42694 Federal Register / Vol. 82, No. 174 / Monday, September 11, 2017 / Notices 

(OMB) for the information collection 

described below. In accordance with the 

Paperwork Reduction Act, HUD is 

requesting comment from all interested 

parties on the proposed collection of 

information. The purpose of this notice 

is to allow for 60 days of public 

comment. 

DATES: Comments Due Date: November 

13, 2017. 

ADDRESSES: Interested persons are 

invited to submit comments regarding 

this proposal. Comments should refer to 

the proposal by name and/or OMB 

Control Number and should be sent to: 

Anna P. Guido, Reports Management 

Officer, QDAM, Department of Housing 

and Urban Development, 451 7th Street 

SW., Room 4186, Washington, DC 

20410–5000; telephone 202–402–5534 

(this is not a toll-free number) or email 

at Anna.P.Guido@hud.gov for a copy of 

the proposed forms or other available 

information. Persons with hearing or 

speech impairments may access this 

number through TTY by calling the tollfree Federal Relay Service at (800) 877– 

8339. 

FOR FURTHER INFORMATION CONTACT: 

Suzette M. Agans, Senior Management 

Analyst, Field Operations Division, 

Field Policy and Management, 

Department of Housing and Urban 

Development, 451 7th Street SW., 

Washington, DC 20410; email Ms. Agans 

at Suzette.M.Agans@hud.gov or 

telephone 202–402–5089. This is not a 

toll-free number. Persons with hearing 

or speech impairments may access this 

number through TTY by calling the tollfree Federal Relay Service at (800) 877– 

8339. Copies of available documents 

submitted to OMB may be obtained 

from Ms. Agans. 

SUPPLEMENTARY INFORMATION: This 

notice informs the public that HUD is 

seeking approval from OMB for the 

information collection described in 

Section A. 

A. Overview of Information Collection 

Title of Information Collection: 

Certification of Consistency with 

Promise Zone Goals and 

Implementation. 

OMB Approval Number: 2577–0279. 

Type of Request: Renewal of 

expiration date. 

Form Number: HUD Form 50153. 

HUD Description of the Need for the 

Information and Proposed Use: This 

collection is a renewal that will be 

collecting information for preference 

points in certain competitive federal 

grants and technical assistance 

applications. This collection will 

reference the actual application 

collection that was approved under 

OMB 2577–0279. HUD and USDA 

designated twenty-two communities as 

Promise Zones between 2014 and 2016. 

Under the Promise Zones initiative, the 

federal government through interagency 

efforts will invest and partner with 

high-poverty urban, rural, and tribal 

communities to create jobs, increase 

economic activity, improve educational 

opportunities, leverage private 

investment, and reduce violent crime. 

Additional information about the 

Promise Zones initiative can be found at 

www.hud.gov/promisezones, and 

questions can be addressed to 

promisezones@hud.gov. The federal 

administrative duties pertaining to these 

designations shall be managed and 

executed by HUD (urban communities) 

and USDA (rural and tribal 

communities) for ten years from the 

designation dates pursuant. The 

Promise Zone Initiative supports HUD’s 

responsibilities under sections 2 and 3 

of the HUD Act, 42 U.S.C. 3531–32, to 

assist the President in achieving 

maximum coordination of the various 

federal activities which have a major 

effect upon urban community, 

suburban, or metropolitan development; 

to develop and recommend to the 

President policies for fostering orderly 

growth and development of the Nation’s 

urban areas; and to exercise leadership, 

at the direction of the President, in 

coordinating federal activities affecting 

housing and urban development. To 

facilitate communication between local 

and federal partners, HUD proposes that 

Promise Zone Lead Organizations 

submit minimal documents to support 

collaboration between local and federal 

partners. This document will assist in 

communications and stakeholder 

engagement, both locally and nationally. 

Respondents (i.e., affected public): 

Twenty-Two Promise Zone Lead 

Organizations. 

Information collection Number of 

respondents 

Frequency 

of response 

Responses 

per annum 

Burden 

hour per 

response 

Annual 

burden hours 

Hourly 

cost per 

response 

Annual cost 

Certification of Consistency Form ................ 22 10 220 .30 66 $40 $2,640.00 

Total ...................... ........................ ........................ ........................ ........................ ........................ ........................ 2,640.00 

B. Solicitation of Public Comment 

This notice is soliciting comments 

from members of the public and affected 

parties concerning the collection of 

information described in Section A on 

the following: 

(1) Whether the proposed collection 

of information is necessary for the 

proper performance of the functions of 

the agency, including whether the 

information will have practical utility; 

(2) The accuracy of the agency’s 

estimate of the burden of the proposed 

collection of information; 

(3) Ways to enhance the quality, 

utility, and clarity of the information to 

be collected; and 

(4) Ways to minimize the burden of 

the collection of information on those 

who are to respond; including through 

the use of appropriate automated 

collection techniques or other forms of 

information technology, e.g., permitting 

electronic submission of responses. 

HUD encourages interested parties to 

submit comment in response to these 

questions. 

Authority: Section 3507 of the Paperwork 

Reduction Act of 1995, 44 U.S.C. Chapter 35. 

Dated: August 28, 2017. 

Nelson R. Brego ́n, 

Associate Assistant Deputy Secretary, Office 

of Field Policy and Management. 

