MASTER LEASE PROGRAM April 2017

What Is Master Lease? Capital Lease/Lease-Purchase Agreement for Capitalized Assets Not an Operating Lease Centralized Lease Program Administered by Department of Administration Capital Finance Office Available to ALL State Agencies Created in 1992; Has Financed Nearly $730 million of Leased Items

Examples of Capitalized Assets Ordinary Capitalized Assets Personal Computers Mobile Computers Systems Furniture Info Tech Infrastructure (Servers) Agriculture Research Equipment (UW) Medical Research Equipment (UW) Trucks Golf Course Maintenance Equipment (UW) IPADS/Tablets Airplane Engines

Examples of Capitalized Assets Unusual Capitalized Assets Systems Development - Costs of Contractor Developing a “System” for Agency Agency Accountants Need to be Involved - Is System Going to Be Capitalized Asset? Examples – STAR Project, Vital Records, Call Center Pre-paid Service Contracts Energy Performance Contracts - WEI-3 Program

Master Lease Cannot Be Used For Operating and Maintenance Expenses Real Estate/Buildings Occupied By State Cash Management Items Presenting Challenges to Master Lease (Need Case-by-Case Review) Reimbursement of Costs Previously Paid Procurement of Equipment from State Agency (BSI) Wages/Fringe Benefits of State Workers Developing a System

Why Lease? Spread Acquisition Costs Over Expected Useful Life. Maximum of Seven Years (Long Term Will Be On a Case by Case Review). Unanticipated or Large One-Time Purchases Match Financing Costs to Depreciation or Replacement Cycle

If Lease, Master Lease Required? NO! Encourage “Shopping” For Other Options Vendor Financing

Benefits of Master Lease Centralized Program – Minimal Paperwork! Nearly 18 Months to Resolve Third-Party Lease Agreement. Use Agency’s Procurement Procedures Large Lease Program; Competitive Rates July 2016 Financing; 1.426% (TIC) for Seven-Year Financing. Current Variable Interest Rate is based upon 1-month LIBOR. Prepayments At Anytime/No Penalty

Approval Process Agency Makes Decision to Use Master Lease Program Agency Submits “Master Lease Request for Use and Approval Form” to DOA Capital Finance DOA Capital Finance, State Budget Office, and (for IT Items) Division of Enterprise Technology Review/Approve Master Lease Request PRELIMINARY APPROVAL; Deputy Secretary of Administration Agency Completes Procurement Process Agency Accepts Equipment; Forwards Invoice and “Master Lease Notice of Equipment Acceptance Form” to DOA Capital Finance Office Acceptance Form Signed by DOA Capital Finance, Legal Opinion Signed by DOA Legal Counsel, and Lease Schedule signed by Lessor and Agency FINAL APPROVAL; DOA Capital Finance Signs Lease Schedule

Master Lease Repayments Semi-Annually on September and March 1 Agency Agrees to Payments Being “Automatically” Withdrawn by State Controller’s Office

Master Lease Prepayments Prepayments Allowed Any Time; No Penalty. Requested Prepayments Approved by State Budget Office. Sources; Budgeted Funds, Unexpected Federal Grants, Other.

State of Wisconsin Master Lease Program State of Wisconsin Department of Administration (Lessee) Third Amended And Restated Master Lease #1992-1 Firstar Bank, National Association (Lessor) Master Indenture Firstar Trust Company (Trustee) Cross-Collateralized Pool of Leased Items Supplemental Indenture Supplemental Indenture Supplemental Indenture Supplemental Indenture COPs- Revolving Facility COPs COPs COPs Note: U.S. Bank National Association is currently successor to Firstar Bank, National Association and Firstar Trust Company