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vendor/prime contractor, its credit quali- In addition, but less of concern, is the ty, the quality of its product and services quality of the vendor, since a problem Leasing services and the quality of the organisation. Also, vendor might lead to a reason for non- some performance risk is minimised by appropriation. Edwards & Angell, LLP 2800 Financial Plaza, Providence, RI 02874, US. Tel: +1 (401) 276 assuring the installation and perform- Compliance with federal tax require- 6636; Fax: +1 (888) 325 9065; Email: [email protected]. Managing Partner: Terry Finn; ance of the asset with acceptance of the ments is also of importance on lease-pur- Partner: Business Aviation Practice Group: Edward H. Kammerer. asset by the federal government at the chase transactions to preserve the Activities: Counsels both financial institutions and their customers in all aspects of business aircraft finance, acquisitions and outset before funding. tax-exempt status of the transaction. operations.

There does not exist an opinion prac- Federal leasing, with the superb credit Edwin E Huddleson, III, Esq. tice of getting opinions on the legal, valid quality of the US government, focuses on 1250 Connecticut Avenue, NW. Suite #200, Washington, DC 20036, US. Tel: +1 (202) 543 2233; Fax: +1 (202) 783 7678; Email: and binding nature of a federal lease on the essential use of the asset to the feder- [email protected]; Website: www.lawyers.com/huddleson. Chief the federal government due mainly to the al government due to the federal govern- Executive: Edwin E. Huddleson, III. existence of experienced contracting offi- ment’s right annually not to renew or to El Camino Resources 21300 Superior Street, Chatsworth, CA 91311-4312, US. Tel: +1 cers assigned to the transactions. non-appropriate. (818) 226 6600; Fax: +1 (818) 226 6640. Chief Executive: David E. Conclusions. Commercial leasing tends Often more importantly, the Harmon. Activities: Buying and selling of computer equipment. to focus on the credit quality of the les- vendor/prime contractor is the focus and eLease see, its ability to pay, regardless of concern, since its performance under the 130 Bush Street, 7th Floor, San Francisco, CA 94104, US. Tel: +1 whether the lessee needs the asset or contract with the federal government (415) 391 9500; (415) 391 9508; Fax: +1 727 209 1201; Email: [email protected]. Contact: Tom Williams. whether the asset performs. remains a risk to the assignee throughout Activities: Member of the United Association of Equipment Leasing Municipal leasing tends to focus on the term of the federal lease. (UAEL). the essential use of an asset because of The Elex Group PO Box 14, Medford, NJ 08055, US. Tel: +1 (609) 654 1100; Fax: the right of the governmental lessee to ᭧ George Mardikes 2006. +1 (609) 654 9531; Email: [email protected]. Contact: Marc non-appropriate annually, since the cred- Pettine. Activities: Member of the United Association of Equipment Leasing it quality is not that much of a concern (UAEL). due to the infrequency of bankruptcy Emkay, Inc This article was written by George Mardikes, Davis and legislation requiring balance budgets 805 West Thorndale Avenue, Itasca, IL 60143, US. Tel: +1 (630) 250 Wright Tremaine LLP,1300 SW 5th Avenue, Suite 2300, 7400; Fax: +1 (630) 250 7077; Website: www.emkaynet.com. and a certain degree of fiscal responsibil- Portland, Oregon 97201, US. Tel: +1 503 778 5323, Fax: Chairman, President & CEO: Gary Tepas; Email: +1 503 276 5623, Email: [email protected] [email protected]; SVP, Marketing: John C. Rennels; Email: ity. [email protected]. Group VP, Operations and International: Greg Tepas; Direct Tel: +1 (630) 775 6215; Email: [email protected]. Activities: Member of the American Automotive Leasing Association.

