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Native American infrastructure projects benefit from tax-exempt financing solutions

By Amy Thomas in Government Posted April 3, 2017

Tribal governments in the United States need access to capital to fund government buildings, schools, medical facilities and other infrastructure, and tax-exempt financing is one solution that can bring these projects to completion.

Tribal Economic Development Bonds demonstrated an investment demand of at least $4.36 billion, according to the Internal Revenue Service.

Teamwork approach for tribal government needs

To create tribal tax-exempt financing solutions, KeyBank’s Native American group teams up with the municipal financing experts at Key Government Finance. By placing all such financings into Key's tax-exempt portfolio as “direct placements, or loans,” Key is able to offer turnkey, cost-effective solutions to support tribal economies.

When it comes to tribal debt issuance, tribes can issue tax-exempt debt, but only if proceeds are used in the “exercise of an essential governmental function.”  

Additionally, interest earnings on tax-exempt tribal debt may be excluded from income, which decreases borrowing costs for the nation (compared to conventional loan interest rates).

Other features include:

  • The lender or investor does not pay federal income tax on interest received from a tribal issuer
  • The tribal issuer receives low interest rates, typically 1% to 2%
  • Compared to taxable debt, tax-exempt debt leverages a different investor pool

Learn more here:

Download info sheet

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