HUD Publishes 2018 Difficult Development Areas and Qualified Census Tracts

On September 11, HUD published a Notice in the Federal Register designating Difficult Development Areas (DDA) and Qualified Census Tracts (QCT) for 2018 for purposes of the basis boost allowed under Low Income Housing Tax Credit (Housing Credit) program. DDAs are areas with high construction, land, and utility costs relative to area median income, and QCTs are areas in which at least 50 percent of the households have an income which is less than 60 percent of area median income or which have a poverty rate of at least 25 percent. As it has for the last two years, HUD DDA designations are set at the zip code level, rather than designations covering full metropolitan statistical areas, as was HUD’s previous practice.

The 2018 DDAs and QCTs are effective for Housing Credit allocations made after December 31, 2017 or for bond-financed properties in which the bonds are issued and the building is placed in service after December 31, 2017. The Notice provides further guidance for areas that were DDAs or QCTs in previous years but are no longer in DDAs or QCTs in 2018 or future years, along with case examples illustrating various potential scenarios.

For further information on the 2018 DDAs and QCTs, contact HUD Senior Economist Michael Hollar, whose contact information is provided in the Notice.