of our society and whose responsibility it Enterprise Fleet Services HEALTHCARE is to provide this basic level to the vari- 600 Corporate Park Drive, St. Louis, MO 63105, US. Tel: +1 (314) 512 5000; Fax: +1 (314) 512 5220; Website: ous groups, such as the aged, the unem- www.enterprise.com/fleet. SVP: Steve Bloom; Direct Tel: +1 (314) EQUIPMENT 512 3930; Email: [email protected]; VP, Finance & Administration: ployed and the disadvantaged. Yet Steve Usselmann; Direct Tel: +1 (314) 512 2332; Email: because we have not developed this basic [email protected]. LEASING Activities: Member of the American Automotive Leasing policy, health care today is being driven Association.

all it the calm before the storm. primarily by economics, rather than Equipment Financing Group, Inc. For those of us in the US moving forward in a logical manner 2037 W. Bullard Ave, Suite 514, Fresno, CA 93711, US. Tel: +1 (559) 438 5146; Fax: +1 (559) 438 5386; Email: [email protected]. C healthcare equipment leasing toward the fulfilment of national health Contact: Christopher Jones. industry, this is the best way to charac- policy objectives.” Activities: Member of the United Association of Equipment Leasing (UAEL). terise the past year in the business. The This insight should come as no sur- Equipment Leasing & Finance Foundation market appeared stable, with increasing prise to anyone who has been following 4301 N. Fairfax Drive, Suite 550, Arlington, VA 22203, US. Tel: +1 use of lease financing by hospitals and the evening news or reading the daily (703) 516 8363; Email: [email protected]; Website: www.leasefoundation.org. Executive Director: Lisa A. Levine, CAE. medical practices. newspapers. It reflects a consensus of the Activities: Non-profit organisation, provides vision for the equipment leasing and finance industry through future-focused But just off the radar, a great storm is problems facing the US healthcare indus- information and research. The foundation is donor-supported, a 501 brewing. It is set to arrive most likely in try today. (c)3 organisation. Corporate donors of US$2,500 or more receive five free, early-release reports a year. Others will need to pay 2007 and will generate enormous What is stunning about the comment US$200 for Foundation reports.

changes within the overall US healthcare is that it was made in 1985. Equipment Leasing Association market and for lessors currently servicing Flash forward 20+ years and health- 4301 North Fairfax Drive, Suite 550, Arlington VA 22203-1627, US. Tel: +1 (703) 527 8655; Fax: +1 (703) 527 2649; Email: it. care costs continue to spiral out of con- elaonline.com. The impetus for the storm was trol. Congress and several Admin- Activities: Member of the International Finance and Leasing Association. summed up by Herman H. Kohlman, istrations have refused until now to Equipment Leasing Specialists, Inc. former national chairman of the address many issues, particularly the 7600 Grand River, Suite 150, Brighton, MI 48116, US. Tel: +1 (810) Healthcare Financial Management unsustainable increases in Medicare 229 2075; Fax: +1 (810) 229 2296; Email: [email protected]. Contact: Randy Montrose, CLP. Association, who said, “One of the costs. Activities: Member of the United Association of Equipment Leasing major reasons that the healthcare indus- The country now faces the prospect of (UAEL). try has had to occupy a reactive position draconian measures that will significant- Euromoney Lease Training, 225 Park Avenue South, 8th Floor, New York, NY 10003-1604, US. is the absence in this country of a nation- ly alter the character of several health- Tel: +1 (212) 361 3299; Fax: +1 (212) 361 3499; Email: [email protected]. Contact: Matthew Know. al health policy. We are the only major care segments and will dramatically Activities: Member of ELA/NASBA Accreditation. Training of leasing nation in the western hemisphere that affect the financial wherewithal of hospi- professionals. has not, in a formal way, come to a con- tals, corporations and physician prac- clusion on what basic level of health care tices across the board. we propose to provide for the members Rumblings of changes began to 485 469-507.qxd 11/27/06 12:09 PM Page 486

