2025 Session Last amended: 2021 session

§ 465.71 — Installment, Lease Purchase; City, County, Town, School

Plain-Language Summary

Cities, counties, towns, and school districts can buy personal property through installment contracts or lease real or personal property with an option to purchase. These lease-purchase agreements do not count as debt for most purposes, and no voter approval is needed. The government must have the right to end the lease at the end of any fiscal year.

465.71 INSTALLMENT, LEASE PURCHASE; CITY, COUNTY, TOWN, SCHOOL.

A home rule charter city, statutory city, county, town, or school district may purchase personal property under an installment contract, or lease real or personal property with an option to purchase under a lease-purchase agreement, by which contract or agreement title is retained by the seller or vendor or assigned to a third party as security for the purchase price, including interest, if any, but such purchases are subject to statutory and charter provisions applicable to the purchase of real or personal property. For purposes of the bid requirements contained in section 471.345, “the amount of the contract” shall include the total of all lease payments for the entire term of the lease under a lease-purchase agreement. The obligation created by an installment contract or a lease-purchase agreement for personal property, or an installment contract or a lease-purchase agreement for real property if the amount of the contract for purchase of the real property is less than $1,000,000, shall not be included in the calculation of net debt for purposes of section 475.53, and shall not constitute debt under any other statutory provision. No election shall be required in connection with the execution of an installment contract or a lease-purchase agreement authorized by this section. The city, county, town, or school district must have the right to terminate a lease-purchase agreement at the end of any fiscal year during its term.

History:

1965 c 266 s 1; 1976 c 44 s 67; 1979 c 3 s 1; 1982 c 523 art 15 s 4; 1988 c 639 s 6; 1989 c 329 art 5 s 16; 1990 c 562 art 5 s 12; 1997 c 231 art 2 s 33; 1Sp2021 c 14 art 10 s 4

History: History: 1965 c 266 s 1; 1976 c 44 s 67; 1979 c 3 s 1; 1982 c 523 art 15 s 4; 1988 c 639 s 6; 1989 c 329 art 5 s 16; 1990 c 562 art 5 s 12; 1997 c 231 art 2 s 33; 1Sp2021 c 14 art 10 s 4

Practical Notes

This is widely used by local governments to finance equipment, vehicles, and buildings without voter-approved bonds. The ability to terminate at year-end is required, which protects the government from being locked into long-term obligations without an exit option.

Source: Minnesota Office of the Revisor of Statutes