Audit Report

OIG-18-048

DOMESTIC ASSISTANCE

Recovery Act: Audit of New Hampshire Housing Finance

Authority’s Payment Under 1602 Program

July 25, 2018

Office of Inspector General

Department of the Treasury
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Contents
 

Audit Report...................................................................................................... 1
 

Results in Brief ................................................................................................. 2
 

Background ...................................................................................................... 3
 

Eligibility under the 1602 Program................................................................ 3
 

New Hampshire Housing Finance Authority .................................................. 5
 

Audit Results.................................................................................................... 6
 

Awarding..................................................................................................... 6
 

Subawarding 6
 

Compliance and Asset Management 7
 

Quarterly and Annual Reporting 8
 

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Appendices 

Appendix 1: Objective, Scope, and Methodology 10
 

Appendix 2: Grantee Terms and Conditions 13
 

Appendix 3: New Hampshire Housing Finance Authority Management
 

Response 18
 

Appendix 4: Treasury Management Response 19
 

Appendix 5: Major Contributors to This Report 20
 

Appendix 6: Report Distribution 21
 

Abbreviations 

1602 Program Payments to States for Low-Income Housing Projects in Lieu of
 

Low-Income Housing Credits for 2009
 

IRC Internal Revenue Code
 

OFAS Office of the Fiscal Assistant Secretary
 

OIG Office of Inspector General
 

NHHFA New Hampshire Housing Finance Authority
 

QAP Qualified Allocation Plan
 

Treasury Department of the Treasury
 

Recovery Act American Recovery and Reinvestment Act of 2009
 

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Audit OIG Report 

The Department of the Treasury 

Office of Inspector General 

July 25, 2018 

David A. Lebryk 

Fiscal Assistant Secretary 

As part of our ongoing oversight of the Department of the 

Treasury’s (Treasury) Payments to States for Low-Income Housing 

Projects in Lieu of Low-Income Housing Credits for 2009 (1602 

Program),

1 authorized by Section 1602 of the American Recovery 

and Reinvestment Act of 2009 (Recovery Act),2 we conducted 

audits of awards made to selected State housing credit agencies. 

The objective of these audits was to assess whether the agencies 

awarded funds under Treasury’s 1602 Program complied with the 

program’s overall requirements and the “Grantee Terms and 

Conditions” (together referred to as 1602 Program requirements). 

In this report, we provided our assessment of New Hampshire 

Housing Finance Authority’s (NHHFA) compliance with the 1602 

Program requirements. NHHFA was statistically selected from a 

universe of 55 States and territories eligible to receive 1602 

Program funds. To determine 1602 Program eligibility, our audit 

scope comprised $27,713,062 of 1602 Program funds awarded to 

NHHFA in June and July of 2009. All $27,713,062 was 

subawarded to nine eligible low-income housing projects, all of 

which we reviewed to further assess NHHFA's compliance with 

1602 Program subaward requirements. We also tested a nonstatistical sample comprising, at a minimum, 50 percent of the 

disbursements made for each project for a total of $18,320,362. 

Appendix 1 provides a more detailed description of our audit 

objective, scope, and methodology. 

1 Treasury’s Office of the Fiscal Assistant Secretary administers this program.
 2 Public Law 111-5, 123 Stat. 362-364 (February 17, 2009). Under section 1602 of the Recovery Act,
 

Treasury shall make a grant to the housing credit agency of each State in an amount equal to such
 

State’s “Low-Income Housing Grant Election Amount.” The “Low-income Housing Grant Election
 

Amount” is further discussed in footnote 6 of this report.
 

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Results in Brief 

We found that NHHFA generally complied with Treasury’s 1602 

Program requirements, which capture the eligibility and compliance 

requirements set forth in both Section 42 of the Internal Revenue 

Code (IRC)3 and Section 1602 of the Recovery Act. Specifically, 

NHHFA met the applicable requirements for receiving its 1602 

Program award totaling $27,713,062 as well as requirements for 

subawarding those funds to nine eligible low-income housing 

projects. 

We also found that NHHFA established a process for monitoring 

the long-term viability of projects and their compliance with 1602 

Program requirements. At the time of our review, there were no 

matters impacting the long-term viability of 1602 Program funded 

projects and their compliance with Section 42 of the IRC. 

