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Correctional Facilities

How to Find Money for Prisons
Thursday, August 20, 2009

Federal and state aid for state, county and city municipal projects is drying up. Many state governments are dealing with budget deficits reaching into the millions and billions. While this is the case, the prison population and population types are consistently growing and diversifying as existing local prisons and jails age. 

In the past, General Obligation Bonds (GOB) have provided long-term financing of capital projects. These types of bonds for many states require an approved voter referendum, which can take several years to pass. In addition, GOBs calculate into the municipality's debt limit, which could limit funding for other needed projects and equipment. 

Municipal Lease-Purchase Financing (MLPF) allows for easy access to the funds needed for much-needed projects without weighing on the debt limit. MLPF is structured as a series of one-year renewable obligations that are subject to the governmental entities ability to appropriate funds for the continuation of the lease. If the lessee discontinues payments, the agreement is terminated and the title of the items on lease is surrendered to the lesser.

Private organizations such as the Municipal Capital Markets Group provide MLPF to local municipalities in need of upgrading their detention centers even when cash flow from state and federal bodies is strapped.


Unlike GOBs, MLPF:

  • Does not require voter approval
  • Not treated as debt, but as an alternative source of capital
  • Does not sit on the municipal budget as huge investment
  • Is able to be used for the whole project or just parts of it
  • Allows for municipalities to eventually own the leased items

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