For purposes of this question, a bus company is offering a deferred payment plan for a bus. The district will have possession of the bus and title, but will not have to pay until next fiscal year. The company would put a lien on the bus. Is this allowable or must it be a lease agreement?
Although not a lien, Iowa Code 285.10(7)”b” allows the bus to serve as security for balance due. Iowa Code 285.10(7)”a” allows a purchase from funds available (not a loan or lease purchase). Delayed payment doesn’t prevent that Code section from applying. It would be a current liability because the bus was received and title passed, even though payment was up to a year later. Only 285.10(7)”a” applies to this arrangement, whether purchased from the general fund, PPEL, or SAVE. The terms of the arrangement are not consistent with any other type of debt instrument available to the school district for buses.