Furthermore, NHHFA complied with 1602 Program reporting 

requirements in submitting quarterly project performance reports 

and annual certification reports to Treasury. As such, we make no 

recommendation in this report. Nonetheless, we do want to 

emphasize the need for continued diligence on the part of Treasury 

and NHHFA to ensure compliance with the 1602 Program 

requirements over the remaining 15-year compliance period. 

As part of our reporting process, we provided NHHFA management 

an opportunity to comment on a draft of this report. In a written 

response, NHHFA management acknowledged the results of the 

audit and noted that the draft audit report accurately described the 

NHHFA’s administration of 1602 Program funds. NHHFA 

management’s response, in its entirety, is included as appendix 3 

of this report. 

After incorporating NHHFA’s response into a draft of this report, 

we provided the draft report to Treasury management for 

comment. In a written response, Treasury management concurred 

with our audit results. Treasury management’s response, in its 

entirety, is provided as appendix 4 of this report. 

3 26 U.S.C.§42 “Low-Income Housing Credit.” 

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Background 

The low-income housing tax credit program codified in Section 42 

of the IRC was authorized by the Tax Reform Act of 1986.4 The 

tax credit is an incentive for individuals and corporations to invest 

in the construction or rehabilitation of low-income housing. For 

projects meeting the program requirements, the tax credit provides 

the investor a dollar-for-dollar reduction in personal or corporate 

federal income tax liability for a 10-year period. 

The Recovery Act intended to provide relief to the conditions 

caused by the economic crisis, at the time. Part of that relief, 

provided in Section 1602 of the Recovery Act, consisted of grants 

awarded to States5 for low-income housing projects in lieu of lowincome housing credit allocations. The purpose of Section 1602 

was to fill the gap left by the reduced demand for low-income 

housing tax credits that would enable low-income housing projects 

to continue or begin in cases where developers could not obtain 

private investment, as well as, increase the availability of 

affordable housing. The Secretary of the Treasury is responsible for 

carrying out the requirements of Section 1602. 

Eligibility Under the 1602 Program 

Under the Recovery Act, State housing credit agencies were 

allowed to exchange a portion of their low-income housing credits 

for Section 1602 funds. The maximum funds available to a State 

could not exceed its “Low-income Housing Grant Election 

Amount”6 as determined under Section 1602. In turn, State 

housing credit agencies would disburse funds to eligible 

subawardees to help finance either the construction or the 

4 Public Law 99-514, Stat. 2189 (October 22, 1986). 

5 According to Treasury’s Grantee Terms and Conditions (appendix 2), “...2. Grantee Eligibility a. The 

grantee is the housing credit agency for one of the 50 States, the District of Columbia, the 

Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or the Northern Mariana 

Islands which files Form 8610, Annual Low-Income Housing Credit Agencies Report with the Internal 

Revenue Service.” 

6 “Low-Income Housing Grant Election Amount” may not exceed 85 percent of the sum of (1) 10 times 

(a) the unused State housing credit ceiling (if any) for calendar year 2008 and (b) the amount of State 

housing credit ceiling returned in 2009, plus (2) 10 times 40 percent of (c) the greater of $2.30 

multiplied by the State population or $2,665,000 and (d) unused housing credit carryover allocated to 

the State in the 2009 National Pool. 

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acquisition and rehabilitation of qualified low-income housing 

projects. Section 1602 also provided that subawarded projects be 

subject to the same eligibility and compliance requirements as the 

low-income housing credits found in Section 42 of the IRC. In 

addition to following the IRC Section 42 eligibility and compliance 

requirements, Section 1602 required that State housing credit 

agencies: 

(1) establish a process to ensure that applicants who were 

allocated low-income housing credits demonstrate “good 

faith efforts” to obtain investment commitments for credits 

elsewhere; 

(2) perform asset management functions to ensure subawardee 

compliance with Section 42 of the IRC and the long-term 

viability of projects;7 and 

(3) recapture funds in the event of subawardees’ noncompliance 

payable to Treasury. 