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appear in early 2006. They will continue Medicare and Medicaid Services (CMS) to build as the full impact of the has proposed replacing the current Leasing services Medicare reimbursement modifications charge-based Health Specific Relative become clearer in 2007 and are made Value methodology with a cost-based Excell Financial Services, Inc. 9137 East Mineral Circle, Suite 100, Centennial, CO 80112, US. Tel: public. There are two areas of particular system. Additionally, the list of DRGs +1 (303) 708 0880; Fax: +1 (303) 736 4032; Email: [email protected]. Contact: David O. Steckelberg. concern to lessors – outpatient diagnostic would be modified to include a severity Activities: Member of the National Association of Equipment Lease imaging and home healthcare – in both rating. Brokers (NAELB). of which the leasing industry has sub- The goal is to eliminate imbalances by Felsberg, Pedretti, Mannrich e Aidar, Advogados e stantial focus and exposure. pushing charges into other areas. This is Consultores Legais 1725 I Street, N.W., Suite 300, Washington D.C., 20006, US. Tel: +1 On a positive note, new healthcare an outgrowth of significant scrutiny of (202) 331 2492; Fax: +1 (202) 331 2493; Email: [email protected]; Website: www.felsberg.com.br. information technology requirements are physician-owned facilities. The number Managing Partner: Thomas Benes Felsberg. Partners: Maria da on the horizon that will provide great of DRGs would increase from 526 to Graça de Brito Vianna Pedretti, Nelson Mannrich, Carlos Miguel Castex Aidar, Guilherme Fiorini Filho, Cláudia Haidamus Perri, opportunities for those in the leasing 861 in 2008. Case severity would be Ricardo Wanderley Mano Sanches, Roberto Wilson Renault Pinto, Antonio Ivo Aidar, Paulo Sigaud Cardozo, David Leining Meiler, Joel business. ranked by a score of 1–4 for minor, Luis Thomaz Bastos. US healthcare dilemma. Before dis- moderate, major and extreme. Activities: Full service law firm with significant experience in complex business transactions, such as international lease, project cussing the changes, it is useful to under- A greater emphasis on medical care, finance, corporate restructurings, mergers and acquisitions, privatisations and legal consulting in domestic and international stand the crux of the US healthcare rather than surgical care, could result in transaction, and tradition of exceptional quality and personal dilemma and the overall plan for an average 6% increase in reimburse- service. Medicare changes in 2007. The issues ment for the former versus a 6% Fidelity Leasing 6165 Harrison Drive, Suite #1 Las Vegas, NV 89120, US. Tel: +1 and their magnitude are relatively com- decrease for the latter. (702) 739 8077; Fax: +1 (702) 739 7853; Email: mon knowledge. Changes in diagnostic imaging reimburse- [email protected]. Contact: Beverly Anderson. Activities: Member of the United Association of Equipment Leasing The US does not compare favourably ments. In the area of diagnostic imaging, (UAEL).

with other industrialised countries in life planned reductions in reimbursement for Financeedge Software LLC expectancy, infant mortality, patient sat- procedures performed in a physician’s 5959 Central Avenue, Suite 103, Saint Petersburg, FL 33710, US. Tel: +1 (727) 381 7855; Fax: +1 (727) 381 6937; Email: isfaction and number of doctors per office or ambulatory imaging centre are [email protected]; Website: capita. Meanwhile, per capita healthcare threatening the US$75bn–US$100bn www.financeedgesoftware.com. Contact: Jean Swantish; Email: [email protected]. costs are more than 250% higher than radiology and imaging marketplace. Activities: Leasing software provider. the other countries’. This has led the These changes are seen as the result of Financial Pacific Leasing Bush Administration to plan for sweep- several factors, such as a higher demand 3455 South 344th Way, Suite 300, Federal Way, WA 98001, US. Tel: +1 (800) 447 7107; Fax: +1 (800) 447 7106; Email: ing changes in Medicare payments com- by patients for non-invasive tests and the [email protected]; [email protected]; Website: www.finpac.com. Contact: Terry Jennings, CLP. mencing in 2007. practice of defensive medicine. It is inter- Activities: Member of the United Association of Equipment Leasing While the overall planned impact of esting to note, however, that the number (UAEL). these changes is set at around 4%, either of MRI and CT machines in the US on a First Access Leasing Corp. 9925 Haynes Bridge Road, Suite 200-1, Alpharetta, GA 30022, US. positively or negatively, the changes for per capita basis is less than in most other Tel: +1 (800) 851 4396; Fax: +1 (770) 263 6623; Email: some hospitals may range as high as industrialised nations. [email protected]. Contact: Jay Ruhm. Activities: Member of the United Association of Equipment Leasing 15%–30% for some treatments. In this Nevertheless, the Deficit Reduction (UAEL).

