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HUD Releases 2018 Qualified Census Tract & Difficult Development Area Designations

On September 11, 2017, HUD published a Notice designating the 2018 Qualified Census Tracts (QCTs) and Difficult Development Areas (DDAs) for the Low Income Housing Tax Credit (LIHTC) program. Qualified Census Tracts are those areas where either (1) 50% or more of the households have incomes below 60% of the area median gross income or (2) the poverty rate is at least 25%. Difficult Development Areas are those areas with high construction, land and utility costs relative to the area median gross income.  Both QCTs and DDAs are eligible for an increase in basis and available tax credits of up to 30%.  The Notice specifically details HUD’s methodology in determining the QCTs and DDAs through the use of fair market rents, FY2017 income limits, census counts, and other income and poverty data. An interactive map, full listing of the 2018 QCTs and DDAs, and other historical data can be accessed at https://www.huduser.gov/portal/datasets/qct.html.

These 2018 designation lists are effective for allocations of LIHTC credit after December 31, 2017, or in the case of bond transactions where tax-exempt bonds are issued and the building is placed in service after December 31, 2017. The HUD Notice also explains the effectiveness of the designations for areas not specifically on a 2018 QCT or DDA list, along with illustrative examples of the consequences of the effective date for areas that either gain or lose QCT or DDA status.

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About this Author

Shanellah Verna, Washington DC, Ballard Spahr, Real Estate Lawyer
Associate

Shanellah Verna is a member of the firm’s Real Estate Department, where she handles general real estate matters. She has experience with federal, state, and local housing laws as well as with property dispositions, regulatory compliance, licensing, corporate governance, and tax issues.

While in law school, Ms. Verna interned at the District of Columbia Housing Authority in the Office of the General Counsel of the Real Estate and Transactional Law Group. Her duties included compliance review of management documents and proposed regulations, drafting of legal memoranda and legislative...

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