Question

Joe Babitt, a former executive of T- Mart, just started a term as mayor of Saulk Center. For the past several days he has been looking for a way to keep his campaign promise to increase services with-out raising taxes or service charges. While lunching at the country club with the treasurer of T- Mart, the subject of a recent sale and leaseback of one of T- Mart’s stores came up. Following a common practice in retailing, T- Mart had erected a building and sold it to an investor. It then signed a long-term lease on the building. “Bingo! That’s it,” thought Mayor Babitt. “We can sell several of the city’s buildings— as well as police cars, fire engines, and other vehicles— to investors and lease them back. That will give us the revenues we desperately need. Now I can concentrate on fighting crime.” Do you agree with Mayor Babitt? If not, what are the flaws in his reasoning?



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  • CreatedDecember 30, 2014
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