As part of its overall administration of Treasury’s 1602 Program, 

the Office of the Fiscal Assistant Secretary (OFAS) developed the 

“Grantee Terms and Conditions” to identify the eligibility and 

compliance requirements set forth in both Section 42 of the IRC 

and Section 1602 of the Recovery Act. State housing credit 

agencies and subawards funded by them are subject to these terms 

and conditions for a 15-year compliance period. Among the 

requirements, State housing credit agencies are required to provide 

financial status and project performance reports quarterly and other 

applicable reports to ensure their compliance with the terms and 

conditions of their 1602 Program awards. In its post subaward 

reporting guidance, OFAS required that State housing credit 

agencies certify annually that (1) the amount of Section 1602 

funds subawarded to a project was equal to or less than 85 

percent of the project’s eligible basis; and (2) funded projects 

remain “qualified” throughout the 15-year compliance period. 

Appendix 2 provides the detail contained in OFAS’ “Grantee Terms 

and Conditions.” 

7 Low-income housing projects must be financially feasible and remain viable throughout the 15-year 

compliance period required by Section 42 of the IRC. 

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White Birch at Rye
 

(OIG Photograph, September 2013)
 

Since awards under the 1602 Program are not conventional grants 

but an exchange of low-income housing credits falling under the 

requirements of Section 42 of the IRC, they are not within the 

scope of the Single Audit Act8 nor a part of the audit universe 

explicitly set by the Office of Management and Budget. Therefore, 

unless the State auditor specifically audits these awards, the 

awards to the respective States and their subawardees will not 

receive any audit coverage. 

New Hampshire Housing Finance Authority 

The NHHFA was established as a 

public instrumentality to promote, 

finance, and support affordable 

housing and related services for 

the people of New Hampshire. 

NHHFA is responsible for 

administering New Hampshire’s 

low-income housing tax credit 

program and allocates credits 

based on the selection criteria set 

forth in its Qualified Allocation 

Plan (QAP).9

In 2009, NHHFA exchanged a portion of its low-income housing 

credits for $27,713,062 under the 1602 Program, which was 

subawarded to fund nine projects that were stalled due to the 

downturn in the low-income housing tax credit equity market. The 

funded projects yielded 259 low-income housing units which were 

set aside for qualifying residents throughout New Hampshire. 

Projects and units were certified for occupancy and placed inservice between August 2010 and December 2011. 

8 Public Law 98-502 (October 19, 1984), amended by Public Law 104-145, Single Audit Act 

Amendments of 1996 (July 5, 1996). 9 The QAP establishes the criteria used by the housing credit agency to determine the State’s housing 

priorities that are appropriate to the local conditions, and along with other requirements, gives 

preference to allocating credit dollar amounts among selected projects. 

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Audit Results
 

We found that NHHFA generally complied with Treasury’s 1602 

Program requirements. Specifically, NHHFA met the requirements 

for receiving its 1602 Program award as well as the requirements 

for subawarding those funds to low income housing projects. 

NHHFA also established a process for monitoring the long-term 

viability of projects and their compliance with 1602 Program 

requirements and met Treasury’s reporting requirements. 

Awarding 

NHHFA requested and was awarded $27,713,062 of 1602 

Program funds, which we verified was equal to NHHFA’s “LowIncome Housing Grant Election Amount” requested in its 

application packages. 

As required by the 1602 Program requirements, NHHFA 

subawarded funds to nine low-income housing projects in 

exchange for tax credits which (1) qualified under Section 42 of 

the IRC, (2) demonstrated “good faith efforts” to obtain 

investments elsewhere, and (3) did not exceed the amounts 

necessary to make the projects financially feasible and viable 

throughout the 15-year compliance period. 

Subawarding 

The nine qualified low-income housing projects that received 

subawards were allocated low-income housing tax credits in 2008 

and 2009. These projects were stalled due to the downturn in the 

low-income housing tax credit equity market, and were 

subawarded 1602 Program funds in exchange for their 2008 and 

2009 low-income housing tax credit allocations. In identifying the 

nine projects, NHHFA applied the selection criteria set forth in its 

QAP as required by Section 42 of the IRC. 

