Difficult Development Areas (DDA)
A Difficult Development Area (DDA) for the Low Income Housing
Tax Credit program is an area designated by HUD with high
construction, land, and utility costs relative to its Area
Median Gross Income (AMGI). All designated Difficult Development
Areas in MSAs/PMSAs may not contain more than 20% of the
aggregate population of all MSAs/PMSAs, and all designated areas
not in metropolitan areas may not contain more than 20% of the
aggregate population of the non-metropolitan counties.
Difficult Development Areas are eligible for Tax Credits at
130% of qualified basis, meaning that more of the development
costs are borne by the Tax Credit funding than in areas not
designated a DDA.
HUD determines DDAs by comparing incomes with housing costs.
Beginning with 2012, HUD used 2010 Census data. Current MSA/PMSA definitions
established by the Office of Management and Budget are listed
for each year. The basis for these comparisons was the HUD
income limits and Fair Market Rents ("FMRs") used for
the section 8 Housing Assistance Payments Program. The procedure
used in making these calculations follows:
- For each MSA/PMSA and each non-metropolitan county, a
ratio was calculated. This calculation uses the
current FMR and four-person VLIL (Very Low Income Limit).
- The numerator of the ratio was the area’s current FMR. In general the FMR is based on the 40th percentile
rent paid by recent movers for a two-bedroom apartment.
In metropolitan areas granted a FMR based on the 50th
percentile rent for purposes of improving the administration
of HUD’s Housing Choice Voucher program, the 40th
percentile rent is used for nationwide consistency of
comparisons.
- The denominator of the ratio was the monthly
LIHTC income-based rent limit calculated as 1/12 of 30 percent
of 120 percent of the area’s VLIL (where 120 percent
of 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 of AMGI
base).
- The ratios of the FMR to the LIHTC income-based
rent limit were arrayed in descending order, separately, for
MSAs/PMSAs and for non-metropolitan counties.
- The Difficult Development Areas are those with the highest
ratios cumulative to 20 percent of the 2000 population of
all metropolitan areas and of all non-metropolitan counties
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