What describes a lease where the jurisdiction acquires the asset and has an option to purchase it at the end?

A capital lease is characterized by a long-term financing arrangement whereby the lessee (the jurisdiction in this case) effectively gains ownership benefits of the asset being leased. In a capital lease, the jurisdiction typically acquires the asset and has the option to purchase it at the end of the lease term, which aligns with the conditions specified in the question.

This type of lease generally meets certain criteria under accounting guidelines, such as transferring ownership of the asset by the end of the lease, having a bargain purchase option, or covering a significant portion of the asset's useful life. Because the jurisdiction has the option to buy the asset at the end of the lease, it signifies a financial commitment that resembles an acquisition rather than mere rental, which is a key characteristic of capital leases.

In contrast, a true lease would not provide the lessee with ownership benefits and typically does not include a purchase option at the end of the term. A rate covenant refers to an agreement regarding the rates charged for services, rather than lease arrangements. Low-interest loans are financing agreements but differ from leases, as they involve borrowing money rather than leasing an asset. Each of these alternatives does not precisely capture the essence of leasing with a purchase option as articulated in the question.