Types of Bonds: Leases
There are a number of different forms of bonds/debt that a school district may issue to meet its financing needs.
Leases. School districts are empowered to enter into multi-year lease, purchase and lease-purchase contracts for equipment and property to be acquired. There are a number of conditions imposed upon such lease agreements. Leases related to buildings, rooms, grounds and appurtenances for district related purposes may be entered into for a term not exceeding 99 years if certain requirements are met. The principal amount of the borrowing and the interest related under any such lease agreement must be repaid within 40 years. Leases related to real or personal property such as a school site, building or equipment, may be entered into for term not exceeding 20 years. A form of lease that may be offered to the public is known as a Certificate of Participation (“COPs”), which is a repayment obligation governed pursuant to an installment contract or lease agreement. Under the Debt Reform Act, a school district’s ability to issue debt certificates, as described below, make the issuance of COPs unnecessary.