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Thread: New Market Tax Credits (NMTC) pricing data

  1. #1
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    New Market Tax Credits (NMTC) pricing data

    Apologies if for some reason this posts twice. I tried typing this out and posting, but it doesn't seem to have appeared. Trying this again:

    I am a tax researcher studying NMTC pricing trends. This data is not readily available, and based on my preliminary research, it seems that the data will probably have to be gathered via a survey of CDEs who have received NMTC awards in recent years. This is a small population, though, so I want to run this by you all first.

    I am considering sending each contact an electronic survey (Survey Monkey?) that simply asks for the per credit NMTC price (i.e., the discount rate required by investors) for the last five projects, identified by zip code (and qualified loan amount?).

    Does this sound right to you? When the dust clears, I want to have NMTC pricing data by zip code. Is there another way you might go about this? I understand that response rates will be low, but it's worth a shot.

    Thanks!

  2. #2
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    From my experience, credit pricing typically hover between $.70-$.80/per dollar, depending on current economic conditions. From CDFI:

    Early in the history of the NMTC program, Armistead (2005b) reported that the perceived present value of the NMTC credit to investors was recognized as roughly 70 to 80 percent of the amount of credits. GAO (2010) later found that, before the economic downturn in 2008, NMTC investors paid about 75 to 80 cents per dollar in tax credits. By 2010, with the economic downturn, CDEs reported paying just 65 to 70 cents per dollar in tax credits, and some as little as 50 cents. Of 70 early-year NMTC projects included in the telephone interview sample, 19 provided information on credit pricing, and this information was similar to previous estimates. (Seventeen projects had a CDE that was also an investor, in which case credits were not priced.) NMTC investors paid a median of 73 cents per dollar of tax credits received, and the cost per credit ranged from a low of 51 cents to a high of 90 cents per dollar of NMTCs received.
    As for data collection, I'd suggest speaking to someone from one of the major tax accounting firms for data (Novogradac, Cohn Reznick). May I ask what you are researching this for?

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