NHHFA subawarded and disbursed all $27,713,062 of its 1602 

Program funds to the nine subawardees. As part of our testing of 

NHHFA’s compliance with 1602 Program subaward requirements, 

we also tested a non-statistical sample comprising, at a minimum, 

50 percent of the disbursements made for each project totaling 

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$18,320,362. We found no instances of noncompliance with 1602 

Program subaward requirements over the disbursement of funds. 

That is, NHHFA (1) expended and accounted for funds in 

accordance with the State’s policies and procedures; (2) 

maintained program, financial, and accounting records sufficient to 

demonstrate that funds were used in accordance with 1602 

Program requirements; and (3) made disbursements to 

subawardees within 3 days of NHHFA drawing funds from its 

Treasury account. 

Compliance and Asset Management 

As required by Section 1602 of the Recovery Act, NHHFA 

established compliance and asset management oversight functions 

to ensure that low-income housing projects comply with Section 

42 of the IRC and remain viable during the 15-year compliance 

period. 

Section 1602 of the Recovery Act also required that State housing 

credit agencies impose conditions, including recapture provisions, 

on subawardees to ensure low-income housing projects remain 

qualified during the 15-year compliance period. OFAS further 

stipulated in its 1602 Program requirements that recapture 

provisions be included in State credit housing agencies’ written 

subaward agreements. Furthermore, State housing credit agencies 

were required by OFAS to have procedures in place for monitoring 

1602 Program subawardees to identify and correct issues of 

noncompliance during the compliance period. In the event of 

noncompliance, State housing credit agencies must impose 

consequences such as possible debarment and the recapture of 

1602 Program funds, payable to Treasury.

10 

In the case of NHHFA, the requisite recapture provisions were 

included in its subaward agreements in the event of subawardee 

noncompliance. NHHFA structured its 1602 Program subawards as 

tax credit exchange funds, subject to recapture in the event a lowincome project does not remain qualified during the 15-year 

compliance period. All nine projects we reviewed had completed 

10 Treasury, “Section 1602—Payments to States for Low-Income Housing Projects in Lieu of LowIncome Housing Credits for 2009 Recapture Guidance.” 

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the first year of the 15-year compliance period. NHHFA performed 

compliance monitoring in the same manner it does for the State’s 

low-income housing tax credit program. That is, NHHFA performed 

timely on-site inspections of project buildings, common areas, 

grounds, and units for suitability of occupancy and any health and 

safety hazards. NHHFA also reviewed project and tenant files for 

the number of units set aside as low-income housing, the number 

of occupants, the annual income certifications within low-income 

households, and rents charged, among other compliance 

requirements. There were no matters impacting compliance with 

Section 42 of the IRC at the time of our review. 

NHHFA’s policy requires that an annual asset management review 

be performed on each 1602 Program project throughout the 15-

year compliance period to ensure its long-term viability. 

Specifically, each project is required to submit to NHHFA quarterly 

operating reports, tenant move-in files, annual compliance 

certification reports, annual budget information, and annual audited 

financial statements to the projects’ NHHFA asset manager. The 

asset manager reviewed the required documents and found no 

matters impacting the long-term viability of low-income housing 

projects at the time of our review. NHHFA’s continuous compliance 

monitoring and review of asset management reports for the 

remaining years within the 15-year compliance period should 

ensure that 1602 Program projects continue to be qualified lowincome buildings. 

Quarterly and Annual Reporting 

OFAS requires that State housing credit agencies submit financial 

status and project performance reports for each low-income 

housing project on a quarterly basis during the development stage 

as well as other reports deemed necessary to ensure compliance 

with provisions of Section 1602. In its post subaward reporting 

guidance, OFAS also requires that State housing credit agencies 

provide two additional certification reports. The first report is to 

certify each project’s placed in-service date and whether 1602 

Program funds used were equal to or less than 85 percent of the 

project’s eligible basis. The second report is required each year 

thereafter for the project’s annual compliance throughout the 

15-year compliance period once the project is placed in service. 

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We found that NHHFA complied with OFAS’ reporting 

requirements. That is, NHHFA submitted quarterly project 

performance reports during each project’s developmental stage and 

annual certification reports after each project was placed in service. 

