82 FR 49653 - Statutorily Mandated Designation of Difficult Development Areas and Qualified Census Tracts: Revision of Effective Date for 2015 Designations

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 82, Issue 206 (October 26, 2017)

This document 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) under Internal Revenue Code (IRC) Section 42 published on October 3, 2014 at 79 FR 59855 and amended December 17, 2015 at 80 FR 78749 in areas approved for Federal disaster-related individual assistance 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 an area that was approved for individual assistance under the Stafford Act in 2017, not on subsequent lists of DDAs or QCTs; and submitted applications while the area was a 2015 QCT or DDA.

[Federal Register Volume 82, Number 206 (Thursday, October 26, 2017)]
[Notices]
[Pages 49653-49654]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-23306]



[[Page 49653]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5815-N-03]


Statutorily Mandated Designation of Difficult Development Areas 
and Qualified Census Tracts: Revision of Effective Date for 2015 
Designations

AGENCY: Office of the Assistant Secretary for Policy Development and 
Research, HUD.

ACTION: Notice.

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SUMMARY: This document 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) under 
Internal Revenue Code (IRC) Section 42 published on October 3, 2014 at 
79 FR 59855 and amended December 17, 2015 at 80 FR 78749 in areas 
approved for Federal disaster-related individual assistance 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 an area that was approved for individual assistance under 
the Stafford Act in 2017, not on subsequent lists of DDAs or QCTs; and 
submitted applications while the area was a 2015 QCT or DDA.

FOR FURTHER INFORMATION CONTACT: For questions on how areas are 
designated and on geographic definitions, contact Michael K. Hollar, 
Senior Economist, Economic Development and Public Finance Division, 
Office of Policy Development and Research, Department of Housing and 
Urban Development, 451 Seventh Street SW., Room 8234, Washington, DC 
20410-6000; telephone number (202) 402-5878, or send an email to 
[email protected]. For specific legal questions, contact Branch 
5, Office of the Associate Chief Counsel, Passthroughs and Special 
Industries, Internal Revenue Service, 1111 Constitution Avenue NW., 
Washington, DC 20224; telephone number (202) 317-4137, fax number (855) 
591-7867. (These are not toll-free telephone numbers.) Additional 
copies of this notice are available through HUD User at (800) 245-2691 
for a small fee to cover duplication and mailing costs.

COPIES AVAILABLE ELECTRONICALLY:  This notice and additional 
information about DDAs and QCTs are available electronically on the 
Internet at http://www.huduser.org/datasets/qct.html.

SUPPLEMENTARY INFORMATION: 

This Notice

    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 
areas approved for federal individual assistance under the Robert T. 
Stafford Disaster Relief and Emergency Assistance Act (Stafford Act) 
(42 U.S.C. 5170, et al.) due to a Presidentially-declared natural 
disaster in 2017 (hereafter, ``declared counties'') and were not in 
areas on subsequent lists of DDAs or QCTs but submitted applications 
while the area was a 2015 QCT or DDA. DDAs and QCTs for 2016 were 
published on November 24, 2015 at 80 FR 73201. DDAs and QCTs for 2017 
were published on October 17, 2016 at 81 FR 71523. DDAs and QCTs for 
2018 were published on September 11, 2017 at 82 FR 42694. This applies 
to declared counties in each of the 50 states, the District of 
Columbia, Puerto Rico, American Samoa, Guam, the Northern Mariana 
Islands, and the U.S. Virgin Islands. The actual designations of 2015 
QCTs and DDAs are not affected by this notice. HUD is revising the 
effective date of the 2015 QCTs and DDAs in declared counties at this 
time to aid the ability of areas affected by natural disasters to place 
in service affordable housing.
    For LIHTC and bond-financed projects located in declared counties, 
the sections entitled ``Effective Date'' and ``Interpretive Examples of 
Effective Date'' of the 2015 DDA and QCT designations as published 
October 3, 2014 at 79 FR 59855 and December 17, 2015 at 80 FR78749 are 
hereby revised to read as follows:

Effective Date

    The 2015 lists of QCTs and DDAs are effective:
    (1) For allocations of credit after December 31, 2014; 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, 2014.
    If an area is not on a subsequent list of DDAs, the 2015 lists are 
effective for the area if:
    (1) 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 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:
    (a) 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
    (b) 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.
    An application is deemed to be submitted on the date it is filed if 
the application is determined to be complete by the credit-allocating 
or bond-issuing agency. A ``complete application'' means that no more 
than de minimis clarification of the application is required for the 
agency to make a decision about the allocation of tax credits or 
issuance of bonds requested in the application.
    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. For purposes of IRC section 42(h)(4), 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 first of the following occurred: (a) The 
building(s) in the first phase were placed in service, or (b) the bonds 
were issued.
    For purposes of this notice, a ``multiphase project'' is defined as 
a set of buildings to be constructed or rehabilitated under the rules 
of the LIHTC and meeting the following criteria:
    (1) The multiphase composition of the project (i.e., total number 
of buildings and phases in project, with a description of how many 
buildings are to be built in each phase and when each phase is to be 
completed, and any other information required by the agency) is made 
known by the applicant in the first application of credit for any 
building in the project, and that applicant identifies the buildings in 
the project for which credit is (or will be) sought;
    (2) The aggregate amount of LIHTC applied for on behalf of, or that 
would eventually be allocated to, the buildings on the site exceeds the 
one-year limitation on credits per applicant, as defined in the 
Qualified Allocation Plan (QAP) of the LIHTC-allocating agency, or the 
annual per-capita credit authority of the LIHTC allocating agency, and 
is the reason the applicant must request multiple allocations over two 
or more years; and
    (3) All applications for LIHTC for buildings on the site are made 
in immediately consecutive years.
    Members of the public are hereby reminded that the Secretary of 
Housing and Urban Development, or the

