How Are COPs Structured?
In a typical lease purchase arrangement, the county, known as a lessee, purchases property or equipment under contract from a lessor (usually a vendor) another public entity or a special purpose nonprofit corporation. The lessor raises funds through the sale of COPs to investors, which provides funds to pay for the purchase of the asset. The county pays yearly lease payments consisting of principal and interest to the certificate holders until the debt is repaid. The lessor receives a portion of each lease payment as tax-exempt interest. The assets are held by a trustee, which is either a bank or trust company. The trustee prepares and executes the certificates, holds title to the leased asset, and receives the county’s payments and remits them to the certificate holders. During the lease payment term, title to the asset may be vested in the name of the county with the lessor retaining a security interest in the asset. Once repayment is complete, ownership of the asset is transferred t
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- How Are COPs Structured?
