Like many other businesses, markets, and sectors of the economy, the NMTC equity market took a pause during the COVID-19 pandemic. As a result, equity prices plummeted in 2020 but began to stabilize in 2021. Now, however, the market has rebounded, with NMTC equity pricing increasing almost to pre-pandemic levels, ranging between 70 and 80 cents per dollar of credit. This increase in equity market pricing has resulted in a more competitive landscape for investors, which, in turn, is good for the newly increased $5 billion in NMTC allocation awards. The previous annual allocation amount was capped at $3.5 billion.
However, the COVID-19 pandemic has had lingering effects on investment in NMTC projects. Supply chain issues and increased construction costs delay and decrease the projects that investments can provide. Nonetheless, the outlook is strong for NMTC equity pricing and investments over the next 12 to 18 months, which is highly beneficial to investors and the communities in which investments are made.
Part of the upturn in the market has come from an increased emphasis on investments focusing on racial equity. Investors see the NMTC program as a means of building wealth in communities of color. For example, U.S. Bank has launched “Access Commitment,” a program designed to redefine how it serves racially diverse customers and create more opportunities for diverse employees, particularly in the Black community.
Likewise, JPMorgan Chase had made a $30 billion commitment to close the racial wealth gap among Black, Hispanic, and Latino communities. The firm also has established a Racial Equity Initiative, which has provided $221 million in NTMC investments across 16 Black-owned or Black-led projects to assist with growth and inclusion efforts. JPMorgan Chase also focuses on projects in communities with greater income disparities, such as Chicago and Los Angeles.
Aside from racial equity investments, NMTC projects have grown in other investment types, including federally qualified health centers and other health care clinics, rural manufacturing, nonprofits to provide social services, and entities focused on food security and manufacturing.
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