HUD Revision to Effective Date for 2015 DDA and QCT Designations
person
A.J. Johnson
today
10/28/2017
On October 26, 2017, HUD published a notice in the Federal Register, "Statutorily Mandated Designation of Difficult Development Areas and Qualified Census Tracts: Revision of Effective Date for 2015 Designations."
This notice revises the effective date for designations of "Difficult Development Areas" (DDAs) and "Qualified Census Tracts" (QCTs) for purposes of the Low-Income Housing Tax Credit (LIHTC) in areas that were declared a federal disaster area under the Stafford Act. This Notice extends from 730 days to 850 days the period for which the 2015 lists of QCTs and DDAs are effective for projects located in the disaster areas. The Notice does not apply to QCTs or DDAs that were on a subsequent list of DDAs or QCTs and only applies to applications that were submitted while the area was a 2015 QCT or DDA.
HUD is revising the effective date of the 2015 QCTs and DDAs in declared counties to aid the ability of areas affected by natural disasters to place in service affordable housing.
Effective Date
The 2015 lists of QCTs or DDAs are effective:
For allocations of credit after December 31, 2014; or
For properties with bond issues under IRC §42(h)(4), if the bonds were issued and the building is placed in service after December 31, 2014.
If an area is not on a subsequent list of DDAs, the 2015 lists are effective for the area if:
The allocation of credit to an applicant is made no later than the end of the 850-day period after the applicant submits a complete application to the credit allocating agency, and the submission is made before the effective date of the subsequent lists; or
For properties with bond issues under IRC §42(h)(4), if:
The bonds are issued or the building is placed in service no later than the end of the 850-day period after the applicant submits a complete application to the bond-issuing agency, and
The submission is made before the effective date of the subsequent lists, provided that both the issuance of the bonds and the placement in service of the building occur after the application is submitted.
DDAs and QCTs for 2016 were published on November 24, 2015; DDAs and QCTs
For 2017 were published on October 17, 2016; and DDAs and QCTs for 2018 were published on September 11, 2017.
In the case of a "multiphase project," the DDA or QCT status of the site of the project that applies for all phases of the project is that which applied when the project received its first allocation of LIHTC.
A "multiphase project" must meet the following criteria:
The multiphase composition of the project was made known by the applicant in the first application of credit for any building in the project, and the applicant identified the buildings in the project for which credit is or will be sought;
The aggregate amount of LIHTC applies for exceeds the one-year limitation on credits per applicant imposed by the allocating agency, and this limitation is the reason the applicant must request multiple allocations over two or more years; and
All applications for LIHTC for the project are made in immediately consecutive years.
Following are two examples of the how the effective date determination works:
Project A is located in a 2015 DDA that was NOT a designated DDA in 2016, 2017, or 2018 and is in a declared federal disaster area.
>A complete LIHTC application was filed on November 15, 2015.
>Credits are allocated to the project on January 30, 2018 (807 days after the LIHTC application).
>Project A is eligible for the increase in eligible basis for a project located in a 2015 DDA because the application was filed BEFORE January 1, 2016 (the effective date for the 2016 DDA list), and because tax credits were allocated no later than the end of the 850-day period after the filing of the complete LIHTC application.
Project B is located in a 2015 DDA that is NOT a designated DDA in 2016, 2017, or 2018 and is in a declared federal disaster area.
>A complete LIHTC application was filed on December 1, 2015.
>Credits are allocated to the project on June 30, 2018 (942 days after the LIHTC application).
>Project B is NOT eligible for the increase in basis because, although the LIHTC application was filed before January 1, 2016 (the effective date of the 2016 DDA lists), the credits were allocated later than the end of the 850-day period after the filing of the complete application.
This Notice affects only owners of LIHTC properties that are:
Located in an area that was in a DDA or QCT in 2015, but not in 2016, 2017, or 2018; and