* * * * * * 

We appreciate the courtesies and cooperation extended by your 

staff during this audit. Major contributors to this report are listed in 

appendix 5. A distribution list for this report is provided as 

appendix 6. If you have any questions, you may contact me at 

(202) 927-1011 or Nick Slonka, Audit Manager, at 

(202) 927-8772. 

/s/ 

Theresa Cameron 

Director, Financial Assistance Audits 

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Appendix 1 

Objective, Scope, and Methodology 

In August 2013, we initiated an audit of the New Hampshire 

Housing Finance Authority (NHHFA) as part of our audits of State 

housing credit agencies funded under Department of the Treasury’s 

(Treasury) Payments to States for Low-Income Housing Projects in 

Lieu of Low-Income Housing Credits for 2009 (1602 Program) 

authorized by Section 1602 of the American Recovery and 

Reinvestment Act of 2009 (Recovery Act). The objective of these 

audits was to assess whether State housing credit agencies 

awarded funds under Treasury’s 1602 Program complied with the 

program’s overall requirements and the “Grantee Terms and 

Conditions” (together referred as 1602 Program requirements). To 

meet our objective, we assessed whether NHHFA properly received 

and subawarded 1602 Program funds, implemented compliance 

and asset management processes, and met Treasury’s reporting 

requirements. 

We statistically selected NHHFA from the universe of 55 states and 

territories eligible to receive 1602 Program funds. We caution, 

however, that our sample was randomly selected to avoid bias and 

not for the purpose of projecting results to the universe or 

concluding on the effectiveness of the 1602 Program. Our audit 

scope comprised $27,712,062 of 1602 Program funds awarded to 

NHHFA in June and July of 2009. Of this amount, NHHFA 

subawarded and disbursed all $27,712,062 to nine low-income 

housing projects. We reviewed all nine projects to further assess 

NHHFA’s compliance with 1602 Program subaward requirements. 

As part of our testing of subaward compliance, we also selected a 

non-statistical sample comprising, at a minimum, 50 percent of the 

disbursements made for each project for a total of $18,320,362. 

In performing our work, we reviewed applicable laws and 

regulations governing the 1602 Program to include the Recovery 

Act and Section 42 of the Internal Revenue Code, as well as 

Treasury’s policies and procedures. We also consulted with an 

Internal Revenue Service Senior Policy Analyst and a Senior 

Program Analyst for low-income housing tax credits to obtain more 

specifics on calculating eligible basis. We visited NHHFA in 

Bedford, New Hampshire, where we interviewed key personnel; 

reviewed and/or tested documents used to support New 

Hampshire’s (1) “Low-Income Housing Grant Credit Election 

Amount,” (2) the selection of subawards, (3) low-income housing 

projects’ existence, (4) cash disbursements, and (5) conformance 

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Appendix 1 

Objective, Scope, and Methodology 

with compliance monitoring, asset management, and 1602 

Program reporting requirements. Specifically, we reviewed and/or 

tested the following documents: 

•	 NHHFA’s signed “Grantee Terms and Conditions” with
 

Treasury stipulating all 1602 Program compliance
 

requirements;
 

•	 NHHFA’s “Annual Low-Income Credit Agencies Report“

(“IRS Form 8610”) supporting New Hampshire’s low-income

housing credit allocations for calendar years 2009 and 2010;

•	 NHHFA’s “Qualified Allocation Plan” specifying the selection

criteria for identifying eligible projects to be subawarded;

•	 project developers’ market studies supporting low-income

housing development needs in specified New Hampshire

communities;

•	 project developers’ documentation demonstrating that “good

faith efforts” were made to obtain financing prior to

receiving a subaward;

•	 NHHFA’s financial feasibility studies supporting the financial

solvency and viability of low-income housing projects;

•	 NHHFA’s signed “1602 Mortgage and Security Agreements”

with low-income housing project developers specifying

subaward amounts and 1602 Program terms and conditions;

•	 subawardees’ draw requests supporting cash disbursements;

•	 projects’ certificates of occupancy supporting existence of

low-income housing units;

•	 projects’ certified public accountants cost certification

reports verifying costs included as part of each project’s

eligible cost basis;

•	 NHHFA’s compliance monitoring and asset management

reports supporting the continued viability of 1602 Program

projects for the duration of the 15-year compliance period;

and

•	 NHHFA’s quarterly financial and project performance reports

and annual certification reports provided to Treasury

ensuring that the 1602 Program subaward was equal to or

less than 85 percent the project’s eligible basis, and that

projects remain qualified projects throughout the 15 year

compliance period.

