2. Implementing ACED Designations for HFA Homeownership Programs
NCSHA Annual Conference
Miami Beach, Florida
September 27, 2016

3. Background
MRB statute (26 USC§143) requires that 20% of homebuyer loans must take place in “targeted areas” with weak markets
Targeted areas must be either QCTs or “areas of chronic economic distress” (ACEDs), which can be designated by states with approval from HUD and the IRS
Loans in targeted areas have higher income and price limits and are exempt from restrictions on lending to homebuyers who have owned a home in the past three years

4. Development
Rules on ACEDs are in the Code of Federal Regulations (26 CFR 6a.103A-2), though they are very much outdated
OHFA staff collected data on every census tract in the state from American Community Survey estimates for ten measures that were considered to address the intent of the regulation
Each statistic was standardized onto a zero-to-100 scale (100 being worst statewide) and averaged into a composite; tracts with a rating over 50 were considered distressed

5. Variables Percent of housing units built before 1940
Median year of housing unit construction
Housing unit vacancy rate
Percent of housing units with incomplete kitchen or plumbing facilities, whichever is higher
Per capita income
Poverty rate
Supplemental Nutrition Assistance Program (SNAP) participation rate
Unemployment rate
Percent of owner-occupied housing units falling (as defined by #4)
Percent of renter households in poverty

6. Process
These three parties, listed in order, need to sign off on the creation, deletion, and/or revision of ACEDs:
HUD Office of Policy Development and Research
Primary contact: Barry Steffen,
2. HUD Office of Housing
Primary contact: Janet Golrick,
3. IRS Office of Chief Counsel
Primary contact: Tim Jones,

7. Challenges
HUD required that requests must come from the governor or his/her direct appointee. This requirement was satisfied by a resolution from the gubernatorially appointed OHFA Board.
ACEDs situated within MSAs must have at least half its households earning less than 80% AMI. This can be verified using HUD CHAS data.
OHFA was creating a process from scratch, since no HFA had revised its ACEDs since the 1990s, and federal bureaucracy was unsurprisingly sluggish.

8. Commentary
Measures noted here are not mandatory, but recommended, given that they have already passed muster
Census tracts as the unit of analysis are also not mandatory; geography of your state may mean another option is better
HFA governance structure will affect the approval process, given the gubernatorial approval requirement
Statutory and regulatory language are both less than clear; legal expertise was invaluable in calls with HUD and the IRS

9. Conclusion
Proper designation of ACEDs allows an HFA to better target its resources, ease compliance issues, and offer its programs to more moderate-income households
HUD and the IRS are now much better prepared to process requests from HFAs and aware that more may be coming
OHFA staff are more than willing to provide materials used and developed as part of the ACED revision process

10. Director of Research and Strategic Planning
Thank you for your time. Acknowledgement: Bryan Grady, Research Analyst Ohio Housing Finance Agency
Dr. Holly Holtzen
Director of Research and Strategic Planning