Do people care that developers require a high rate of return? Can you just take out “Most Expensive” for this part of the stack? Can we reflect that the loans in an NMTC deal may be lower risk because of the lower loan to value (if this is true)?
I took out “are sold” because the credits aren’t sold at the full 39%
WHY NMTC DEALS WORK.…Project Funding without NMTC With NMTC • Risk • Risk Averse Averse Loans ~60% • Priced at Market Loans80-90 % • Priced at Market 22% Rates Rates • Accepts Risk NMTC Funds • Low-Cost ~ 22% • No • High Risk repaymentDeveloper • Most Developer •High Risk Funds Expensiv Funds •Most 10-20% Expensive 10-20% e
THE NMTC PROCESS • 100% Allocation Authorization for the project (AA) Tax Credits from the AA are sold to Investors • 39% • 22%. Low-Cost Funding is created for Qualified Projects•39% tax credit is received by investor over a 7-year period: 5% + 5% + 5% + 6% + 6% + 6% + 6%
A FEW ACTUAL PARTICIPANTS IN THE NMTC INDUSTRY Ochoco Lumber Co. Lenders Investors $26 Billion CDEsCDFI Fund $17.2 Billion placed to date Projects in Low Income Communities: Community Forest in Grand Lake Stream; MMG in Presque Isle; GMRI in Portland;
Grand Lake Stream Woodlands $19.8 Million NMTC Financing Grand Lake Stream Plantation, MaineFinances 21,949 acres of working forest to facilitate sustainable harvesting, protect ecotourism and provide land for low-income housing development. Preserves over 100 Jobs Equity Investors: Bangor Savings Bank & U.S. Bancorp CDC Lenders: Bangor Savings Bank & Lyme Timber Company Manager: CEI Capital Management LLC, a subsidiary of Coastal Enterprises, Inc. (A Maine non-profit corporation) Partnered with Northern Forest Center Downeast Lakes Land Trust March 26, 2009