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HUD Publishes 2006 Difficult Development Area Lists

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On Monday, August 22, 2005, HUD published in the Federal
Register the 2006 lists of Difficult Development Areas
for section 42 of the Internal Revenue Code, the Low-
Income Housing Tax Credit (LIHTC). LIHTC projects in
Difficult Development Areas (DDAs) are eligible for up to
30 percent additional LIHTC subsidy.

Following past practice of basing the coming year's
designations on data from the immediately previous year,
HUD based the 2006 designations on revised final fiscal
year (FY) 2005 Fair Market Rents (FMRs), 2005 income
limits, and 2000 Census population counts. The 2006
designation results in substantial change from the
Difficult Development Areas designated for 2005 because
the FY 2005 FMRs were the first to be benchmarked to the
2000 Census. The effect is particularly notable in
nonmetropolitan areas where the Census 2000 benchmarking
of FMRs had the most impact. Of the 315 nonmetropolitan
counties to be designated 2006 DDAs, 172 were not DDAs in
2005; a total of 147 nonmetropolitan 2005 DDAs will not
be DDAs in 2006. Of the 27 metropolitan areas to be
designated 2006 DDAs, 9 were not DDAs in 2005. A total of
5 metropolitan 2005 DDAs will not be DDAs in 2006.

The Qualified Census Tracts that HUD also designates for
the LIHTC are not affected by this notice.

Complete information on the 2006 Difficult Development
Areas and Qualified Census Tracts, including the list of
designated areas and detailed designation methodology, is
available on the HUD User website at
https://www.huduser.gov/datasets/qct.html.

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