environment, some institutions may be Act of 2005 (DRA) provided for two First American Equipment Financial highly rewarded while others will be changes that many providers believe are 645 N. Michigan Ave, Suite 800, Chicago, IL 60611. US. Tel: +1 (716) 598 0900; Fax: +1 (716) 598 0909; Email: extraordinarily hard hit, depending on draconian. The first would cause a [email protected]. Contact: William Verhelle. case mix and degree of specialisation. reduction in reimbursement for the sec- Activities: Member of the United Association of Equipment Leasing (UAEL). The impetus for these changes is a ond and subsequent similar images of First Leasing, Inc. perception that the current system has contiguous body parts in the same ses- PO Box 2562, Opelika, AL 36803-2562, US. Tel: +1 (334) 749 2780; created imbalances that cause undue sion. This change, to be phased in over Fax: +1 (334) 749 2752; Email: [email protected]. Contact: David A. Jones. financial incentives for the treatment of two years, would result in a 25% reduc- Activities: Member of the United Association of Equipment Leasing certain patients and the use of certain tion in 2006 and a 50% reduction in (UAEL). protocols. There also is a discrepancy 2007. First National Equipment Financing, Inc 1620 Dodge Street, STOP 1100, Omaha, NE 68197, US. Tel: +1 between the reimbursement of many pro- The second DRA change would place (402) 633 7600; Fax: +1 (888) 269 7383; Email: [email protected]. Contact: John Strohm. cedures in an in-hospital environment caps on the technical component of Activities: Member of the United Association of Equipment Leasing when compared to a more favourable imaging services provided in the physi- (UAEL). payment in an outpatient setting. cian office or ambulatory imaging centre. First Niagara Leasing In addition, President Bush’s 2004 This reimbursement amount cannot PO Box 514, Lockport, NY 14095, US. Tel: +1 (716) 625 9880; Fax: +1 (800) 745 5822; Email: [email protected]. mandate calling for total paperless exceed that payable under the Medicare Contact: Joseph David. Activities: Member of the United Association of Equipment Leasing billing and a push for increased out- hospital outpatient prospective payment (UAEL). comes reporting will negatively impact system. Significant lobbying efforts are FIT Leasing institutions that are not able to provide underway to delay or alter these planned 12611 Pearce Street, Garden Grove, CA 92843, US. Tel: +1 (714) 590 3110; Fax: +1 (714) 638 4170; Email: [email protected]. online reporting data. The plan calls for changes. Contact: Joe Schmitz, CLP. a full market basket update of 3.4% for For lessors in the imaging space, these Activities: Member of the United Association of Equipment Leasing (UAEL). hospitals submitting quality data but changes create severe issues. The first is Fleet One, LLC only a 1.4% increase for those not sub- how to protect investments already on 5042 Linbar Drive, Nashville, TN 37211, US. Tel: +1 (866) 517 2537; mitting data. the books. A significant increase in both Fax: +1 (888) 310 1988; Email: [email protected]; Website: www.fleetone.com. Contact: Andy Roberts, Michael Thompson, Changes in 2007 incorporate modifi- delinquency and defaults can be antici- David Rewers. cations to the current Diagnosis-Related pated if the above measures are adopted Group (DRG) formula. The Centers for as proposed. Secondly, the entire 486 469-507.qxd 11/27/06 12:09 PM Page 487

