Difficult Development Areas and Qualified Census Tracts
A Qualified Census Tract (QCT) is any census tract (or equivalent geographic area defined by the Census Bureau) in which at least 50% of households have an income less than 60% of the Area Median Gross Income (AMGI). HUD has defined 60% of AMGI as 120% of HUD’s Very Low Income Limits (VLILs), which are based on 50% of area median family income, adjusted for high cost and low income areas. The QCT provision of the Low Income Housing Tax Credit statute encourages private developers to build low-income housing in low income and high poverty areas.
Difficult Development Areas (DDA)s are locations that have high construction, land, and utility costs relative to the area median gross income. QCTs are tracts with a poverty rate of at least 25 percent, or tracts where 50 percent of the households have incomes below 60 percent of the area median income.
If a project is located in a difficult development area (DDA) or a QCT, the eligible basis of the project can be increased by 30%. This allowable increase is commonly referred to as a “basis boost”.
For properties placed into service after July 30, 2008, Housing Credit Authorities have the authority to select specific buildings not already in DDAs or QCTs to receive the 30 percent basis boost. This building-specific designation is not available for projects financed with tax-exempt bonds.