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Which year’s qualified census tract designations (“QCT”) are applicable under ARP and how should a city address changes in QCTs during the ARP-funded project?

Qualified Census Tracts (“QCTs”) are a common, readily accessible, and geographically granular method of identifying communities with a large proportion of low-income residents. Using an existing measure may speed implementation and decrease administrative burden, while identifying areas of need at a highly localized level.[1]

As per the U.S. Department of Housing and Urban Development (“HUD”) Federal Register Notice dated September 9, 2020, Statutorily Mandated Designation of Difficult Development Areas (“DDAs”) and Qualified Census Tracts for 2021, Section VIII Future Delegations, “HUD designates QCTs annually as new income and poverty rate data are released.”  In addition, “the 2021 lists of QCTs and DDAs are effective:

  1. For allocations of credit after December 31, 2020; or
  2. For purposes of IRC Section 42(h)(4), if the bonds are issued and the building is placed in service after December 31, 2020.”

If an area is not on a subsequent list of QCTs or DDAs, the 2021 lists are effective for the area if:

  1. The allocation of credit to an applicant is made no later than the end of the 730-day period after the applicant submits a complete application to the Low-Income Housing Tax Credit (“LIHTC”) allocating agency, and the submission is made before the effective date of the subsequent lists; or
  2. For purposes of IRC Section 42(h)(4), if:
  • The bonds are issued, or the building is placed in service no later than the end of the 730-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.”[2]

As outlined above, a QCT designation is good for at least two years (730 days after submission of an LIHTC application) and to use the most recent available data from HUD for 2021.  This should be noted in any policies and procedures for the program.  As projects are implemented over a long period of time (implementation period), the municipality will likely only need to add the additional QCT designations.  All previous designations will still apply, and they will not change going forward.[3]

The HUD, QCTs and DDAs can be located at https:// www.huduser.gov/portal/datasets/qct.html and the U.S. Department of the Interior, Bureau of Indian Affairs, Indian Lands of Federally Recognized Tribes of the United States (June 2016), https://www.bia.gov/sites/bia.gov/files/assets/bia/ots/webteam/pdf/idc1-028635.pdf.[4]

Last Revised: June 4, 2021

 

[1] HUD Federal Register Notice / Vol. 86, No. 93 / Monday, May 17, 2021 / Rules and Regulations (85 FR 26786 – 26824, at 26791).

[2] HUD Federal Register Notice dated 9-24-20 designating QCTs and Difficult Development Areas for 2021 (85 FR 60255-60261, at 60259) - https://www.govinfo.gov/content/pkg/FR-2020-09-24/pdf/2020-21041.pdf

[3] HUD Federal Register Notice dated 9-24-20 designating QCTs and Difficult Development Areas for 2021 (85 FR 60255-60261, at 60259-60261) - https://www.govinfo.gov/content/pkg/FR-2020-09-24/pdf/2020-21041.pdf