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methodology of project prove-up and months. Will lessors be willing to fund credit analysis will need to be restruc- the ever-increasing amount of “air” that Leasing services tured. will be inherent in the leases as equip- Since the early 1990s, the structure of ment title passes to the patient. FMC Leasing Corp. 2 Rail Road Square, Great Falls, MT 59401, US. Tel: +1 (406) 454 transactions and the credit approval Information technology: A break in the 0096; Fax: +1 (406) 454 0058; Email: [email protected]. clouds. Contact: Gerald Fish. process have become well established. If there is a silver lining to these Activities: Member of the United Association of Equipment Leasing Sophisticated lessors have developed dark skies, it may lie in the area of infor- (UAEL). credit-modelling techniques that have mation technology. In April 2004, Ford Financial Services, Inc. ensured a proper risk:reward ratio. With President Bush mandated that the coun- 101 Leucadia Blvd, Suite 100, Encinitas, CA 92024, US. Tel: +1 (760) 944 9758; Fax: +1 (760) 944 9759; Email: [email protected]. the DRA proposals, those models are out try develop an automated and integrated Contact: William Ford, Jr. Activities: Member of the United Association of Equipment Leasing the window. Health Information Technology (HIT) (UAEL). Home healthcare concerns. A second system to ensure that every patient’s Ford Motor healthcare segment that is undergoing medical records are available at all times. 16800 Executive Plaza Drive, 6N1A, Dearborn, MI 48126, US. Tel: +1 (313) 322 3000; Fax: +1 (313) 594 3006; Website: tremendous change with major implica- The hope is that this will lead to tremen- www.fleet.ford.com. Director, North American Fleet Lease & tions for the leasing industry is that of dous cost savings and to the elimination Remarketing Operations (NAFLRO): Hal Feder; Direct Tel: +1 (313) 390 2571; Email: [email protected]; General Manager, Commercial home healthcare. This sector already of medical errors. & Government Operations, (NAFLRO): John J. Ruppert; Direct Tel: +1 (313) 248 8818; Email: [email protected]; Fleet Operations underwent major upheaval six years ago An ancillary benefit would be in mak- Manager, Government & Commercial Fleet Sales Operations: Eric because of reductions in reimbursements. ing outcomes reporting more widely Guenther: Direct Tel: +1 (313) 390 2262; Email: [email protected]; Major Leasing Account Manager: Larry Gach; Those changes created high delin- available to assist in creating a better- Direct Tel: +1 (313) 390 0933; Email: [email protected]. Activities: Associate member of the American Automotive Leasing quency rates and losses, many business informed consumer. In so doing, there Association. failures and a significant industry consol- would be great cost savings through the Forsythe McArther Associates Inc. idation. Part of the shakeout was neces- elimination of inefficiencies and a reduc- 7700 Frontage Road, Skokie, IL 60077, US. Tel: +1 (847) 213 7585; sary and warranted. Since that time, the tion in medical errors. It has been esti- Fax: +1 (847) 213 8585. Contact: Albert L. Weiss. Activities: Leasing activities. Member of the ELA. sector has enjoyed stability – until now. mated that the full implementation of Fortune Financial, Inc. Most home healthcare leases are tra- HIT could save US$162bn annually. PO Box 590, Bend, OR 97709, US. Tel: +1 (541) 388 3187; Email: ditionally written on a three-year term. As the President’s mandate takes hold, [email protected]. Contact: George J. Davis, II. Activities: Member of the United Association of Equipment Leasing The provider of the equipment was reim- opportunities for equipment lessors will (UAEL). bursed for as long as the equipment was represent the largest opportunity for the Forum Leasing being used by a patient. When one industry within the healthcare sector. 2140 Lake Park Blvd, Suite 112, Richardson, TX 75080, US. Tel: +1 (972) 690 9444; Fax: +1 (972) 690 9464; Email: patient was finished with the equipment, The cumulative costs for adoption of the [email protected]. Contact: Tim O’Connor. Activities: Member of the United Association of Equipment Leasing it was used with another and so on. HIT standards are estimated at US$98bn (UAEL). In 2005, Medicare moved to revise for hospitals and US$17.2bn for physi- Fox Enterprises, LLC such usage to a rent-to-own scenario for cians through 2015. 