WHEN TO CONSIDER LEASE/PURCHASE

Abstract

In December 1988, the Los Angeles County Public Library entered into an agreement with the Security Pacific Merchant Bank of Los Angeles for the five‐year lease/purchase of a $5.3 million Automated Circulation System (ACS) from Data Research Associates (DRA) of St. Louis. The previous June, the Public Library had entered into a cash contract with DRA, but shifted its position after determining that it was to the County's advantage to lease/purchase the system rather than using available cash fund balances needed for other budgetary priorities. The June 1988 contract with DRA included a clause allowing the assignment of ownership for financing purposes. After negotiating the best possible agreement to purchase the computer system, the County, on behalf of the library, leased/purchased the system from the bank which in turn issued Certificates of Participation to raise the cash from persons and corporations who wanted to purchase relatively short term income tax free investments.