Leasing and Off-Balance Sheet Financing

The Port Authority has experience with both capital leases and operating leases, and can partner with a business to finance a capital improvement project that obtains the desired accounting treatment for the business. A Port Authority revenue bond can utilize a capital lease structure that, subject to business’ accounting practices, will transfer the benefits and burdens of owning an asset and will constitute a debt of the business. A Port Authority revenue bond can utilize an operating lease structure that, subject to a business’ accounting practices, will avoid characterization of the lease as debt on the business’ balance sheet and preserve the business’ debt capacity for other projects.