4021 Woodcreek Oaks Blvd, Suite 156-2, Roseville, CA 95747, US. Tel: +1 (916) 705 8356; Email: [email protected]. Contact: Teresa select durable medical equipment. In A study of the costs of implementa- Fox. such situations, once the equipment had tion for a physician practice reported in Activities: Member of the United Association of Equipment Leasing been rented to a patient for 12 months, the September/October 2005 issue of (UAEL). title to the equipment transferred and it Health Affairs reported an initial average Frandzel Robins Bloom & Csato, L.C. 6500 Wilshire Blvd, 17th Floor, , CA 90048, US. Tel: +1 becomes the property of the patient. of US$44,000 per full-time equivalent (323) 852 1000; Fax: +1 (323) 651 2577; Email: [email protected]. Contact: Andrew Alper. To complicate matters further, it was provider, with an ongoing cost of Activities: Member of the United Association of Equipment Leasing proposed that the dealer would be US$8,500 per provider per year. This (UAEL). responsible for continued maintenance study estimated the average practice Freedman & Taitelman 1901 Avenue of the Stars, Suite 500, Los Angeles, CA, US. Tel: +1 of the equipment, even though it was no would recover their costs in 2.5 years. (310) 201 0005; Fax: +1 (310) 201 0045; Email: longer in the rental pool. A number of healthcare segments may [email protected] Contact: Michael Taitelman. Activities: Member of the United Association of Equipment Leasing During 2005, an initiative was under- require greater attention in the imple- (UAEL). taken to widen the scope of the equip- mentation of the healthcare information Freshfields Bruckhaus Deringer LLP ment categories to include respiratory technology agenda. This includes phar- 701 Pennsylvania Avenue, N.W., Suite 600, Washington DC 20004, US. Tel: +1 (202) 777 4500; Fax: +1 (202) 777 4555; Email: equipment such as ventilators, respira- macy services. It has been estimated that [email protected]; Website: www.freshfields.com. Contact: Thomas Jörgens (New York). tors and CPAP machines. There is a dif- there are as many as 98,000 deaths each Activities: Advising financial institutions, manufacturers, airlines ference between the House and Senate year in the US as a result of medical error and end users on tax and finance lease deals especially aviation versions of the bill that would establish – a large percentage of which are the and rail. the rent-to-own period, with the House result of patients being administered the Freshfields Bruckhaus Deringer LLP 520 Madison Avenue, 34th Floor, New York, NY 10022, US. Tel: +1 providing for a 12-month period and the wrong medications. (212) 277 4000; Fax: +1 (212) 277 4001; Email: [email protected]; Website: www.freshfields.com. Senate a 36-month timeframe. The market for pharmacy automation Contact: Thomas Jörgens. In any event, these changes are caus- was estimated to be US$1.4bn in 2003 Activities: Advising financial institutions, manufacturers, airlines and end users on tax and finance lease deals especially aviation ing great disruptions in the marketplace. and was expected to increase at an aver- and rail. Among the issues facing lessors is age annual growth rate of nearly 12% to GamePlan Financial, Inc. whether 12-month lease terms will be US$2.5bn by 2008. The largest portion 17662 Irvine Blvd, Suite #2, Tustin, CA 92780, US. Tel: +1 (714) 505 3056; Fax: +1 (714) 505 3057; Email: [email protected]. attractive. Much of the equipment is of this increase will occur in inpatient Contact: Scott Wingate. Activities: Member of the United Association of Equipment Leasing small ticket and it is questionable if suffi- pharmacy systems. (UAEL). cient real cash returns will be available to Lessors be ready. What is evident from prompt the availability of financing. this clamour of change is that the United Of greater concern is the market’s States is finally beginning to take charge demand for terms longer than 12 of the healthcare costs in this country 487 469-507.qxd 11/27/06 12:09 PM Page 488

