Population Growth Means More LIHTC Authority, Bond Volume Cap in 2015

Published by Michael Novogradac on Wednesday, March 25, 2015 - 12:00am

In Notice 2015-23, the Internal Revenue Service (IRS) released the 2015 calendar year resident population figures, which show that the nation’s total population grew by approximately 0.8 percent. This growth in population translates into higher LIHTC and bond volume authority for 2015. More specifically, for 2015, each state’s low-income housing tax credit (LIHTC) ceiling is equal to the greater of the product of $2.30 (the same amount as in 2014) and the state population or the small state minimum of $2.68 million. A state’s tax-exempt private activity bond volume cap is the greater of the product of $100 (also the same as 2014) and the state population or the small state minimum of $301,515,000.

Using the population figures in Notice 2015-23 to determine states’ 2015 LIHTC ceilings and tax-exempt private activity bond caps reveals interesting insights.

  1. Total per capita LIHTC and tax exempt bond volume cap increased.​ Nationwide population grew about 2.6 million (from 315 million to 317.6 million) between 2014 and 2015. This growth indicates that LIHTC authority in 2015 will increase by approximately $6 million from $753 million to $759 million, or by 0.87 percent. The tax-exempt bond volume cap will increase by approximately $360 million from $36.08 billion to $36.44 billion, or by 1 percent.
  2. Texas experienced the largest absolute and percentage increase in population. Texas’ population increased by 508,765 residents, an increase of about 2 percent.
  3. Of the five most populous states, population increased in four, and decreased in one. As mentioned above, Texas’ population increased the most in absolute and percentage terms at 2 percent. Next in line was Florida with a 1.7 percent increase in population, California with 1.2 percent, New York with 0.5 percent, and Illinois with zero (slightly negative) population growth. This population growth indicates that LIHTC credit caps will increase by $1.08 million in California, $1.17 million in Texas, $783,000 in Florida, $218,730 in New York, and decrease by $3,577 in Illinois.
  4. Mississippi will again be classified as small state for calculating tax-exempt bond volume cap. The small state minimum volume cap increased from $296 million to $301 million in 2015, leading to Mississippi falling back into the small state category this year.

Overall, the increases in per capita LIHTCs and bond volume cap this year are significantly smaller than the increases in 2014, primarily because the $2.30 and $100 factors stayed the same in 2015, while in 2014 they increased from $2.25 and $95. The low inflation environment the U.S. is currently experiencing explains the lack of growth in per capita factors in 2015. Though, we expect them to increase again in 2016.

Blog Graph New Capita Credits
Click to Enlarge