[FR Doc. 2017–19187 Filed 9–8–17; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF HOUSING AND 

URBAN DEVELOPMENT 

[Docket No. FR–6043–N–01] 

Statutorily Mandated Designation of 

Difficult Development Areas and 

Qualified Census Tracts for 2018 

AGENCY: Office of the Assistant 

Secretary for Policy Development and 

Research, HUD. 

ACTION: Notice. 

SUMMARY: This document designates 

‘‘Difficult Development Areas’’ (DDAs) 

and ‘‘Qualified Census Tracts’’ (QCTs) 

for purposes of the Low-Income 

Housing Tax Credit (LIHTC) under 

Internal Revenue Code (IRC), as enacted 


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Federal Register / Vol. 82, No. 174 / Monday, September 11, 2017 / Notices 42695 

by the Tax Reform Act of 1986. The 

United States Department of Housing 

and Urban Development (HUD) makes 

new DDA and QCT designations 

annually. 

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 8216, 

Washington, DC 20410–6000; telephone 

number 202–402–5878, or send an email 

to Michael.K.Hollar@hud.gov. 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 202–317–6731. For 

questions about the ‘‘HUBZone’’ 

program, contact Mariana Pardo, 

Director, HUBZone Program, Office of 

Government Contracting and Business 

Development, U.S. Small Business 

Administration, 409 Third Street SW., 

Suite 8800, Washington, DC 20416; 

telephone number 202–205–2985, fax 

number 202–481–6443, or send an email 

to hubzone@sba.gov. (These are not tollfree telephone numbers.) A text 

telephone is available for persons with 

hearing or speech impairments at 800– 

877–8339. 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: 

I. This Notice 

Under 26 U.S.C. 42(d)(5)(B)(iii), for 

purposes of the LIHTC, the Secretary of 

HUD must designate DDAs, which are 

areas with high construction, land, and 

utility costs relative to area median 

gross income. This notice designates 

DDAs for 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 designations of DDAs in 

this notice are based on modified Fiscal 

Year (FY) 2017 Small Area Fair Market 

Rents (Small Area FMRs), FY2017 

income limits, and 2010 Census 

population counts, as explained below. 

Similarly, under 26 U.S.C. 

42(d)(5)(B)(ii), the Secretary of HUD 

must designate QCTs, which are areas 

either in which 50 percent or more of 

the households have an income which 

is less than 60 percent of the area 

median gross income for such year or 

which have a poverty rate of at least 25 

percent. This notice designates QCTs 

based on new income and poverty data 

released in the American Community 

Survey (ACS). Specifically, HUD relies 

on the most recent three sets of ACS 

data to ensure that anomalous estimates, 

due to sampling, do not affect the QCT 

status of tracts. 

II. Data Used To Designate DDAs 

Data from the 2010 Census on total 

population of metropolitan areas and 

nonmetropolitan areas are used in the 

designation of DDAs. The Office of 

Management and Budget (OMB) first 

published new metropolitan area 

definitions incorporating 2010 Census 

data in OMB Bulletin No. 13–01 on 

February 28, 2013. FY2017 FMRs and 

FY2017 income limits used to designate 

DDAs are based on these metropolitan 

statistical area (MSA) definitions, with 

modifications to account for substantial 

differences in rental housing markets 

(and, in some cases, median income 

levels) within MSAs. SAFMRs are 

calculated for the ZIP Code Tabulation 

Areas (ZCTAs), or portions of ZCTAs 

within the metropolitan areas defined 

by OMB Bulletin No. 13–01. 

III. Data Used To Designate QCTs 

Data from the 2010 Census on total 

population of census tracts, 

metropolitan areas, and the 

nonmetropolitan parts of states are used 

in the designation of QCTs. The FY2017 

income limits used to designate QCTs 

are based on these MSA definitions with 

modifications to account for substantial 

differences in rental housing markets 

(and in some cases median income 

levels) within MSAs. This QCT 

designation uses the OMB metropolitan 

area definitions published in OMB 

Bulletin No. 13–01 on February 28, 

2013, without modification for purposes 

of evaluating how many census tracts 

can be designated under the population 

cap, but uses the HUD-modified 

definitions and their associated area 

median incomes for determining QCT 

eligibility. 

Because the 2010 Decennial Census 

did not include questions on respondent 

household income, HUD uses ACS data 

to designate QCTs. The ACS tabulates 

data collected over 5 years to provide 

estimates of socioeconomic variables for 

small areas containing fewer than 

20,000 persons, such as census tracts. 

Due to sample-related anomalies in 

estimates from year-to-year, HUD 

utilizes three sets of ACS tabulations to 

ensure that anomalous estimates do not 

affect QCT status. 

IV. Background 

The U.S. Department of the Treasury 

(Treasury) and its Internal Revenue 

Service (IRS) are authorized to interpret 

and enforce the provisions of the LIHTC 

found at IRC section 42. In order to 

assist in understanding HUD’s 

mandated designation of DDAs and 

QCTs for use in administering IRC 

section 42, a summary of the section is 

provided below. The following 

summary does not purport to bind 

Treasury or the IRS in any way, nor 

does it purport to bind HUD, since HUD 

has authority to interpret or administer 

the IRC only in instances where it 

receives explicit statutory delegation. 

