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Like other communities across the nation suffering from the recession, your community may want to raise funds in order to support projects and operating needs. For decades, Fortune 500 companies have used a vehicle that has allowed them to use their real estate assets to help finance their business needs-the sale-leaseback.
Like companies, communities can use the sale and simultaneous leasing back of their facilities as a means of accomplishing specific financial objectives. A sale-leaseback is a situation in which the owner transfers real estate for cash and simultaneously executes a lease on the same property.
A sale-leaseback allows the community (the seller-tenant) to capitalize on its financial stability and the value of the secure rent stream it will pay during the lease term. It allows the community to sell brick, mortar, and dirt (city hall or other local government property) for a price in excess of the market value without the lease. A sale-leaseback is a secure alternative to the traditional method of raising capital by selling local government bonds or raising taxes. It provides an opportunity to raise cash while maintaining operational control of the property as if it were still owned by the community.

Why Communities Like Sale-Leasebacks
A sale-leaseback allows a community to use the capital that would otherwise remain locked up in its real estate assets. Unlike bond issues, sale-leasebacks do not put a new, or any additional, tax burden onto a local government's citizens. If a community believes it could better use the capital tied up in city hall or other local properties for improvements to the community or for other financial obligations, a sale-leaseback could be extremely helpful.
Often, communities are surprised to discover the value of their real estate equity. Maximizing the sale price for a municipal property is a function of understanding this unique market, including the specialized investors and lease structures required.
Sale-leaseback capital can be used to finance new public facilities, facility improvements,
infrastructure, and other capital improvement projects. It has also proven effective in plugging budget gaps and increasing bond ratings and capacity. Notably, the capital from a sale leaseback can be used however the community wishes. In today's economy, this can be critical. city manager