals from any state boards, state agencies, etc., and;
(d) A detailed explanation of the terms of the lease purchase agreement including, but not limited to, the amount of purchase, trade in allowance, interest charges, service contracts, etc.
(2) The Bond Review Board meets on Thursday following the third Tuesday of each month. Application for consideration must be filed with the bond finance office not later than two weeks prior to the date of the regular meeting.
(3) A planning session will be held no later than one week prior to a regular Bond Review Board Meeting. Applicants may be required to attend a planning session and may be asked to make a presentation and answer questions regarding the lease purchase.
e. Payments should be requested on a quarterly, semi-annual or annual basis. If payments will be made on a monthly basis, a minimum $25.00 monthly charge will be made to defray expenses related to the handling of extra paperwork resulting from the additional payments. The additional expense charge will be obligated along with all lease purchase costs. The requisitioning department's account will be charged the expense charge each month with the amount being credited to an account under the control of the Purchasing/Payables Department.
f. All lease purchases must be approved by the Chief Financial Officer.