V. Summary of the Low-Income 

Housing Tax Credit 

A. Determining Eligibility 

The LIHTC is a tax incentive intended 

to increase the availability of lowincome rental housing. IRC section 42 

provides an income tax credit to certain 

owners of newly constructed or 

substantially rehabilitated low-income 

rental housing projects. The dollar 

amount of the LIHTC available for 

allocation by each state (credit ceiling) 

is limited by population. Each state is 

allowed a credit ceiling based on a 

statutory formula indicated at IRC 

section 42(h)(3). States may carry 

forward unallocated credits derived 

from the credit ceiling for one year; 

however, to the extent such unallocated 

credits are not used by then, the credits 

go into a national pool to be 

redistributed to states as additional 

credit. State and local housing agencies 

allocate the state’s credit ceiling among 

low-income housing buildings whose 

owners have applied for the credit. 

Besides IRC section 42 credits derived 

from the credit ceiling, states may also 

provide IRC section 42 credits to owners 

of buildings based on the percentage of 

certain building costs financed by taxexempt bond proceeds. Credits provided 

under the tax-exempt bond ‘‘volume 

cap’’ do not reduce the credits available 

from the credit ceiling. 

The credits allocated to a building are 

based on the cost of units placed in 

service as low-income units under 

particular minimum occupancy and 

maximum rent criteria. In general, a 

building must meet one of two 

thresholds to be eligible for the LIHTC; 

either: (1) 20 percent of the units must 

be rent-restricted and occupied by 

tenants with incomes no higher than 50 

percent of the Area Median Gross 

Income (AMGI), or (2) 40 percent of the 


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units must be rent-restricted and 

occupied by tenants with incomes no 

higher than 60 percent of AMGI. A unit 

is ‘‘rent-restricted’’ if the gross rent, 

including an allowance for tenant-paid 

utilities, does not exceed 30 percent of 

the imputed income limitation (i.e., 50 

percent or 60 percent of AMGI) 

applicable to that unit. The rent and 

occupancy thresholds remain in effect 

for at least 15 years, and building 

owners are required to enter into 

agreements to maintain the low-income 

character of the building for at least an 

additional 15 years. 

B. Calculating the LIHTC 

The LIHTC reduces income tax 

liability dollar-for-dollar. It is taken 

annually for a term of 10 years and is 

intended to yield a present value of 

either: (1) 70 percent of the ‘‘qualified 

basis’’ for new construction or 

substantial rehabilitation expenditures 

that are not federally subsidized (as 

defined in IRC section 42(i)(2)), or (2) 30 

percent of the qualified basis for the cost 

of acquiring certain existing buildings or 

projects that are federally subsidized. 

The actual credit rates are determined 

monthly under procedures specified in 

IRC section 42 and cannot be less than 

9 percent for buildings that are not 

federally subsidized. Individuals can 

use the credits up to a deduction 

equivalent of $25,000 (the actual 

maximum amount of credit that an 

individual can claim depends on the 

individual’s marginal tax rate). For 

buildings placed in service after 

December 31, 2007, individuals can use 

the credits against the alternative 

minimum tax. Corporations, other than 

S or personal service corporations, can 

use the credits against ordinary income 

tax, and, for buildings placed in service 

after December 31, 2007, against the 

alternative minimum tax. These 

corporations also can deduct losses from 

the project. 

The qualified basis represents the 

product of the building’s ‘‘applicable 

fraction’’ and its ‘‘eligible basis.’’ The 

applicable fraction is based on the 

number of low-income units in the 

building as a percentage of the total 

number of units, or based on the floor 

space of low-income units as a 

percentage of the total floor space of 

residential units in the building. The 

eligible basis is the adjusted basis 

attributable to acquisition, 

rehabilitation, or new construction costs 

(depending on the type of LIHTC 

involved). These costs include amounts 

chargeable to a capital account that are 

incurred prior to the end of the first 

taxable year in which the qualified lowincome building is placed in service or, 

at the election of the taxpayer, the end 

of the succeeding taxable year. In the 

case of buildings located in designated 

DDAs or designated QCTs, or buildings 

designated by the state agency, eligible 

basis can be increased up to 130 percent 

from what it would otherwise be. This 

means that the available credits also can 

be increased by up to 30 percent. For 

example, if a 70 percent credit is 

available, it effectively could be 

increased to as much as 91 percent (70 

percent × 130 percent). 

C. Defining Difficult Development Areas 

(DDAs) and Qualified Census Tracts 

(QCTs) 

As stated above, IRC section 42 

defines a DDA as an area designated by 

the Secretary of HUD that has high 

construction, land, and utility costs 

relative to the AMGI. All designated 

DDAs in metropolitan areas (taken 

together) may not contain more than 20 

percent of the aggregate population of 

all metropolitan areas, and all 

designated areas not in metropolitan 

areas may not contain more than 20 

percent of the aggregate population of 

all nonmetropolitan areas. See 26 U.S.C. 

42(d)(5)(B)(iii). 

Similarly, IRC section 42 defines a 

QCT as an area designated by the 

Secretary of HUD and, for the most 

recent year for which census data are 

available on household income in such 

tract, in which either 50 percent or more 

of the households have an income 

which is less than 60 percent of the area 

median gross income or which has a 

poverty rate of at least 25 percent. All 

designated QCTs in a single 

metropolitan area or nonmetropolitan 

area (taken together) may not contain 

more than 20 percent of the population 

of that metropolitan or nonmetropolitan 

area. Thus, unlike the restriction on 

DDA designations, QCTs are restricted 

by each individual area as opposed to 

the aggregate population across all 

metropolitan areas and nonmetropolitan 

areas. See 26 U.S.C. 42(d)(5)(B)(ii). 

