Delayed DDA, QCT Effective Date Presents Key Opportunity for Affordable Housing Developers, Investors

Published by Mark Shelburne on Monday, December 14, 2015 - 12:00am

A recent post described an opportunity to preserve the 30 percent low-income housing tax credit (LIHTC) boost for properties being planned in expiring difficult development areas (DDAs) and qualified census tracts (QCTs). As noted in that post, the key is submitting a “complete application” before the effective date of the new areas, which in the past had always been year’s end. This deadline was expected to be particularly significant this year, as substantial changes are being made to the DDAs and QCTs in 2016.

Fortunately, in an unexpected move, the U.S. Department of Housing and Urban Development (HUD) created more time for the affordable housing community to plan for the new DDAs/QCTs. The Nov. 24, 2015 Federal Register notice announcement set the effective date for the new DDAs/QCTs as July 1, 2016. This means developers planning LIHTC properties in census tracts that are in 2015 DDAs, but not 2016 DDAs or 2016 QCTs, will have an additional six months to submit LIHTC and tax-exempt bond applications and maintain the eligible basis increase.

Developers applying in the 2016 areas also will have 730 days to complete the subsequent requirements (receiving a 9 percent allocation or issuing tax-exempt bonds and placing the buildings in service).

Tune into Novogradac’s 2016 DDAs and QCTs: What You Need to Know Webinar on Dec. 18, and pick up the January 2016 Novogradac Journal of Tax Credits to learn more.