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###### Department of the Treasury

          - 31 CFR Part 32
          - RIN 1505-AC17

# AGENCY:

Office of the Fiscal Assistant Secretary, Treasury.

# ACTION:

Interim final rule.

# SUMMARY:

The Department of the Treasury is amending its policy regarding the time limitation within which State housing credit agencies must disburse funds received under section 1602 of the American Recovery and Reinvestment Tax Act of 2009. This change will allow States to disburse section 1602 funds to subawardees through December 31, 2011 under certain conditions.

# DATES:

This final rule is effective August 31, 2009. Comments must be received on or before September 30, 2009.

# ADDRESSES:

                        Treasury participates in the U.S. government's eRulemaking Initiative by publishing rulemaking information on                         *http://www.regulations.gov*. Regulations.gov offers the public the ability to comment on, search, and view publicly available rulemaking materials, including comments received on rules. Comments on this rule should be submitted using only the following methods:                    

*Federal eRulemaking Portal*:                         *http://www.regulations.gov.*                         Follow the instructions on the Web site for submitting comments.                    

*Mail:*                         Ellen Neubauer, Fiscal Service, U.S. Department of the Treasury, 1500 Pennsylvania Ave., Washington, DC 20220.                         *Instructions:*                         All submissions received must include the agency name (“Fiscal Service”) and the title of this rulemaking. In general, comments received will be published on Regulations.gov without change, including any business or personal information provided. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.                    

You may also inspect and copy this interim rule at: Treasury Department Library, Freedom of Information Act (FOIA) Collection, Room 1428, Main Treasury Building, 1500 Pennsylvania Avenue, NW., Washington, DC 20220. Before visiting, you must call (202) 622-0990 for an appointment.

# FOR FURTHER INFORMATION CONTACT:

                        Ellen Neubauer, Program Manager, at (202) 622-0560 or at                         *ellen.neubauer@do.treas.gov.*

# SUPPLEMENTARY INFORMATION:

## I. Background

                    Section 1602 of the American Recovery and Reinvestment Tax Act of 2009 (Act) (Pub. L. 111-5) (hereinafter Section 1602) allows State housing credit agencies to elect to receive payments in lieu of low-income housing credits under section 42 of the Internal Revenue Code. Payments must be used to make subawards to finance the construction or acquisition and rehabilitation of qualified low-income                           ( print page 44752)                        buildings. The United States Department of the Treasury (Treasury) awards Section 1602 funds to State housing credit agencies in an amount equal to their low-income housing grant election amount which may not exceed a portion of the States' low-income housing tax credit ceiling for 2009.                

Section 1602(d) of the Act requires that State housing credit agencies return to the Treasury funds not used to make subawards before January 1, 2011. The Terms and Conditions promulgated by the Treasury to govern the program require that any funds not disbursed before January 1, 2011, be returned to the Treasury. Upon further consideration Treasury has determined that this requirement is overly restrictive and may preclude funding of otherwise eligible projects that may not reach final completion by the end of 2010. This rule therefore changes this requirement. Under this rule set forth at 31 CFR part 32, State housing credit agencies are required to return to the Treasury any funds not used to make subawards by December 31, 2010. However, once a subaward has been made, a State can continue to disburse funds for the subaward through December 31, 2011, provided the project is at least 30 percent complete by the end of 2010.

## II. Procedural Analyses

### Administrative Procedures Act

This rule is being issued without prior public notice and comment because under 5 U.S.C. 553(b) and (d)(3) good cause exists to determine that prior notice and comment rulemaking is unnecessary and contrary to the public interest. The policy being implemented through this rule impacts procedural requirements imposed on State housing credit agencies that receive funds from the Federal government under Section 1602 and does not adversely affect the rights of the public. Additionally, delay in the effective date of this rule is contrary to the public interest because without clarity regarding the time period within which State housing credit agencies may disburse funds under the program, State housing credit agencies are unable to make decisions regarding which projects to fund thereby delaying the construction or rehabilitation of low-income housing.

### Request for Comment on Plain Language

Executive Order 12866 requires each agency in the Executive branch to write regulations that are simple and easy to understand. We invite comment on how to make the interim rule clearer. For example, you may wish to discuss: (1) Whether we have organized the material to suit your needs; (2) whether the requirements of the rules are clear; or (3) whether there is something else we could do to make these rules easier to understand.

### Regulatory Planning and Review

The rule is a “significant regulatory action” as defined in Executive Order 12866. Accordingly, the rule has been reviewed by the Office of Management and Budget.

### Regulatory Flexibility Act Analysis

                    Because no notice of rulemaking is required, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601*et seq.*) do not apply.                

# List of Subjects in 31 CFR Part 32

      - Low-income housing tax credits

For the reasons set forth in the preamble, we add 31 CFR Part 32 to read as follows:

# PART 32—PAYMENTS IN LIEU OF LOW INCOME HOUSING TAX CREDITS

        - 32.1.
        - Timing of disbursements.

Authority: Public Law 111-5.

§ 32.1 

(a) State housing credit agencies that receive funds under section 1602 of Division B of the American Recovery and Reinvestment Tax Act of 2009 must make subawards to subawardees to finance the construction or acquisition and rehabilitation of low-income housing no later than December 31, 2010. Any funds that are not used to make subawards by December 31, 2010, must be returned to the Treasury by January 1, 2011.

(b) The requirement in subsection (a) above does not prevent State housing credit agencies from continuing to disburse funds to subawardees after December 31, 2010 provided:

(1) A subaward has been made to the subawardee on or before December 31, 2010;

(2) The subawardee has, by the close of 2010, paid or incurred at least 30 percent of the subawardee's total adjusted basis in land and depreciable property that is reasonably expected to be part of the low-income housing project; and

(3) Any funds not disbursed to the subawardee by December 31, 2011, must be returned to the Treasury by January 1, 2012.

Dated: August 19, 2009.

Gary Grippo,

Acting Fiscal Assistant Secretary.

[FR Doc. E9-20903 Filed 8-28-09; 8:45 am]

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