[[Page 49654]]

Secretary's designee, has legal authority to designate DDAs and QCTs, 
in accordance with 26 U.S.C. 42(d)(5), by publishing lists of 
geographic entities as defined by, in the case of DDAs, the Census 
Bureau, the several states and the governments of the insular areas of 
the United States and, in the case of QCTs, by the Census Bureau; and 
to establish the effective dates of such lists. The Secretary of the 
Treasury, through the IRS thereof, has sole legal authority to 
interpret, and to determine and enforce compliance with the IRC and 
associated regulations, including Federal Register notices published by 
HUD for purposes of designating DDAs and QCTs. Representations made by 
any other entity as to the content of HUD notices designating DDAs and 
QCTs that do not precisely match the language published by HUD should 
not be relied upon by taxpayers in determining what actions are 
necessary to comply with HUD notices.

Interpretive Examples of Effective Date

    For the convenience of readers of this notice, interpretive 
examples are provided below to illustrate the consequences of the 
effective date in areas that gain or lose DDA status. The examples 
covering DDAs are equally applicable to QCT designations.
    (Case A) Project A is located in a 2015 DDA that is NOT a 
designated DDA in 2016, 2017, or 2018 and is in a declared county. A 
complete application for tax credits for Project A is filed with the 
allocating agency on November 15, 2015. Credits are allocated to 
Project A on January 30, 2018. Project A is eligible for the increase 
in basis accorded a project in a 2015 DDA because the application was 
filed BEFORE January 1, 2016 (the effective date for the 2016 DDA 
lists), and because tax credits were allocated no later than the end of 
the 850-day period after the filing of the complete application for an 
allocation of tax credits.
    (Case B) Project B is located in a 2015 DDA that is NOT a 
designated DDA in 2016, 2017, or 2018 and is in a declared county. A 
complete application for tax credits for Project B is filed with the 
allocating agency on December 1, 2015. Credits are allocated to Project 
B on June 30, 2018. Project B is NOT eligible for the increase in basis 
accorded a project in a 2015 DDA because, although the application for 
an allocation of tax credits was filed BEFORE January 1, 2016 (the 
effective date of the 2016 DDA lists), the tax credits were allocated 
later than the end of the 850-day period after the filing of the 
complete application.
    (Case C) Project C is located in a 2015 DDA that was not a DDA in 
2014. Project C was placed in service on November 15, 2014. A complete 
application for tax-exempt bond financing for Project C is filed with 
the bond-issuing agency on January 15, 2015. The bonds that will 
support the permanent financing of Project C are issued on September 
30, 2015. Project C is NOT eligible for the increase in basis otherwise 
accorded a project in a 2015 DDA, because the project was placed in 
service BEFORE January 1, 2015.
    (Case D) Project D is located in an area that is a DDA in 2015, but 
is NOT a DDA in 2016, 2017, or 2018 and is in a declared county. A 
complete application for tax-exempt bond financing for Project D is 
filed with the bond-issuing agency on October 30, 2015. Bonds are 
issued for Project D on January 30, 2018, but Project D is not placed 
in service until July 30, 2018. Project D is eligible for the increase 
in basis available to projects located in 2015 DDAs because: (1) One of 
the two events necessary for triggering the effective date for 
buildings described in Section 42(h)(4)(B) of the IRC (the two events 
being bonds issued and buildings placed in service) took place on 
January 30, 2018, within the 850-day period after a complete 
application for tax-exempt bond financing was filed, (2) the 
application was filed during a time when the location of Project D was 
in a DDA, and (3) both the issuance of the bonds and placement in 
service of Project D occurred after the application was submitted.

Findings and Certifications

A. Environmental Impact

    This notice involves the establishment of fiscal requirements or 
procedures that are related to rate and cost determinations and do not 
constitute a development decision affecting the physical condition of 
specific project areas or building sites. Accordingly, under 40 CFR 
1508.4 of the regulations of the Council on Environmental Quality and 
24 CFR 50.19(c)(6) of HUD's regulations, this notice is categorically 
excluded from environmental review under the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321).

B. Federalism Impact

    Executive Order 13132 (entitled ``Federalism'') prohibits an agency 
from publishing any policy document that has federalism implications if 
the document either imposes substantial direct compliance costs on 
state and local governments and is not required by statute, or the 
document preempts state law, unless the agency meets the consultation 
and funding requirements of section 6 of the executive order. This 
notice merely designates DDAs as required under IRC Section 42, as 
amended, for the use by political subdivisions of the states in 
allocating the LIHTC. As a result, this notice is not subject to review 
under the order.

    Dated: October 19, 2017.
Kurt G. Usowski,
 Deputy Assistant Secretary for Economic Affairs.
[FR Doc. 2017-23306 Filed 10-25-17; 8:45 am]
 BILLING CODE 4210-67-P