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Appendix 1 

Objective, Scope, and Methodology 

We performed our fieldwork between August 2013 and August 

2017, which also included site visits to four low-income housing 

projects located in Exeter, Manchester, and Rye, New Hampshire. 

We conducted this performance audit in accordance with generally 

accepted government auditing standards. Those standards require 

that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objectives. We believe that the 

evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives. 

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Appendix 2 

Grantee Terms and Conditions 

Grants to States for Low-Income Housing Projects in Lieu of Low-Income Housing 

Credits for 2009 

GRANTEE TERMS AND CONDITIONS 

1. Authority

a. Section 1602 of the American Recovery and Reinvestment Tax Act of 2009 (Act) authorizes

the United States Department of the Treasury (Treasury) to issue grants to State housing credit 

agencies in lieu of low-income housing credits. 

b. The grantee has authority to receive Section 1602 grants.

2. Grantee Eligibility

a. The grantee is the housing credit agency for one of the 50 States, the District of Columbia, the

Commonwealth of Puerto Rico, the Virgin Islands, American Samoa, Guam, or the Northern 

Mariana Islands which files Form 8610, Annual Low-Income Housing Credit Agencies Report 

with the Internal Revenue Service. 

b. The grantee shall be the sole recipient of the Section 1602 funds in the State and must

coordinate with other housing credit agencies within the State (including any constitutional home 

rule cities) to determine how much of their 2009 credit ceiling the other agencies would elect to 

take in the form of a grant election amount and will provide to those agencies their proportionate 

share. 

c. The grantee shall enter into written agreement with any other participating housing credit

agencies within the State, binding the participating agency to comply with the terms and 

conditions applicable to the grantee or designated state agency in the sections 3 through 10 of 

these terms and conditions. 

d. The grantee is the party responsible to Treasury for all grant matters.

3. Eligible Projects

a. The grantee shall only select projects for subawards which are qualified low-income buildings 

under Section 42 of the Internal Revenue Code (the Code). 

b. The grantee must ensure that the subaward is consistent with the requirement of section

42(m)(2) of the Code that the subaward made for a project [building(s)] does not exceed the 

amount necessary to ensure the financial feasibility of the project and its viability as a project 

throughout the credit period. 

4. Use of Grant Funds

a. The grantee is receiving an initial grant election amount. The grantee may apply for additional

grant funds through 2010. If the Treasury Department approves the request, the Treasury 

Department will amend the award to increase the grant amount. 

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Appendix 2 

Grantee Terms and Conditions 

b. The grantee shall use all grant amounts to make subawards, or for transfer to other agencies to

make subawards. The subawards shall be in the form of cash assistance and are not required to 

be repaid unless there is a recapture event with respect to the qualified low-income building. The 

grantee shall not use grant election amounts for any other purpose, including administrative 

costs. The grantee may collect reasonable fees from a subawardee to cover expenses associated 

with performance of its duties under Section 1602(c)(3) of the Act, Compliance and Asset 

Management. Reasonable fees are amounts customarily charged for the same or similar services 

and in no event may exceed costs. 

c. The grantee may disburse grant funds to subawardees in 2009 and 2010. The grantee may

disburse grant funds to subawardees in 2011 provided the subaward has been made to the 

subawardee on or before December 31, 2010 and 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 for which the 

disbursements are made. 

d. The subawards shall finance the construction or acquisition and rehabilitation of qualified lowincome buildings in accordance with Section 1602(c) of the Act. 

e. The grantee shall make subawards in the same manner and shall be subject to the same

limitations as an allocation of housing credit dollar amount allocated under Section 42(m) of the 

Code, except for the additional determinations required in subsection g of this section. 

f. Prior to making any subaward, the grantee shall establish a written process for making a

determination that applicants for subawards have demonstrated a good faith effort to obtain 

investment commitments for tax credits in lieu of a subaward. 

g. Prior to making any subaward, the grantee shall make a determination that the applicant for

the subaward has demonstrated a good faith effort to obtain investment commitments for tax 

credits in lieu of the subaward. 