IRC section 42(d)(5)(B)(v) allows 

states to award an increase in basis up 

to 30 percent to buildings located 

outside of federally designated DDAs 

and QCTs if the increase is necessary to 

make the building financially feasible. 

This state discretion applies only to 

buildings allocated credits under the 

state housing credit ceiling and is not 

permitted for buildings receiving credits 

in connection with tax-exempt bonds. 

Rules for such designations shall be set 

forth in the LIHTC-allocating agencies’ 

qualified allocation plans (QAPs). See 

26 U.S.C. 42(m). 

VI. Explanation of HUD Designation 

Method 

A. 2018 Difficult Development Areas 

In developing the 2018 list of DDAs, 

as required by 26 U.S.C. 42(d)(5)(B)(iii), 

HUD compared housing costs with 

incomes. HUD used 2010 Census 

population for ZCTAs, and 

nonmetropolitan areas, and the MSA 

definitions, as published in OMB 

Bulletin No. 13–01 on February 28, 

2013, with modifications, as described 

below. In keeping with past practice of 

basing the coming year’s DDA 

designations on data from the preceding 

year, the basis for these comparisons is 

the FY2017 HUD income limits for very 

low-income households (very lowincome limits, or VLILs), which are 

based on 50 percent of AMGI, and 

modified FMRs based on the FY2017 

FMRs used for the Housing Choice 

Voucher (HCV) program. For 

metropolitan DDAs, HUD used Small 

Area FMRs based on three annual 

releases of ACS data, to compensate for 

statistical anomalies which affect 

estimates for some ZCTAs. For nonmetropolitan DDAs, HUD used the 

FY2017 FMRs published on August 26, 

2016 (81 FR 58952) as updated 

periodically through March 30, 2017 (82 

FR 15711). 

In formulating the FY2017 FMRs and 

VLILs, HUD modified the current OMB 

definitions of MSAs to account for 

differences in rents among areas within 

each current MSA that were in different 

FMR areas under definitions used in 

prior years. HUD formed these ‘‘HUD 

Metro FMR Areas’’ (HMFAs) in cases 

where one or more of the parts of newly 

defined MSAs were previously in 

separate FMR areas. All counties added 

to metropolitan areas will be an HMFA 

with rents and incomes based on their 

own county data, where available. HUD 

no longer requires recent-mover rents to 

differ by five percent or more in order 

to form a new HMFA. All HMFAs are 

contained entirely within MSAs. All 

nonmetropolitan counties are outside of 

MSAs and are not broken up by HUD for 

purposes of setting FMRs and VLILs. 

(Complete details on HUD’s process for 

determining FY2017 FMR areas and 

FMRs are available at https://

www.huduser.gov/portal/datasets/ 

fmr.html#2017. Complete details on 

HUD’s process for determining FY2017 

income limits are available at https://

www.huduser.gov/portal/datasets/ 

il.html#2017.) 

HUD’s unit of analysis for designating 

metropolitan DDAs consists of ZCTAs, 

whose Small Area FMRs are compared 

to metropolitan VLILs. For purposes of 

computing VLILs in metropolitan areas, 


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1HUD encourages other jurisdictions with rent 

control laws that affect rents paid by recent movers 

into existing units to contact HUD about what data 

might be provided or collected to adjust SAFMRs 

in those jurisdictions. 

2HUD income limits for very low-income 

households (very low-income limits, or VLILs) are 

based on 50 percent of AMGI. In formulating the 

Fair Market Rents (FMRs) and VLILs, HUD 

modified the current OMB definitions of MSAs to 

account for substantial differences in rents among 

areas within each new MSA that were in different 

FMR areas under definitions used in prior years. 

HUD originally formed these ‘‘HUD Metro FMR 

Areas’’ (HMFAs) in cases where one or more of the 

parts of newly defined MSAs that previously were 

in separate FMR areas had 2000 Census based 40thpercentile recent-mover rents that differed, by 5 

percent or more, from the same statistic calculated 

at the MSA level. In addition, a few HMFAs were 

formed on the basis of very large differences in 

AMGIs among the MSA parts. All HMFAs are 

contained entirely within MSAs. Furthermore, HUD 

created separate ‘‘HUD Metro FMR Areas’’ for all 

counties added to metropolitan areas in the 

February 28, 2013 re-definition of metropolitan 

areas published by the Office of Management and 

Budget. All nonmetropolitan counties are outside of 

MSAs and are not broken up by HUD for purposes 

of setting FMRs and VLILs. (Complete details on 

HUD’s process for determining FMR areas and 

FMRs are available at http://www.huduser.org/ 

portal/datasets/fmr.html. Complete details on 

HUD’s process for determining income limits are 

available at http://www.huduser.org/portal/ 

datasets/il.html.) 

HUD considers entire MSAs in cases 

where these were not broken up into 

HMFAs for purposes of computing 

VLILs; and HMFAs within the MSAs 

that were broken up for such purposes. 

Hereafter in this notice, the unit of 

analysis for designating metropolitan 

DDAs will be called the ZCTA, and the 

unit of analysis for nonmetropolitan 

DDAs will be the nonmetropolitan 

county or county equivalent area. The 

procedure used in making the DDA 

designations follows: 

1. Calculate FMR-to-Income Ratios. 

For each metropolitan ZCTA and each 

nonmetropolitan county, HUD 

calculated a ratio of housing costs to 

income. HUD used a modified FY2017 

two-bedroom Small Area FMR for 

ZCTAs, the FY2017 two-bedroom FMR 

as published for non-metropolitan 

counties, and the FY2017 four-person 

VLIL for this calculation. 

