What is a Municipal Lease? • Key Feature:  Non-appropriation Clause Historical Perspective less than 1% (product related, small ticket more likely) • Two Primary Types Of Municipal Leases True Lease Stated Residual (FMV) at Lease Maturity Tax Exempt Installment Sale Currently represents Major Portion of the market MBCC Municipal Leases • True Lease - Differs from Commercial True Lease - Tax Depreciation Limited to Lessor - Interest income to Lessor is taxable - Interest rate to Lessee is not favorable - Municipalities use only with small ticket items (e.g. office equipment) • Tax Exempt Installment Sale (Lease Purchase) - Interest income is Excluded from Lessor's Taxable Income - Non-Appropriation Clause - Nominal Purchase Option ($1) • Typical Pricing Structure for all Municipal Leases - Annual Payments (Quarterly & Monthly available) - Arrears or Advance - Fixed rate quotes up to one year prior to equipment delivery Goals For Municipalities Efficient Funding Techniques Invest a Smaller Amount of Capital to Achieve a Higher Level of Service - Only Purchase What You Need A New Focus on Cash Flow - Only Pay for What You Use Concentrate on Life Cycle Costs - Cost of Total Usage Municipal Lease Benefits Modern - Updated Equipment - More Reliable - Maintainable Lower Total Operating Costs Better Service to Customers at Lower Costs Better Utilization of Taxpayers Funds Fiscal Agility Within Budget Limitations

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