5. Written Agreements and Disbursements to Subawardees

a. The grantee shall execute a legally binding written agreement with the entity receiving a

subaward. The grantee and the subawardee must execute the written agreement before any 

Section 1602 funds are disbursed to the subawardee. 

b. The written agreement must set forth (explicitly, or incorporated by reference) all Section

1602 program requirements, including the requirements of Section 42 of the Code, applicable to 

the subaward. 

c. The written agreement shall impose conditions or restrictions, including a requirement

providing for recapture, so as to assure that the qualified low-income building remains a 

qualified low-income building during the 15-year compliance period. The written agreement may 

include the extended low-income housing commitment under Section 42(h)(6)(B) of the Code. 

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Appendix 2 

Grantee Terms and Conditions 

d. The written agreement shall require the subawardee to provide sufficient information to the

grantee to report on the use of grant funds as required by section 8 of these terms and conditions. 

6. Asset Management

a. The grantee shall perform asset management functions so as to ensure compliance with

Section 42 of the Code and the regulations thereunder (including Title 26 Code of Federal 

Regulations section 1.42.9), and the long-term viability of the buildings funded by a subaward 

under the Act in accordance with Section 1602(c)(3) of the Act. 

7. Compliance with the 2009 State Housing Credit Ceiling

a. The grantee shall track (1) the credit equivalent of all grant election amounts to ensure that the

2009 State Housing Credit Ceiling is appropriately reduced as required by section 42(i)(9)(A) of 

the Code and (2) total grant election amounts to ensure that these amounts do not exceed the 

amount authorized by section 1602(b). 

b. The grantee shall track the total of credits allocated under Section 42(h)(1) of the Code.

c. The grantee shall ensure that the credit equivalent of all elected grant amounts through 2010,

plus the credits allocated under Section 42(h)(1) of the Code during 2009, do not exceed the 

State housing credit ceiling for 2009. 

8. Reporting

a. The grantee shall provide periodic reports as required by Treasury. A financial status report

and a project performance report is required on a quarterly basis, due 10 working days after the 

end of the quarter. Quarters end on March 31, June 30, September 30, and December 31. 

b. The performance report has the following elements on each project receiving a subaward

during the quarter: 

• Name of recipient entity

• Name of project

• Brief description of project

• Location of project: city/county, State, zip code

• Number of construction jobs created

• Number of construction jobs retained

• Number of non-construction jobs created

• Number of non-construction jobs retained

• Number of total housing units newly constructed

• Number of total housing units rehabilitated

• Number of low-income housing units newly constructed

• Number of low-income housing units rehabilitated

c. The grantee shall submit any other reports that Treasury deems necessary to comply with

Section 1602 of the Act and American Recovery and Reinvestment Act guidance. 

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Appendix 2 

Grantee Terms and Conditions 

9. Recapture 

a. The grantee shall include in any subaward a requirement providing for recapture to assure that 

the building remains a qualified low-income building during the 15-year compliance period. 

b. The grantee shall notify subawardees that any amount subject to recapture becomes a debt 

owed to the United States payable to the General Fund of the Treasury and enforceable by all 

available means against any assets of the recipient entity. 

10. Financial Management 

a. The grantee must expend and account for grant funds in accordance with State laws and 

procedures for expending and accounting for its own funds. Fiscal control and accounting 

procedures of the designated State housing credit agency must be sufficient to permit preparation 

of required reports and permit the tracing of funds to a level of expenditures adequate to establish 

that such funds have not been used in violation of the restrictions and prohibitions of applicable 

statutes. Effective control and accountability must be maintained for all grant funds. 

b. The grantee shall open a new account (Grant Account) with a financial institution for the 

purpose of receiving grant election amounts, for making distributions of grant election amounts 

to other agencies within the State, and for making subawards. 

