In a letter dated May 11, 2009, California State Treasurer Bill Lockyer sent a letter to key staff at the Department of the Treasury, HUD and the IRS expressing concerns about the recent Application and Terms and Conditions guidance for the implementation of Section 1602 (the Exchange Program) of the American Recovery and Reinvestment Act (ARRA). The letter expresses concern that the Exchange funds must be granted to project owners rather than loaned noting that grants would be taxable income to the recipient for California income tax purposes. It also states that loans would make it easier for the state to enforce statutory requirements associated with the funds. Additionally, the letter expresses concerns over the timing for the expenditure of the Exchange funds.  read more…