2011 Population Estimates for Housing Tax Credits and Bond Caps

The IRS recently released its 2011 calendar-year resident population estimates. These estimates are used to determine the size of the tax credit pie that state housing finance agencies can distribute to low-income housing projects.

The allocated credits are usually then awarded by the state agencies to projects in a few “allocation rounds” held each year, on a competitive basis. Typically, the top-ranked project will get credits, then the second, and so on until the credits are exhausted for the round. This process allows each state to set its own priorities and address its specific housing goals. It also encourages developers to offer benefits that are better than the established minimums when competing against other projects. Developers might charge lower rents, or maintain the low-income requirements for a longer time period to improve a project's rank in the competitive process.

The population estimates are also used to determine the tax-exempt private activity bond caps in 2011. Not all projects claim the low-income credit based on this competitive process. Projects that are financed by tax-exempt bonds can also qualify for the credit. Tax-exempt bonds are also limited on a state-by-state basis, and the state agency responsible for bonds may be different, but it will generally apply rules similar to those of the agency responsible for the tax credit program.

The state-by-state population estimates are multiplied by the figures in another IRS announcement, currently last October's Revenue Procedure 2010-40, to arrive at the size of the pie to distribute among developers in the low-income housing business. According to the IRS's notice, each state's available low-income housing tax credit (LIHTC) ceiling in 2011 is equal to the greater of $2.15 multiplied by the state population or $2,465,000; a state's tax-exempt bond volume cap will be the greater of $95 multiplied by the state population or $277,820,000.

To compare, in 2010 the most populous state, California, got a per-capita LIHTC value of $2.10 times 36,961,664 people, or almost $77.62 million in tax credits. In 2011, California gets $2.15 times 37,253,956 people, or almost $80.10 million in credits. At the other end of the scale, the sparse state of Wyoming, population 544,270, got the minimum of $2,430,000 in 2010. In 2011, having managed to raise its population to 563,626, it still gets the minimum, which is now $2,465,000 in credits.

The five states with the largest percentage growth from 2010 to 2011 were Nevada (2.13 percent), New Mexico (2.4 percent), Wyoming (3.43 percent), North Dakota (3.83 percent), and Hawaii (4.79 percent). Conversely, the states that showed the most significant population decreases by percentage from 2010 to 2011 were Michigan (-.87 percent), Georgia (-1.46 percent), Arizona (-3.19 percent), Puerto Rico (-6.5 percent) and the Northern Mariana Islands, which are north of Guam, at (-6.55 percent).

Across all states and territories, the total population change was an increase of approximately .48 percent over last year. This translates to about half-a-percent increase in total low-income tax credits and bonds that will be available in 2011 over 2010.

2011 Calendar-Year Resident Population Estimates