c. The grantee must maintain program, financial, and accounting records sufficient to 

demonstrate that grant funds were used in accordance with the Section 1602 program and these 

terms and conditions. The Treasury as the awarding office, the cognizant Treasury inspector 

general, and the Comptroller General of the United States, or any of their authorized 

representatives, shall have the right of access to facilities and to any pertinent books, documents, 

papers, or other records (electronic and otherwise) of grantees, which are pertinent to the grant, 

in order to make audits, examinations, excerpts, and transcripts. 

d. The grantee shall minimize the time between the receipt of grant funds and the disbursement 

of those funds to subawardees. Federal funds cannot be drawn by the grantee from the U.S. 

Treasury in advance of need. The grantee shall not place in escrow or advance lump sums to 

project owners. Once funds are drawn from the grantee’s U.S. Treasury account, they must be 

expended as a subaward by the grantee within three days, or if grant funds are transferred by the 

grantee to another agency, as a subaward by that agency within three days following the date of 

transfer by the grantee. 

e. The grantee shall promptly return to its Grant Account any subawards returned to the 

designated State housing credit agency from subawardees and shall expend returned amounts as 

subawards before additional grant amounts are drawn from the Treasury. 

11. Disallowance, Suspension, and Termination 

a. If the grantee materially fails to comply with any term of the award, whether stated in a 

Federal statute or regulation, the terms and conditions herein, in a State plan or application, a 

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Name 

Phone 

Signature 

Title

Email 

Date signed

Appendix 2 

Grantee Terms and Conditions 

notice of award, or elsewhere, Treasury may take one or more of the following actions, as 

appropriate in the circumstances: 

• Temporarily halt cash payments pending correction of the deficiency by the grantee

• Disallow all or part of the cost of the activity or action not in compliance

• Wholly or partly suspend or terminate the current award

• Withhold further awards for the program

• Take other remedies that may be legally available

In taking an enforcement action, Treasury will provide the grantee the opportunity for a hearing, 

appeal, or other administrative proceeding to which the grantee is entitled under any statute or 

regulation applicable to the action involved. 

b. The grantee must immediately report any indication of fraud, waste, abuse, or potentially

criminal activity pertaining to grant funds to Treasury and the cognizant Treasury inspector 

general. 

12. Return of Unused Grant Funds

a. The grantee shall return to the Treasury by January 1, 2011 any grant election amounts not

used to make subawards by December 31, 2010. This requirement does not prevent the State 

housing credit agency 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. 

Signature 

Under penalties of perjury, I declare that I have examined the terms and conditions in this 

application and that the designated State housing credit agency agrees to and will ensure that 

these terms and conditions will be followed. I declare that I am an authorized official of the 

designated State housing credit agency and am authorized to bind the State housing credit agency 

to these Terms and Conditions. 

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Phone

Signature

Title

Email

Date signed
Appendix 3 

New Hampshire Housing Finance Authority Management Response 

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Appendix 4 

Treasury Management Response 

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Appendix 5 

Major Contributors To This Report 

Nick Slonka, Audit Manager 

Paul Harris, Supervisory Program Analyst 

Gerald Kelly, Auditor-In-Charge 

Amy Wang, Auditor 

Usman Abbasi, Referencer 

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Appendix 6 

Report Distribution 

Department of the Treasury 

Counselor to the Secretary 

Fiscal Assistant Secretary 

Deputy Assistant Secretary, Fiscal Operations and Policy 

Office of Strategic Planning and Performance Improvement 

Office of the Deputy Chief Financial Officer, Risk and Control 

Group
 

Director, Office of Grants and Asset Management
 

Program Director, Office of Housing and Energy
 

Office of Management and Budget 

OIG Budget Examiner 

New Hampshire Housing Finance Authority 

Executive Director 

Audit of New Hampshire Housing Finance Authority’s Payment Page 21 

Under 1602 Program (OIG-18-048) 
REPORT WASTE, FRAUD, AND ABUSE

Treasury OIG Hotline: 1-800-359-3898

Hotline@oig.treas.gov

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gulfcoastrestorationhotline@oig.treas.gov

Access Treasury OIG reports and other information online: 

www.treasury.gov/about/organizational-structure/ig