Master Lease Purchase Program Overview
The Master Lease Purchase Program ("MLPP") is a lease revenue financing program
established in 1992, primarily to finance capital equipment acquisitions by
state agencies, authorized by Texas Civil Statutes, Article 601d, Â§9A (now,
Texas Govâ€™t. Code, Â§1232.103.) MLPP also may be used to finance other types of
projects that have been specifically authorized by the Legislature and approved
by the TPFA Board. The financing vehicle for the MLPP program is a tax-exempt
revenue commercial paper program established pursuant to Texas Govâ€™t. Code,
Under the program, the TPFA borrows money to pay for an agencyâ€™s equipment or
other project by issuing tax-exempt revenue commercial paper notes. The agency
and the TPFA enter into a lease pursuant to which TPFA takes title to the
equipment or other project and leases it to the agency who is required to make
lease payments to TPFA. TPFA uses the lease payments to repay the principal and
interest on the commercial paper notes. When the lease is fully paid, the
agency receives title to the equipment or other financed project. An agency may
pay off its lease at any time without penalty.
MLPP carries ratings from Standard & Poorâ€™s of A-1+, Moodyâ€™s of P-1, and
Fitchâ€™s of F-1+. Liquidity for the program in an amount of $150,000,000 plus
interest at 10% for 270 days is provided by the Texas Comptroller of Public
Accounts. For additional
information, you may review the Offering Memorandum (link
to Offering Memorandum) and the Liquidity Agreement (link
to Liquidity Agreement).
Who may use MLPP?
MLPP is available to any state agency. A "State Agency" is any board,
commission, department, office, agency, institution of higher education, or
other governmental entity in the executive, judicial, or legislative branch of
state government. (See, Texas Govâ€™t Code, Â§ 1232.003.)
What may be financed?
MLPP may be used to finance a state agencyâ€™s acquisition of equipment that
costs at least $10,000 and has a useful life of at least three years.
Individual items may be bundled and financed in one purchase as long as the
value of the individual item is at least $100. In other words, an acquisition
of equipment may be financed if the total amount of the one contract or
purchase order is for at least $10,000. (Since this is the acquisition of
"equipment" as a general rule, the contract will be in the form of a standard
purchase order and the amount of that one purchase order has to be $10,000 or
"Equipment" means any "fixed asset, other than land or a building, used by a
state agency to conduct state business,"... including computer equipment.
Computer equipment includes any automated information technology system and
Other projects, such as real estate or construction, may be financed through
MLPP if the specific project has been authorized by the Legislature and
approved for MLPP financing by the TPFA Board.
In the MLPP documents and rules, the term "Eligible Project" is used to define
and describe projects that may be financed.
After the agency has determined that it has the authority to purchase or
complete an Eligible Project, the agencyâ€™s governing body must adopt a
Resolution, which determines that financing is appropriate, approves and
authorizes a request for financing, designates an officer or employee and
delegates to the officer or employee authority to proceed with the submission
of a request for financing and completion of the financing. To view a sample
resolution, click here.
An agency may use its own form of resolution as long as it contains the
substantive evidence that the governing body approved the financing request and
the officer or employee signing the documents is authorized to do so.
The agency is required to obtain approval of the Bond Review Board or other
agencies if required.
Bond Review Board Approval
A lease for an amount of $250,000 or more or for a term of 5 years or more
requires Bond Review Board ("BRB") approval. The agency is responsible for
submitting its own application and obtaining approval of the BRB. However, as
the BRBâ€™s current application form requires the attachment of an amortization
schedule prepared by TPFA, the agency should notify TPFA MLPP Program
Administrator of its intent to seek BRB approval as soon as practicable. For
further information, please consult the BRB.