Congressmen Barney Frank (D-Mass.) and Charles Rangel (D-N.Y.) have asked the Treasury Department to provide guidance for implementing the low-income housing tax credit (LIHTC) exchange provision under the American Recovery and Reinvestment Act of 2009.

The bill gave states the authority to exchange up to 40 percent of their LIHTC credits in 2009 and unused credits from previous years at a rate of $0.85 per credit. The cash can then be turned into grants to help stalled tax credit projects.

The move was made “to respond to an environment of significant dislocations in the housing tax credit market, including significant reductions in prices received for tax credit investments and difficulties in even placing their credits,” said the congressional leaders in a March 25 letter to Treasury Secretary Timothy Geithner.

Although many states have drafted plans to incorporate the bill’s provisions into their LIHTC programs, they have been waiting for Treasury to weigh in on the matter.

“The argument that there are important issues that need to be resolved regarding implementation of what is a new discretionary authority, including issues such as the process for states to make elections to exchange credits and compliance and asset management requirements, is no reason for a delay in implementation,” says the letter. “Time is of the essence.”

Frank chairs the Financial Services Committee, and Rangel chairs the Ways and Means Committee.

Click here to view the letter [pdf]