Sonny Merryman, Inc., recently invited its customer Vincent Ashley, transportation director of Richmond City Schools, to discuss the decision to pursue municipal financing through Daimler Financial. While many school districts traditionally have used budgeted funds and bond offerings to pay for new school buses, municipal financing is becoming a more attractive solution for many customers.
Municipal financing is not considered debt, and there is no impact on state debt limitations. Voter referendum generally is not required, and the process is faster and easier than a bond offering. In addition, interest rates usually are lower than commercial rates due to the school district’s tax-exempt status. With options such as repayment terms up to 10 years, no down payment and deferred first payment up to one year, Daimler Financial works with each school bus customer to create a customized finance program to meet budgetary needs.
SM: What were the main reasons Richmond considered municipal financing over a traditional straight purchase?
VA: This type of financing provided an opportunity to purchase a greater number of resources with a finite amount of public funds. The lease served as an “asset multiplier,” allowing the district to purchase more buses than it could with a straight purchase.
SM: How has municipal financing affected the transportation division’s financial picture since that time?
VA: Municipal financing allowed the district to achieve a significant decrease in the average age of the fleet and repair and maintenance costs, as well.
SM: What advice would you give other transportation directors who may be considering municipal financing for their school district?
VA: The best advice would be to give municipal financing a chance, if for no other reason than the safety of students by transporting them in newer, technologically advanced buses. It’s helpful to have the flexibility to purchase a greater number of buses with a smaller annual payment of funds.
SM: How would you rate your overall experience with municipal financing?
VA: My experience has been excellent, and I see this as the wave of the future for bus purchases. For more information on municipal financing solutions, contact Daimler Financial by phone at (866) 351-4672 or by email at MunicipalFinance@daimler.com.