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Federal Register / Vol. 86, No. 172 / Thursday, September 9, 2021 / Notices
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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 2022 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 areas 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
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households, and population in households; the median household income and poverty rate as estimated in the 20132017, 20142018 and 2015
2019 ACS tabulations; the FY 2021 Very Low-Income Limits VLILs computed at the HMFA level to determine tract eligibility; and the MSA definitions published in OMB Bulletin No. 1701
on August 15, 2017, 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 42d5BivII, refers to the same section of the IRC that defines income for purposes of tenant eligibility and unit maximum rent, specifically IRC
Section 42g4. By rule, the IRS sets these income limits according to HUDs VLILs, which, starting in FY 2006 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 population cap as required by the statute IRC Section 42d5BiiIII, which states that MSAs should be treated as singular areas.
HUD determined the QCTs as follows:
1. Calculate 60 percent 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 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 ACS 5-year tabulations 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 FY 2021
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 percent of Households Below 60 percent 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 average-household-size-adjusted income standard to the median household income for the tract reported in each of the three years of ACS tabulations 20132017, 20142018 and 2015
2019. HUD did not consider estimates of median household income to be statistically reliable unless the margin of
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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, HUD determined the poverty rate in each of the three releases of ACS tabulations 20132017, 2014
2018 and 20152019 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 2022 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 percent 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 statistically reliable income and poverty criteria are each averaged over the three ACS tabulations 2013

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