The modified FY2017 two-bedroom 

Small Area FMRs for ZCTAs differ from 

the FY2017 Small Area FMRs in three 

ways. First, HUD did not limit the 

median gross ZCTA rent to 150 percent 

of the median gross Core-Based 

Statistical Area (CBSA) rent, as in the 

Small Area FMR calculations used in 

HUD’s demonstration project. Second, 

HUD adjusted median rent values in 

New York City to correct for the 

downward-bias resulting from rent 

control and stabilization regulations 

using the New York City Housing and 

Vacancy Survey, which is conducted by 

the U.S. Census Bureau.1 No other 

jurisdictions have provided HUD with 

data that could be used to adjust 

SAFMRs for rent control or stabilization 

regulations. Finally, the adjustment for 

recent mover rents is calculated at the 

HMFA-level rather than CBSA-level. 

The numerator of the ratio, 

representing the development cost of 

housing, was the area’s FY2017 FMR, or 

SAFMR in metropolitan areas. In 

general, the FMR is based on the 40thpercentile gross rent paid by recent 

movers to live in a two-bedroom rental 

unit. 

The denominator of the ratio, 

representing the maximum income of 

eligible tenants, was the monthly LIHTC 

income-based rent limit, which was 

calculated as 1/12 of 30 percent of 120 

percent of the area’s VLIL (where the 

VLIL was rounded to the nearest $50 

and not allowed to exceed 80 percent of 

the AMGI in areas where the VLIL is 

adjusted upward from its 50 percent-ofAMGI base). 

2. Sort Areas by Ratio and Exclude 

Unsuitable Areas. The ratios of the 

FMR, or Small Area FMR, to the LIHTC 

income-based rent limit were arrayed in 

descending order, separately, for ZCTAs 

and for nonmetropolitan counties. 

ZCTAs with populations less than 100 

were excluded in order to avoid 

designating areas unsuitable for 

residential development, such as ZCTAs 

containing airports. 

3. Select Areas with Highest Ratios 

and Exclude QCTs. The DDAs are those 

areas with the highest ratios that 

cumulatively comprise 20 percent of the 

2010 population of all metropolitan 

areas and all nonmetropolitan areas. For 

purposes of applying this population 

cap, HUD excluded the population in 

areas designated as 2018 QCTs. Thus, an 

area can be designated as a QCT or 

DDA, but not both. 

B. Application of Population Caps to 

DDA Determinations 

In identifying DDAs, HUD applied 

caps, or limitations, as noted above. The 

cumulative population of metropolitan 

DDAs cannot exceed 20 percent of the 

cumulative population of all 

metropolitan areas, and the cumulative 

population of nonmetropolitan DDAs 

cannot exceed 20 percent of the 

cumulative population of all 

nonmetropolitan areas. 

In applying these caps, HUD 

established procedures to deal with how 

to treat small overruns of the caps. The 

remainder of this section explains those 

procedures. In general, HUD stops 

selecting areas when it is impossible to 

choose another area without exceeding 

the applicable cap. The only exceptions 

to this policy are when the next eligible 

excluded area contains either a large 

absolute population or a large 

percentage of the total population, or 

the next excluded area’s ranking ratio, 

as described above, was identical (to 

four decimal places) to the last area 

selected, and its inclusion resulted in 

only a minor overrun of the cap. Thus, 

for both the designated metropolitan 

and nonmetropolitan DDAs, there may 

be minimal overruns of the cap. HUD 

believes the designation of additional 

areas in the above examples of minimal 

overruns is consistent with the intent of 

the IRC. As long as the apparent excess 

is small due to measurement errors, 

some latitude is justifiable, because it is 

impossible to determine whether the 20 

percent cap has been exceeded. Despite 

the care and effort involved in a 

Decennial Census, the Census Bureau 

and all users of the data recognize that 

the population counts for a given area 

and for the entire country are not 

precise. Therefore, the extent of the 

measurement error is unknown. There 

can be errors in both the numerator and 

denominator of the ratio of populations 

used in applying a 20 percent cap. In 

circumstances where a strict application 

of a 20 percent cap results in an 

anomalous situation, recognition of the 

unavoidable imprecision in the census 

data justifies accepting small variances 

above the 20 percent limit. 

C. Qualified Census Tracts 

In developing the list of QCTs, HUD 

used 2010 Census 100-percent count 

data on total population, total 

households, and population in 

households; the median household 

income and poverty rate as estimated in 

the 2009–2013, 2010–2014 and 2011– 

2015, ACS tabulations; the FY2017 Very 

Low-Income Limits (VLILs) computed at 

the HUD Metropolitan FMR Area 

(HMFA) level 2 to determine tract 

eligibility; and the MSA definitions 

published in OMB Bulletin No. 13–01 

on February 28, 2013, for determining 

how many eligible tracts can be 

designated under the statutory 20 

percent population cap. 

HUD uses the HMFA-level AMGIs to 

determine QCT eligibility because the 

statute, specifically IRC section 

42(d)(5)(B)(iv)(II), refers to the same 

section of the IRC that defines income 

for purposes of tenant eligibility and 

unit maximum rent, specifically IRC 

section 42(g)(4). By rule, the IRS sets 

these income limits according to HUD’s 

VLILs, which, starting in FY2006 and 

thereafter, are established at the HMFA 

level. HUD uses the entire MSA to 

determine how many eligible tracts can 

be designated under the 20 percent 


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population cap as required by the 

statute (IRC section 42(d)(5)(B)(ii)(III)), 

which states that MSAs should be 

treated as singular areas. 