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The Medicare crisis, which has not been unique among leasing markets. Others as visible as the Social Security debate, is have reacted neither to the changes that Leasing services much more daunting and will become have already begun to occur, nor to the critical at a much earlier date. exiting of several segment leaders, either Garthwaite Partners International LLC 13 Arcadia Road, Suite 14, Old Greenwich, CT 06870, US. Tel: +1 Despite spending almost 15% of GDP by choice or otherwise. (203) 698 0015; Fax: +1 (203) 698 3001; Website: www.garthwaitepartners.com. Managing Partner: Candace on healthcare, the US still trails the bulk The past is a mere prelude to the Garthwaite; Email: [email protected]. of the western nations in providing med- future. Those lessors who want to join Activities: Executive search firm. ical care to its people, with more than 40 this market must accept change or they GE Commercial Finance, Corporate Aircraft million uninsured citizens. Yet, per capi- will surely face real problems down the 44 Old Ridgebury Raod, Danbury, CT, US. Tel: +1 (203) 796 1000; Fax: +1 (203) 205 5430; Email: [email protected]; ta spending of US$5,267 in 2002 was road, as the healthcare reform storm Website: www.gecorporateaircraft.com. International Sales Director: Geoff Kaufman; National Sales Manger: Keith Hayes. nearly twice as much as the next closest blows in. Activities: Leasing activities. Member of the ELA. European country. GE Commercial Finance Leasing of healthcare equipment has 3000 Lakeside Drive, Suite 200N, Bannockburn, IL 60015, US. Tel: +1 (847) 283 6222; Fax: +1 (800) 934 3002; Email: been in fashion over the past several [email protected]. Contact: Robert Herb. years, with more lessors entering the seg- This article was written by Alan N. Frankel, Principal, Activities: Member of the United Association of Equipment Leasing The Alta Group, 15 Hansen Court, Narberth, PA 19072, (UAEL). ment. Some, however, have clearly not US. Tel: +1 610 664 5539, Fax: +1 610 668 1291, GE Fleet Services recognised the healthcare sector is Website: www.thealtagroup.com 3 Capital Drive, Eden Prairie, MN 55344, US. Tel: +1 (952) 828 1000; Fax: +1 (952) 828 2010; Website: www.gefleet.com. President/CEO: Kathryn V. Marinello; Direct Tel: +1 (952) 828 2643; Email: [email protected]; SVP & Legal Counsel: Brock Austin; Tel: +1 (952) 828 2526; Email: make an election either to pay the tax up [email protected]; SVP, North American Commercial STATE AND LOCAL front on the purchase price, or pay the Operation: Andrea Pearson; Direct Tel: +1 (952) 828 1411; Email: [email protected]. tax on the rentals. Activities: Member of the American Automotive Leasing TAXES ON Tax on the purchase price can be a Association. disadvantage to a leasing company, since GE Fleet Services EQUIPMENT 2312 E. Trinity Mills Road, Carrollton, TX 75006, US. Tel: +1 (972) it must put out the cash in advance and 657 7000; Fax: +1 (972) 657 7039; Email: then collect such pro-rata over the life of [email protected]. President: Patrick Staudt. LEASING Activities: Member of the American Automotive Leasing the lease. This hurts cash flow, and total Association. his article is for informational recovery does not always occur (i.e. bad General Motors Corporation purposes only; it is not intended debts, early terminations, etc.). Fleet & Commercial Operations, 100 Renaissance Center, M/C 482- A20-B76, Detroit, MI 48265-1000, US. Tel: +1 (313) 667 9430; Fax: T to be used as tax advice. However, where allowed, paying tax +1 (313) 667 9390; Email: [email protected]; Website: www.gmfleet.com. General Manager: Brian McVeigh; Direct Tel: +1 Many taxes are not generally applied on the purchase by the leasing company (313) 667 8805. the same way for automobiles, trucks, can be advantageous in that it may result Activities: Associate member of the American Automotive Leasing Association. equipment and railroad rolling stock. in the avoidance of another tax that will Genesis Capital Corporation The various taxes with respect to leasing be explained later. 