Housing advocates are urging lawmakers to draft legislation that would permit low-income housing tax credits for disaster areas to be exchanged for federal cash grants after Treasury Department officials nixed the idea.

Their efforts appear to be paying off. Sens. Evan Bayh, D-Ind., and Richard Shelby, R-Ala., are planning to introduce legislation this week that would clarify that additional low-income housing tax credits authorized for disaster areas caused by flooding in the Midwest and by hurricanes Katrina and Rita in the Gulf can be monetized under a program authorized under the stimulus law, according to housing sources. Both senators are members of the Banking Committee, and Shelby is the top Republican. Their staffs could not be reached for comment.

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