State housing credit agencies have criticized provisions of Treasury Department guidance on low-income housing tax credit exchanges that require funds to be used as project grants, rather than loans, and that impose a December 31, 2010, deadline for the expenditure of funds.rn"In sum, these two provisions materially restrict our ability to implement the law and will greatly reduce the effectiveness of the exchange program," wrote Bill Lockyer, California state treasurer, in a May 11 letter to Treasury Department and HUD officials.rnSome agencies contend that providing subawards as loans would make it easier for them to enforce program requirements, including the recapture of funds for non-compliance.rnThe Treasury guidance says a recapture obligation can be enforced "by all available means against any assets of the recipient entity," but it doesn't say whether state agencies would be required to repay funds that they are unable to collect from noncompliant projects.
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