The Treasury Department announced that it is relaxing its policy regarding the time limitation within which state housing credit agencies must disburse low-income housing tax credit (LIHTC) exchange funds.

Published in the Aug. 31 Federal Register, the change allows states to disburse funds to subawardees through Dec. 31, 2011, under certain conditions.

Under the American Recovery and Reinvestment Act, state housing credit agencies are required to return to the Treasury any funds not used to make subawards before Jan. 1, 2011.

“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,” said the announcement.

Under the interim final rule, credit agencies can continue to disburse funds to subawardees through 2011, provided that the subaward was made on or before Dec. 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.

Comments on the rule are due Sept. 30.

The Treasury also recently announced another $309 million in awards under the exchange program.

The recipients in this sixth round are Arizona, $34 million; Connecticut, $16 million; North Carolina, $95 million; North Dakota, $3.6 million; Pennsylvania, $41 million; South Carolina, $118 million; and Vermont, $1.4 million.

The exchange program aims to jump-start the development of LIHTC projects.

Treasury officials estimate that more than $3 billion will be provided.