Can tax-exempt financing be used to reimburse a lessee for cash purchases?
Yes, provided the government adopts a reimbursement resolution setting forth its official intent to reimburse expenditures with the 103 lease. This resolution must describe the project or equipment for which reimbursement is sought and the maximum amount of tax-exempt obligations to be issued to fund this reimbursement. The reimbursement must be for capital expenses except, and subject to Internal Revenue Code-imposed ceilings, for costs of issuance of the tax-exempt obligations as well as preliminary expenses for the project. The proceeds of a 103 lease may be used to reimburse the government for expenditures made no more than 60 days prior to the adoption of the reimbursement resolution. Any expenditure outside of this 60-day period is not subject to reimbursement. To actually enter into the 103 lease, the government has from 18 months to 36 months (depending on the amount of tax exempt obligations the government issued in that year) after the date the expenditure was paid or the dat
