Financing the future: Tribal success stories with Section 105(l) leases
As part of its mission-driven focus to Native America, KeyBank Native American Financial Services strives to remain on the forefront when it comes to the ever-evolving topic of Section 105(l) leases.
Recently, we completed two financings that are expected to be repaid by this source of revenue and could provide a blueprint for other Tribes and Tribally chartered corporations to finance critical projects in their communities.
Our team remains committed to improving the quality of life in the communities we serve. We recognize that many Native Americans, including those who live on reservations, face profound challenges, such as:
- Limited access to health care
- Inadequate public safety facilities
- Outdated school facilities
Indian Country infrastructure is in need of urgent improvement, and Section 105(l) leases can help – and have helped provide funding for such improvements as detailed below:
The Mississippi Band of Choctaw Indians: School campus financing
On August 8, 2025, KeyBank Native American Financial Services closed the syndication of $295 million Senior Secured Credit Facilities for the Mississippi Band of Choctaw Indians (d/b/a Choctaw Resort Development Enterprise). The financing includes a $100 million Revolving Credit Facility, $85 million Term Loan A, and $110 million Delayed Draw Term Loan. A portion of the proceeds go towards building a new Choctaw Central Middle School and a high school campus.
The new school, opening in summer 2026, will serve up to 1,200 students and include:
- A two-story academic building
- Offices for middle school and high school staff and counselors
- A band hall, cafeteria, dormitory, library
- ADA bathrooms and elevators
- A two-level arena
- A 2,000-seat turf football field
San Carlos Apache Healthcare Corporation: Skilled nursing/long-term care facility financing
On September 17, 2025, KeyBank Native American Financial Services helped the San Carlos Apache Healthcare Corporation raise funds through Health System Revenue Bonds and Series 2025 Taxable Bonds.
Proceeds of the 2025 Taxable Bonds will be used, along with Corporation equity, to finance a 100-bed long-term care and skilled nursing facility on the San Carlos Apache Tribe’s reservation, located approximately 130 miles east of Phoenix, Arizona. The new facility will be next to the Corporation’s 12-bed critical access hospital, allowing members of the San Carlos Apache Tribe to receive culturally sensitive care close to home.
The team played a vital role in helping the Corporation secure an “A-” credit rating from Fitch Ratings, a distinction that greatly enhances the marketing and appeal of the 2025 Taxable Bonds. This rating is particularly noteworthy as it is believed to be the first ever awarded to a tribal healthcare operator in the lower 48 states and stands as one of the highest credit ratings ever granted to a Native American tribe or tribally chartered corporation. This financing arrangement is distinguished, as it relies solely on the revenue and assets of the Corporation’s Health System and does not carry a guaranty from any other party or lack of security from sources other than the revenue and assets of the Corporation’s Health System. Upon opening, the new healthcare facility will be eligible for a Section 105(l) lease through Indian Health Services to receive reimbursements for operational costs, including payments toward bond debt service.
By reaching these financial milestones, the Corporation enhances its capacity to provide quality health care, supports the community, and promotes innovation in tribal healthcare for sustainable growth and better health outcomes.
Section 105(l) leases: A quick refresh
Section 105(l) of the Indian Self-Determination and Education Assistance Act (ISDEAA) outlines what are commonly referred to as 105(l) leases. These instruments are essentially long-term funding agreements for Tribe-owned or leased facilities.
Tribes with ISDEAA (Section 638) Contracts/Compacts have a significant opportunity to receive recurring annual payments from 105(l) leases with the U.S. government for facilities they own or lease.
These payments come through:
- Bureau of Indian Affairs (BIA)
- Indian Health Services (IHS)
To qualify for a 105(l) lease,1 the facility must:
- Already be built.
- Be owned, leased, or held in trust by the Tribe.
- Be used for Tribal administration and programs, functions, services, or activities (PFSAs) under Indian Self-Determination and Education Assistance Act (ISDEAA).
Examples of facilities that may qualify include schools, judicial centers, health clinics, wellness centers, long-term care facilities, substance abuse treatment facilities, and staff quarters.
Why it matters
Based on the outcome of previous lawsuits brought by Tribes, it has been determined by courts that the federal government has a legal obligation to make lease payments based on the fair market value of the facility or applicable actual facility costs (such as principal and interest, operations and management, depreciation, reserve, etc.) or some combination of these elements.
Leveraging 105(l) leases
Tribes have a unique opportunity to raise long-term debt that can be repaid by 105(l) leases. Even if the loan isn’t directly tied to the building covered by the lease, the funds can still support other infrastructure needs. These leases can be part of your Tribe’s strategic goals that leverage either tax-exempt or taxable financing to provide funds. Whether the debt is taxable depends on how the money is used.
Let’s get started
To start your 105(I) or learn about our tailored solutions for your Tribe’s financial goals, contact us today.
Caitlin Caldwell, Director, Institutional Banking, KeyBanc Capital Markets
Ben Rechkemmer, Managing Director & Head of KeyBank Native American Financial Services
For more information, visit key.com/nativeamerican.