639.13—Eligible types of leases.
(a) General.
Any leasing arrangement, the terms of which provide for the recipient's use of a capital asset, potentially is eligible as a capital project under Chapter 53 of Title 49 of the United States Code, regardless of the classification of the leasing arrangement for tax purposes.
(b) Special circumstances.
A recipient may request FTA to determine the eligibility of a certain financial arrangement if the recipient believes it might not meet the requirements of this part.
(c) Lump sum lease.
A recipient that wishes to enter into a lease which requires the draw down of a single lump sum payment at the inception of the lease (or payments in advance of the incurrence of costs) rather than periodic payments during the life of the lease must notify FTA prior to execution of the lease concerning how it will ensure satisfactory continuing control of the asset for the duration of the lease. FTA has the right to disapprove any arrangements where it has not been demonstrated that the recipient will have control over the asset. FTA may require the recipient to submit its cost-effectiveness comparison for review.
(d) Pre-existing lease.
A lease entered into before grant approval, or before November 14, 1991 may be eligible for capital assistance for costs incurred after approval of such a lease by FTA under this part, if
(2)
The recipient can demonstrate that the lease, when entered into, was more cost effective than purchase or construction; and
(3)
The procurement of the asset by lease was in accordance with Federal requirements that applied at the time the procurement tool place.
[56 FR 51794, Oct. 15, 1991, as amended at 63 FR 68367, Dec. 10, 1998]