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Master Lease Programs for Government Can Streamline Equipment Financing

What are the benefits of master lease programs? State, local and tribal government officials sometimes ask this question when funding essential equipment and real property through Baystone Government Finance. The question comes up when Baystone professionals explain that all of our lease contracts, including tax-exempt financing through municipal leases, are set up as “master leases.”

Each lease includes terms that make it a master lease, meaning it can encompass multiple leases for different equipment acquired at different times. This capability comes in handy for customers who need additional equipment after signing the existing lease.

We will discuss how master leases work, and their benefits, with the help of Baystone Vice President Christina Ummel.

How does a master lease work?

Documentation for tax-exempt municipal leases and other leases can include terms that define them as master leases.

For example, the terms allow a government body to later add equipment or real property that was not identified on the origination date when the existing lease was executed. To do so, the government entity signs a brief schedule, addendum or supplement to the existing lease, in accordance with that lease’s provisions. It eliminates the need to enter into separate leases each time a government organization requires equipment financing.

However, a master lease does not lock in a rate for future equipment or ensure that future requests for funding are automatically approved. Each new schedule, addendum or supplement is subject to a credit review and is priced on its own merits. This is required because rates and circumstances can change after an existing lease is signed.

What are the benefits of a master leasing program?

The existing lease agreement already includes master lease terms, which streamlines subsequent lease financing for customers in two ways.

The primary benefit: time savings. Adding lease schedules under an existing master lease requires minimal or no legal review by the obligor. Baystone can notify customers of approvals faster and pay equipment vendors more quickly than it can if the customer submits an entirely new lease application.

A secondary benefit: reduced paperwork. Baystone already requires minimal paperwork for lease agreements, but organizations can trim their paperwork even more, by about a third, if they submit a new schedule to an existing lease versus applying for a new lease.

In some cases, the benefits of having tax-exempt financing with master lease terms can multiply significantly. A Florida municipality we serve, for example, added 13 schedules over multiple years to cover more equipment under its existing lease agreement. The time and paperwork required for this would have been considerably more had the municipality opted to initiate 13 new lease contracts.

What equipment can be added?

Baystone considers any and all essential equipment and real property for financing, but this is a partial list of new and used assets we routinely fund.

  • Fire trucks
  • Police vehicles
  • Ambulances
  • Public works equipment
  • Emergency response vehicles and equipment
  • Computers and tablets
  • Body cameras and security equipment
  • Copiers
  • Software
  • Telecommunications
  • IT infrastructure
  • Energy savings projects
  • HVAC, LED lighting, roofs and boilers
  • Modular classrooms and buildings
  • 911 systems
  • Artificial turf and sports complexes
  • Water treatment equipment
  • Metering equipment
  • Capital improvement projects
  • Exercise and fitness equipment
  • Administration buildings
  • Fire stations
  • Gymnasiums
  • Shop buildings

Questions about master lease programs?

Baystone Government Finance is the government and non-profit lending division of KS StateBank. We have one of the largest teams in the United States dedicated to this specialty, including financial experts and in-house lawyers. Existing Baystone customers with questions may contact their representatives. Christina Ummel can also answer questions at cummel@ksstate.bank, phone 800-752-3562, ext. 7354.

Master Lease Definition

A master lease is a document structure that allows a government body to add additional equipment or other property to an existing lease. This eliminates the need for the government body to enter into separate leases each time financing for additional equipment or property is needed. With a master lease, the government body simply signs a schedule, addendum or supplement to the original master lease, in accordance with the master lease provisions.

The basic terms and conditions of the finance agreement are contained in the master lease (the master municipal lease agreement), which streamlines subsequent lease financings. Lease schedules require only minimal or no legal review by the obligor. This can reduce the amount of time between receiving the finance paperwork and funding to the vendor.

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