[Code of Federal Regulations]
[Title 49, Volume 6]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 49CFR639.13]

[Page 54-55]
 
                        TITLE 49--TRANSPORTATION
 
                             TRANSPORTATION
 
PART 639--CAPITAL LEASES--Table of Contents
 
                         Subpart B--Requirements
 
Sec. 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.

[[Page 55]]

    (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
    (1) The lease is otherwise eligible under this part;
    (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]