- Details
- By Brian Edwards
- Finance
Tribal governments are increasingly using a once-obscure federal leasing provision known as Section 105(l) to generate hundreds of millions of dollars for health care and infrastructure projects, according to a new analysis from the Center for Indian Country Development at the Federal Reserve Bank of Minneapolis.
The provision, part of the Indian Self-Determination and Education Assistance Act, requires federal agencies to compensate tribes for the use of tribally owned facilities that administer federal programs. Its use has expanded rapidly since 2016, following court rulings that clarified compensation requirements.
Annual lease revenue grew from about $800,000 in 2016 to an estimated $612.7 million in 2024, adjusted for inflation. Over that period, tribes received roughly $1.81 billion in total lease payments. The number of leases increased from two in 2016 to nearly 1,900 in 2024, with most tied to health care facilities funded through the Indian Health Service.
The revenue is discretionary, allowing tribes to apply it toward facility construction, maintenance, and operations. Increasingly, tribes are also using future lease revenue to support financing for larger capital projects.
Examples include health facility expansions and new construction projects that combine lease revenue with tax credits and private financing. Financial institutions have begun underwriting loans against projected lease payments, creating a new pathway for tribes to access capital.
The growth of Section 105(l) leasing reflects broader trends in tribal self-governance, as tribes take on federal program delivery and reinvest associated funding into community infrastructure.
Tribes and their financing partners are beginning to apply Section 105(l) lease revenue to larger, structured financing deals, according to the CICD analysis. The Oneida Nation in Wisconsin is planning an expansion of its health campus using a mix of federal funding, private financing and projected lease revenue. In Minnesota, the Leech Lake Band of Ojibwe has used anticipated Section 105(l) lease payments to help secure construction financing for a new health care facility.
