Despite population increase, total housing tax credit allocation decreases
On March 21st, the Internal Revenue Service published the population figures used to calculate the calendar year 2022 low-income housing tax credit (LIHTC) and private activity bond (PAB) limits for all 50 states, Washington, D.C., and U.S. territories. The national population increased by 0.7 percent, and Texas’ population increased by .056 percent to a total of 29,527,941 residents; an increase of 167,182 residents from last year.
A 12.5 percent increase in 9 percent allocations enacted in the 2018 omnibus spending bill has expired for the calendar year 2022, causing a decrease nationwide in the 2022 9% population-based LIHTC allocations. As a result, the multiplier determining the LIHTC allocations changed from $2.81 in 2021 to $2.60 in 2022. This year, Texas is estimated to receive $76.3 million in 9% housing tax credits, a far lower figure than if the 2018 provision had been extended, and a decrease from the $81.5 million available in 2021.
Overall, the loss of approximately $10.9 million in potential funding means fewer affordable housing developments that TDHCA can finance. Unfortunately, this funding loss will exacerbate developers’ existing challenges, such as rising construction costs, labor shortages, supply chain issues, and rising interest rates.