The QCTs were determined as 

follows: 

1. Calculate 60% AMGI. To be eligible 

to be designated a QCT, a census tract 

must have 50 percent of its households 

with incomes below 60 percent of the 

AMGI or have a poverty rate of 25 

percent or more. Due to potential 

statistical anomalies in the ACS 5-year 

estimates, one of these conditions must 

be met in at least 2 of the 3 evaluation 

years for a tract to be considered eligible 

for QCT designation. HUD calculates 60 

percent of AMGI by multiplying by a 

factor of 1.2 the HMFA or 

nonmetropolitan county FY2017 VLIL 

adjusted for inflation to match the ACS 

estimates, which are adjusted to the 

value of the dollar in the last year of the 

5-year group. 

2. Determine Whether Census Tracts 

Have Less Than 50% of Households 

Below 60% AMGI. For each census tract, 

whether or not 50 percent of households 

have incomes below the 60 percent 

income standard (income criterion) was 

determined by: (a) Calculating the 

average household size of the census 

tract, (b) adjusting the income standard 

to match the average household size, 

and (c) comparing the averagehousehold-size-adjusted income 

standard to the median household 

income for the tract reported in each of 

the three years of ACS tabulations 

(2009–2013, 2010–2014 and 2011– 

2015). HUD did not consider estimates 

of median household income to be 

statistically reliable unless the margin of 

error was less than half of the estimate 

(or a Margin of Error Ratio, MoER, of 50 

percent or less). If at least two of the 

three estimates were not statistically 

reliable by this measure, HUD 

determined the tract to be ineligible 

under the income criterion due to lack 

of consistently reliable median income 

statistics across the three ACS 

tabulations. Since 50 percent of 

households in a tract have incomes 

above and below the tract median 

household income, if the tract median 

household income is less than the 

average-household-size-adjusted income 

standard for the tract, then more than 50 

percent of households have incomes 

below the standard. 

3. Estimate Poverty Rate. For each 

census tract, the poverty rate was 

determined in each of the three releases 

of ACS tabulations (2009–2013, 2010– 

2014 and 2011–2015) by dividing the 

population with incomes below the 

poverty line by the population for 

whom poverty status has been 

determined. As with the evaluation of 

tracts under the income criterion, HUD 

applies a data quality standard for 

evaluating ACS poverty rate data in 

designating the 2018 QCTs. HUD did 

not consider estimates of the poverty 

rate to be statistically reliable unless 

both the population for whom poverty 

status has been determined and the 

number of persons below poverty had 

MoERs of less than 50 percent of the 

respective estimates. If at least two of 

the three poverty rate estimates were not 

statistically reliable, HUD determined 

the tract to be ineligible under the 

poverty rate criterion due to lack of 

reliable poverty statistics across the ACS 

tabulations. 

4. Designate QCTs Where 20% or Less 

of Population Resides in Eligible Census 

Tracts. QCTs are those census tracts in 

which 50 percent or more of the 

households meet the income criterion in 

at least two of the three years evaluated, 

or 25 percent or more of the population 

is in poverty in at least two of the three 

years evaluated, such that the 

population of all census tracts that 

satisfy either one or both of these 

criteria does not exceed 20 percent of 

the total population of the respective 

area. 

5. Designate QCTs Where More Than 

20 Percent of Population Resides in 

Eligible Census Tracts. In areas where 

more than 20 percent of the population 

resides in eligible census tracts, census 

tracts are designated as QCTs in 

accordance with the following 

procedure: 

a. The income and poverty criteria are 

each averaged over the three ACS 

tabulations (2009–2013, 2010–2014 and 

2011–2015). Statistically reliable values 

that did not exceed the income and 

poverty rate thresholds were included 

in the average. 

b. Eligible tracts are placed in one of 

two groups based on the averaged 

values of the income and poverty 

criteria. The first group includes tracts 

that satisfy both the income and poverty 

criteria for QCTs for at least two of the 

three evaluation years. The second 

group includes tracts that satisfy either 

the income criterion or the poverty 

criterion in at least two of three years, 

but not both. A tract must qualify by at 

least one of the criteria in at least two 

of the three evaluation years to be 

eligible, although it does not need to be 

the same criterion. 

c. Tracts in the first group are ranked 

from highest to lowest by the average of 

the ratios of the tract averagehousehold-size-adjusted income limit to 

the median household income. Then, 

tracts in the first group are ranked from 

highest to lowest by the average of the 

poverty rates. The two ranks are 

averaged to yield a combined rank. The 

tracts are then sorted on the combined 

rank, with the census tract with the 

highest combined rank being placed at 

the top of the sorted list. In the event of 

a tie, more populous tracts are ranked 

above less populous ones. 

d. Tracts in the second group are 

ranked from highest to lowest by the 

average of the ratios of the tract averagehousehold-size-adjusted income limit to 

the median household income. Then, 

tracts in the second group are ranked 

from highest to lowest by the average of 

the poverty rates. The two ranks are 

then averaged to yield a combined rank. 

