Leasing - An Innovative Way to Finance Energy Conservation Improvements

Abstract

Leasing represents an attractive method of raising 100% of the cost of capital goods and equipment and of obtaining the use of capital goods and equipment over long periods of time for relatively low periodic payments. Typically the cost of lease financing is less than the cost of a comparable debt financing. An important element in lease financing is the transfer or treatment of the tax benefits that are associated with owning capital equipment.

My presentation will cover what a lease is, how lease financing has developed and grown in the last 20 years and who are some of the firms in the leasing industry. I will also discuss the specific tax benefits that are available to owners of capital equipment because those tax benefits and the tax characteristics of the equipment financed are very important ingredients in leasing today. Third, I'll describe several different forms of leases or things that are referred to as leases including the standard full payout tax leveraged lease, the short term operating lease and the safe harbor lease, including the sale of tax benefits for a one-time cash payment. Finally, I'll describe credit, which induces the investors to put their money down and enter into the lease.