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Q: Has the tax exempt lease purchase model been used in the development of schools?
A: Yes.
Q: Can it be applied to all district capital projects, or just an educational facility?
A: It can be applied to all projects.
Q: Will the District own the property at the end of the lease term?
A: Yes. The District will also have "beneficial ownership" from day one.
Q: Is there a final balloon payment to make the actual purchase?
A: No.
Q: What is the number one benefit to using the lease purchase model?
A: This is the lowest cost of ownership, fastest and highest quality delivery process with maximum owner control and lowest risk.
Q: Is it legal in my state to do a tax exempt lease purchase model?
A: Laws vary from state to state, but SGT has extensive experience in states across the nation.
Q: Will a referendum be required to approve this lease project?
A: No, unless an additional property tax will be imposed to repay the debt.
Q: Can the purchase of land be included in the total project package?
A: Yes.
Q: Who owns the land?
A: The land is typically owned (or acquired and owned) by the school district or institution and then leased to the nonprofit owner. The land may be acquired directly by the nonprofit owner if the school district or institution desires.
Q: If the package includes the use of school district-owned property, is that land leased to the developer?
A: No. It may be leased to a tax exempt not-for-profit entity set up on behalf of the district.
Q: How long is the land lease?
A: The lease term matches the term of the lease revenue bonds. These terms vary from state to state.
Q: Does the school district or institution sign a contract with the developer to begin this process?
A: The initial contract is a professional services agreement with the developer.
Q: Who "owns" the project during the development phase?
A: The district is the beneficial owner from day one through a tax exempt/not-for-profit entity set up or utilized on the school district's or institution's behalf.
Q: Is the majority of the risk held by the school district or institution or by the developer?
A: The school district or institution executes a lease which commences upon occupancy of the facility. Until that time, the developer and design-builder guarantee the maximum price of the facility and "bond" the job.
Q: As I understand it, the lease will be held by a tax exempt organization. Who is in charge of operating the tax exempt entity?
A: The board of directors of the tax exempt entity, which is typically appointed by the school district or institution and overseen by its board. However, should the school district or institution desire, the developer can continue its involvement and manage the affairs of the board of directors.
Q: How can the school district or institution be assured that they will receive a quality project and not a building put together quickly using cheap materials?
A: The school district or institution's facilities staff will be integrally involved in the design and specification process. The final design must meet district standards and will reflect their input. Indeed, the district or institution should be selecting a team based upon best qualifications, best value, top references and strong bonding capacity. All sub-bids will be awarded to the lowest "responsible" bidders in an open book, transparent manner with close review by the school district or institution facilities staff.
Q: Since the design and construction team is contracted with the developer, do they have the same liability and same commitment to the school district or institution as they would if they were working with us directly?
A: Yes. They have more motivation to complete on time and under budget as change orders are virtually eliminated in this process.
Q: Will the developer guarantee an on time delivery of the project, considering reasonable circumstances?
A: Delivery will be guaranteed by the contractor under his GMP design-build contract and the bonding requirements.

With Garfield Traub's development leadership and creative financing expertise, we were able to negotiate all project documents and successfully structure allowing us to break ground on the convention center and hotel sooner.
Donald Pipes
City Manager
Overland Park, Kansas