The tracts are then sorted on the 

combined rank, with the census tract 

with the highest combined rank being 

placed at the top of the sorted list. In the 

event of a tie, more populous tracts are 

ranked above less populous ones. 

e. The ranked first group is stacked on 

top of the ranked second group to yield 

a single, concatenated, ranked list of 

eligible census tracts. 

f. Working down the single, 

concatenated, ranked list of eligible 

tracts, census tracts are identified as 

designated until the designation of an 

additional tract would cause the 20 

percent limit to be exceeded. If a census 

tract is not designated because doing so 

would raise the percentage above 20 

percent, subsequent census tracts are 

then considered to determine if one or 

more census tract(s) with smaller 

population(s) could be designated 

without exceeding the 20 percent limit. 

D. Exceptions to OMB Definitions of 

MSAs and Other Geographic Matters 

As stated in OMB Bulletin 13–01, 

defining metropolitan areas: 

OMB establishes and maintains the 

delineations of Metropolitan Statistical 

Areas, . . . solely for statistical purposes. 

. . . OMB does not take into account or 

attempt to anticipate any non-statistical uses 

that may be made of the delineations, [.] In 

cases where . . . an agency elects to use the 

Metropolitan . . . Area definitions in 

nonstatistical programs, it is the sponsoring 

agency’s responsibility to ensure that the 

delineations are appropriate for such use. An 

agency using the statistical delineations in a 

nonstatistical program may modify the 

delineations, but only for the purposes of that 

program. In such cases, any modifications 

should be clearly identified as delineations 

from the OMB statistical area delineations in 

order to avoid confusion with OMB’s official 

definitions of Metropolitan . . . Statistical 

Areas. 

Following OMB guidance, the 

estimation procedure for the FMRs and 

income limits incorporates the current 

OMB definitions of metropolitan areas 

based on the CBSA standards, as 


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Federal Register / Vol. 82, No. 174 / Monday, September 11, 2017 / Notices 42699 

implemented with 2010 Census data, 

but makes adjustments to the 

definitions, in order to separate subparts 

of these areas in cases where counties 

were added to an existing or newly 

defined metropolitan area. In CBSAs 

where subareas are established, it is 

HUD’s view that the geographic extent 

of the housing markets are not the same 

as the geographic extent of the CBSAs. 

In the New England states 

(Connecticut, Maine, Massachusetts, 

New Hampshire, Rhode Island, and 

Vermont), HMFAs are defined according 

to county subdivisions or minor civil 

divisions (MCDs), rather than county 

boundaries. However, since no part of 

an HMFA is outside an OMB-defined, 

county-based MSA, all New England 

nonmetropolitan counties are kept 

intact for purposes of designating 

Nonmetropolitan DDAs. 

VII. Future Designations 

DDAs are designated annually as 

updated income and FMR data are made 

public. QCTs are designated annually as 

new income and poverty rate data are 

released. 

VIII. Effective Date 

The 2018 lists of QCTs and DDAs are 

effective: 

(1) For allocations of credit after 

December 31, 2017; 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, 2017. 

If an area is not on a subsequent list 

of QCTs or DDAs, the 2018 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 

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 730-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 2 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 

Secretary’s designee, has legal authority 

to designate DDAs and QCTs, 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. 

IX. 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 QCT or DDA 

status. The examples covering DDAs are 

equally applicable to QCT designations. 

(Case A) Project A is located in a 2018 

DDA that is NOT a designated DDA in 

2019 or 2020. A complete application 

for tax credits for Project A is filed with 

the allocating agency on November 15, 

2018. Credits are allocated to Project A 

on October 30, 2020. Project A is 

eligible for the increase in basis 

accorded a project in a 2018 DDA 

because the application was filed 

BEFORE January 1, 2019 (the assumed 

effective date for the 2019 DDA lists), 

and because tax credits were allocated 

no later than the end of the 730-day 

period after the filing of the complete 

application for an allocation of tax 

credits. 

(Case B) Project B is located in a 2018 

DDA that is NOT a designated DDA in 

2019 or 2020. A complete application 

for tax credits for Project B is filed with 

the allocating agency on December 1, 

2018. Credits are allocated to Project B 

on March 30, 2021. Project B is NOT 

eligible for the increase in basis 

accorded a project in a 2018 DDA 

because, although the application for an 

allocation of tax credits was filed 

BEFORE January 1, 2019 (the assumed 

effective date of the 2019 DDA lists), the 

tax credits were allocated later than the 

end of the 730-day period after the filing 

of the complete application. 

(Case C) Project C is located in a 2018 

DDA that was not a DDA in 2017. 

Project C was placed in service on 

November 15, 2017. A complete 

application for tax-exempt bond 

financing for Project C is filed with the 

bond-issuing agency on January 15, 

2018. The bonds that will support the 

permanent financing of Project C are 

issued on September 30, 2018. Project C 

is NOT eligible for the increase in basis 

otherwise accorded a project in a 2018 

DDA, because the project was placed in 

service BEFORE January 1, 2018. 

(Case D) Project D is located in an 

area that is a DDA in 2018, but is NOT 


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42700 Federal Register / Vol. 82, No. 174 / Monday, September 11, 2017 / Notices 

a DDA in 2019 or 2020. A complete 

application for tax-exempt bond 

financing for Project D is filed with the 

bond-issuing agency on October 30, 

2018. Bonds are issued for Project D on 

April 30, 2020, but Project D is not 

placed in service until January 30, 2021. 

Project D is eligible for the increase in 

basis available to projects located in 

2018 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 April 

30, 2020, within the 730-day period 

after a complete application for taxexempt 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. 

