Board of Investments’ ARPA down‑payment loan program draws scrutiny; BOI defends underwriting and transparency

The Legislative Audit Committee spent a portion of its hearing asking the Board of Investments and the Legislative Audit Division about a down‑payment assistance loan program that used federal ARPA funds routed through the state and administered by BOI.

Dan Villa, BOI’s executive director, told the committee the board had administered four rounds of loans using funds directed by the governor following recommendations from an advisory council. He said underwriting was done by participating private banks and BOI staff reviewed eligibility and ownership structures; staff approved loans under $1 million and the loan committee handled larger loans, while all materials were sent to the full board and any member could object.

Villa disputed recent press reporting that named an entity as a loan recipient, saying the story contained factual errors and that one named entity (Dealco in the published report) did not receive a loan. BOI’s counsel sent a demand for correction to the publisher, Villa said, and BOI offered to make loan files available to legislative liaisons for verification. Villa said no loan exceeded the program maximum ($3 million per applicant/ownership structure) and that the program’s terms varied across rounds to allocate funds more broadly when money was limited.

Committee members asked for greater detail about program governance and the flow of funds. Several members requested staff follow‑up: how the advisory council and the governor’s office allocated funds, what conflict‑of‑interest protections applied to decision‑makers, how ownership and related‑party limits were reviewed, and whether the board or staff tracked aggregated exposures for owners who might control multiple applicant entities. Villa said BOI reviewed ownership structures and tracked total exposure by owner and that his office posts quarterly loan reports on its website.

Legislators also asked how confidentiality was handled given commercial proprietary data provided by banks in loan applications. Villa said the ARPA transparency website shows who received funds and in what amounts; materials provided to BOI during underwriting contain proprietary lender information that is not public and should not be redistributed. He asked the committee to note that a federal single audit of ARPA spending is underway and will examine program compliance and that some public questions about the program would be addressed in that review.

Auditors noted they will include ARPA program testing in the federal single audit and that the single audit will have a limited compliance scope for ARPA funds. The committee asked audit staff to return with more detailed background on process, selection, and conflict‑of‑interest safeguards and asked BOI to provide the ARPA transparency link and the demand‑for‑correction letter to the committee staff.

What’s next: Audit staff will include the ARPA down‑payment assistance program in the fiscal‑year single audit fieldwork; the auditors estimate the single audit may be completed around August and publicly available by September. Meanwhile, the committee asked BOI for detailed process materials and for the legislative audit office to prepare a background memo explaining where decision authority sat and how program governance operated during each funding round.

Representative excerpt:

“We are the final repository for unspent agency ARPA dollars because we could move the money through Montana banks so successfully,” Villa told the committee; he emphasized BOI’s underwriting process shared risk with private lenders and said BOI made loans under the program’s published terms.