22372 Rosebriar, Mission Viejo, CA 92692, US. Tel: +1 (949) 476 will be treated in relation to the time Montana, New Hampshire and 9304; Fax: +1 (949) 855 9301; Email: [email protected]. President: Philip D. Pfirrmaun; Managing Director: Andrea C. they occur, rather than on their impor- Oregon do not have a sales/use tax at all. Roberts. tance. Alaska has no state tax, but the bor- Activities: Financial advisor to lessees and lessors on new and secondary market lease financings (US$5m-US$100m Sales and use taxes. Most states have a oughs/counties have such taxes, and transactions). single sales/use/rental tax on the leasing some rates are high. Delaware has no Genesis Commercial Capital of equipment. Many of the states which state tax, but has a service (use) tax on 17910 Skypark Circle, Suite 105, Irvine, CA 92614, US. Tel: +1 (949) 851 3036; Fax: +1 (949) 851 4946; Email: [email protected]. have these taxes require that the leasing rental receipts that is assessed against the Contact: Greg Rieke. Activities: Member of the United Association of Equipment Leasing companies report and remit tax on the lessor. (UAEL). “gross” rents billed or collected from In many states, the localities (cities Global Aviation Title Insurance Agency LLC their respective lessees. and counties) have followed suit and 10th Floor, Two Leadership Square, Oklahoma City, OK 73102, US. Tel: +1 (405) 552 2201; Fax: +1 (405) 235 0439; Email: The reason for this is obvious in that have enacted local taxes based on the [email protected]. President: Frank L. Polk; Also the gross rentals over the full life of a state law, rules and regulations. Contact: Scott M. McCreary or Erin M. Van Laanen. Activities: Insurance agent for First American Transporation Title lease will be greater than the tax on the There is a growing trend of local Insurance Company, in the business of selling aircraft title insurance to owners and lenders, covering any aircraft registered in the United purchase price. However, in most scenar- jurisdictions that impose transit district States, and most Geneva Convention countries. ios, lease rate factors, borrowing rates taxes on rental receipts akin to another Global Technology Solutions and the time value of money will in sub- sales/use tax. 8318 89th Avenue North, Park, MN 55445, US. Tel: +1 stance make the upfront versus over-the- Examples exist in Los Angeles, Santa (763) 488 1870; Fax: +1 (763) 488 1875; Email: [email protected]. Contact: Jon Putnam. life collection economics relatively Clara, San Mateo, San Francisco and Activities: Member of the United Association of Equipment Leasing similar. Santa Cruz, ; Cook County, (UAEL). Illinois, Maine, New Jersey and Ohio Illinois; Philadelphia, Pennsylvania; GlobalTech Leasing, Inc. 300 Esplanade Dr, Suite 1960, Oxnard, CA 93036, US. Tel: +1 (800) require that the lessors pay the sales/use Austin, Dallas, Ft Worth, Houston and 414 7654; Fax: +1 (866) 556 7643; Email: [email protected]. Contact: Charles W. Salyer tax up-front at the time the equipment is San Antonio, Texas, and Seattle, Activities: Member of the United Association of Equipment Leasing purchased for lease. The State of Texas Washington (see Exhibits A, B and C). (UAEL). differentiates between operating and Exemptions from the sales tax. The topic of Golden West Financial Services 3130 Harbor Blvd, Suite D2, Costa Mesa, CA 92626, US. Tel: +1 financing leases, and taxes the financing exemptions is a study all unto itself. Many (714) 751 6100; Fax: +1 (714) 431 0715; Email: leases up front. states, particularly those states basing [email protected]. Contact: Stephen L. Tidland. Activities: Member of the United Association of Equipment Leasing Arkansas, California, Michigan, their revenues on rental receipts, allow a (UAEL). Missouri, Nevada, Rhode Island and pass-through of an exemption from the Tennessee permit the leasing company to exempt lessee to the lessor company. 488