(Case E) Project E is a multiphase 

project located in a 2018 DDA that is 

NOT a designated DDA or QCT in 2019. 

The first phase of Project E received an 

allocation of credits in 2018, pursuant to 

an application filed March 15, 2018, 

which describes the multiphase 

composition of the project. An 

application for tax credits for the second 

phase of Project E is filed with the 

allocating agency by the same entity on 

March 15, 2019. The second phase of 

Project E is located on a contiguous site. 

Credits are allocated to the second 

phase of Project E on October 30, 2019. 

The aggregate amount of credits 

allocated to the two phases of Project E 

exceeds the amount of credits that may 

be allocated to an applicant in one year 

under the allocating agency’s QAP and 

is the reason that applications were 

made in multiple phases. The second 

phase of Project E is, therefore, eligible 

for the increase in basis accorded a 

project in a 2018 DDA, because it meets 

all of the conditions to be a part of a 

multiphase project. 

(Case F) Project F is a multiphase 

project located in a 2018 DDA that is 

NOT a designated DDA in 2019 or 2020. 

The first phase of Project F received an 

allocation of credits in 2018, pursuant to 

an application filed March 15, 2018, 

which does not describe the multiphase 

composition of the project. An 

application for tax credits for the second 

phase of Project F is filed with the 

allocating agency by the same entity on 

March 15, 2020. Credits are allocated to 

the second phase of Project F on 

October 30, 2020. The aggregate amount 

of credits allocated to the two phases of 

Project F exceeds the amount of credits 

that may be allocated to an applicant in 

one year under the allocating agency’s 

QAP. The second phase of Project F is, 

therefore, NOT eligible for the increase 

in basis accorded a project in a 2018 

DDA, since it does not meet all of the 

conditions for a multiphase project, as 

defined in this notice. The original 

application for credits for the first phase 

did not describe the multiphase 

composition of the project. Also, the 

application for credits for the second 

phase of Project F was not made in the 

year immediately following the first 

phase application year. 

X. 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). 

Dated: August 29, 2017. 

Todd M. Richardson, 

Deputy Assistant Secretary, Office of Policy 

Development, Office of Policy Development 

and Research. 

[FR Doc. 2017–19188 Filed 9–8–17; 8:45 am] 

BILLING CODE 4210–67–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

[FWS–HQ–MB–2017–N136; FF09M21200– 

178–FXMB1232099BPP0L2] 

Migratory Birds; Take of Peregrine 

Falcons for Use in Falconry 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Notice. 

SUMMARY: In December 2008, the U.S. 

Fish and Wildlife Service completed an 

environmental assessment (EA) on the 

take of peregrine falcons for use in 

falconry. In 2009 and 2010, we 

published notices in the Federal 

Register describing the take limits and 

geographic allocation of take for firstyear fall-migrant (passage) peregrine 

falcons consistent with the selected 

alternative in that EA. The overall take 

limits have remained constant since 

2009. This notice is to inform the public 

that, at the request of the Atlantic, 

Mississippi and Central Flyway 

Councils, we have reviewed recent data 

and are revising the take limits for 

passage peregrine falcons beginning in 

the fall of 2017. 

FOR FURTHER INFORMATION CONTACT: 

Brian A. Millsap, National Raptor 

Coordinator, Division of Migratory Bird 

Management, U.S. Fish and Wildlife 

Service, at 505–761–4724; brian_

millsap@fws.gov. 

SUPPLEMENTARY INFORMATION: 

Background 

The authority of the U.S. Fish and 

Wildlife Service to govern take of 

raptors and other migratory birds is 

derived from the Migratory Bird Treaty 

Act (MBTA; 16 U.S.C. 703–712). In 

carrying out this responsibility, we have 

administratively divided the Nation into 

four Flyways: Atlantic, Mississippi, 

Central, and Pacific. Each Flyway has a 

Flyway Council that assists in 

researching and providing migratory 

game bird management information. 

The Federal regulations to carry out the 

MBTA are located in title 50 of the Code 

of Federal Regulations. 

The MBTA prohibits any person from, 

among other things, taking, possessing, 

purchasing, bartering, selling, or 

offering to purchase, barter, or sell, 

raptors (birds of prey) and other 

migratory birds listed in 50 CFR 10.13, 

unless the activities are allowed under 

Federal regulations. Take and 

possession of raptors for use in falconry 

is governed by regulations at 50 CFR 

21.29. Under the provisions of the 

Federal falconry regulations, the Service 

administers a program to approve State, 

tribal, and territorial falconry programs. 

Since January 1, 2014, the 48 

continental States and Alaska all have 

approved falconry regulatory programs, 

and the Service no longer issues permits 

for the practice of falconry. 

We completed an environmental 

assessment (EA) on take of migrant 

peregrine falcons in 2008 (see 73 FR 

74508, December 8, 2008). Our preferred 

alternative at that time allowed a take of 

36 passage peregrine falcons from 

September 20 through October 20 from 

anywhere in the United States east of 

100 degrees W. longitude. Allocation of 

the 36 passage peregrine falcons was 

agreed upon by the Atlantic, 

Mississippi, and Central Flyway 

Councils. Our management strategy 

analyzed in the preferred alternative in 

the 2008 EA incorporated three 

important safeguards to ensure against 

negative impacts from authorized 

falconry take on peregrine falcons across 

their range. 

First, we constrained the timing and 

location of the falconry captures to 

focus the take on the northern peregrine 


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