Becoming a CHDO: Program

Requirements for Successfully

Obtaining CHDO Designation

R U R A L H O U S I N G C A PA C I T Y B U I L D I N G P R O G R A M ( R H C B )

F U N D E D B Y T H E D E PA R T M E N T O F H E A LT H A N D H U M A N S E R V I C E S
C O M PA S S I O N C A P I T A L F U N D

Presented by:
Stephanie Nichols, CHDO Project Manager
Housing Assistance Council

Moderated by:
Shonterria Charleston, RHCB Project Manager
Housing Assistance Council
Housing y improves housing conditions for the
Assistance rural poor, with an emphasis on the
Council poorest of the poor in the most rural
Building rural
places in the United States.
communities since 1971

y offers services to public, nonprofit,

and private organizations
throughout the rural United States.

y maintains a special focus on high‐

need groups and regions: Indian
country, the Mississippi Delta,
farmworkers, the Southwest border
colonias, and Appalachia.
 HAC Services
y Loans. Since 1971, HAC has made almost $164 million in loans to
help create more than 56,867 homes, including water/sewer
connections. HAC's loan funds have reach throughout rural
America, with loan commitments to over 600 local organizations
in more than 400 counties throughout 49 states and territories of
Puerto Rico and the U.S. Virgin Islands.

y Research and Information. HAC publishes the biweekly

newsletter HAC News and Rural Voices, a quarterly magazine;
writes up to 15 research reports and technical manuals annually;
and maintains a rural housing resource center for its constituents.
HAC's Web site, www.ruralhome.org, is a significant source of up‐
to‐date information on rural housing topics.
 HAC Services
y Technical Assistance. HAC's expert staff delivers thousands
of hours of technical advice each year to organizations and
developers improving low‐income rural housing. One
element of HAC's assistance is a contract with HUD to help
rural Community Housing Development Organizations
(CHDOs) use HOME and other funding programs.

y Training. HAC sponsors intensive training workshops all

over the country, emphasizing housing development,
financing, construction and nonprofit management. HAC
also regularly convenes the National Rural Housing
Conference; more than 700 people attended the December
2008 conference in Washington, D.C.
 HAC Offices
Housing Assistance Council
1025 Vermont Ave Ste 606
Washington DC 20005
(202) 842‐8600
hac@ruralhome.org
www.ruralhome.org
Southeast Regional Office Southwest Regional Office
600 West Peachtree Street NW Ste 1500 3939 C San Pedro NE Ste 7
Atlanta, GA 30308 Albuquerque, NM 87110
(404) 892‐4824 (505) 883‐1003
southeast@ruralhome.org southwest@ruralhome.org

Midwest Regional Office Western Regional Office

10100 N Ambassador Dr Ste 310 717 K Street Ste 404
Kansas City, MO 64153 Sacramento, CA 95814
(816)880‐0400 (916) 706‐1836
midwest@ruralhome.org western@ruralhome.org
 A Note for Homeless Service Agencies

y If the development of affordable housing is a new

venture for your organization you must carefully
consider the risks and benefits to your organization,
communities, and service population.
{ Is affordable housing part of the mission and purpose of the
organization?
{ Do you have the capacity to develop housing? If not, how will
you obtain it?
{ Are there organization’s in your service area that you can partner
with?
 A Note for Homeless Service Agencies

y There are many funding sources for affordable housing

development. Today we will be discussing the HOME
Program and a special set‐aside within the HOME
Program called CHDO.
y If the board and staff of your organization decides to
move forward with affordable housing development, I
encourage you to explore all of your funding options.
There are numerous programs which may be
beneficial to your organization and program
recipients.
 y Objectives
{ Provide decent affordable housing to
HOME Program lower‐income households,
The HOME Program { Expand the capacity of nonprofit
was created by the housing providers,
National Affordable
Housing Act of 1990 and { Strengthen the ability of state and local
has been amended governments to provide housing, and
several times by
subsequent legislation. { Leverage private sector participation.
 Allocation of Funds

y HOME Funds are allocated annually to Participating

Jurisdictions (PJs).
{ PJs are units of state and local government which administer HOME
Program funds
y Funds are allocated by formula based on multiple factors
including population, poverty rate, and housing
conditions.
y PJs are responsible for effective use of funds and
compliance with Federal regulations.
y Government, Nonprofit and Private For‐Profit agencies
apply to the PJ for HOME Funds to carry out eligible
activities.
 Eligible Uses of HOME Funds

y Homeowner Rehab
y Homebuyer
y Rental Development
y TBRA (Rental Subsidy)

y Permanent Housing
 y PJs designate organizations meet
certain federal guidelines
CHDOs
y The PJ MUST set‐aside at least 15%
A Community Housing
Development of their HOME allocation for
Organization (CHDO) is
a private nonprofit,
CHDO eligible projects.
community‐based y CHDOs may engage in other
service organization that
has obtained or intends HOME eligible activities in which
to obtain staff with the
capacity to develop they are not owners, developers,
affordable housing for
the community it serves.
and sponsors of housing.
 Eligible Uses of CHDO Set‐Aside Funds

y Owner
{ A CHDO is considered an owner of a property when it holds valid legal
title or has a long‐term leasehold interest (99‐year minimum). The
CHDO may be an owner with one or more individuals, corporations,
partnerships, or other legal entities.
y Developer
{ A CHDO considered a developer when it either:
Ù Owns to property and develops the project
Ù Has the contractual obligation to a property owner to develop a project

y Sponsor
{ The CHDO is considered a sponsor when it develops a project that it
solely or partially owns and agrees to convey ownership to a second
nonprofit organization at a predetermined time.
 Eligible Uses of CHDO Set‐Aside Funds

y Using the 15% set‐aside, a CHDO acting as an owner,

sponsor, or developer may undertake any of the
following activities:
{ acquisition and/or rehabilitation of rental
property;
{ new construction of rental housing;
{ acquisition and/or rehabilitation of homebuyer property;
{ new construction of homebuyer property;
{ direct financial assistance to purchasers of HOME‐assisted
housing sponsored or developed by a CHDO with HOME funds.
 Ineligible Uses of CHDO Set‐Aside Funds

y CHDOs may engage in other HOME eligible activities

in which they are not owners, developers, and
sponsors of housing.

y Using the 15% set‐aside, a CHDO acting as an owner,

sponsor, or developer may not undertake any of the
following activities:
{ rehabilitation of existing homeowners' properties and
{ tenant‐based rental assistance
 Special Assistance to CHDOs

y PJs may provide special forms of assistance to CHDOs

{ Project Pre‐Development Loans

{ Operating Assistance

{ Project Proceeds

{ Capacity Building Assistance

 Pre‐Development Funds

y A portion of CHDO set‐aside funds may be provided

to CHDOs for project‐specific pre‐development
assistance.
{ The project specific pre‐development assistance is intended to
assure that CHDOs have access to funds for up‐front, eligible
project expenditures.
{ All costs must necessary and reasonable and be related to a
specific project which, if deemed feasible, would receive HOME
funds for development.
Ù Technical Assistance and Site Control Loans
Ù Seed Money Loan
 Operating Expenses

y Up to 5% of a PJ’s HOME allocation each year may be used

to provide general operating assistance to CHDOs that are
receiving set‐aside funds for an activity.
{ Assistance may not exceed $50,000 or 50% of the CHDO’s total annual
operating expenses for that year, whichever is greater.
{ Eligible uses must be necessary and reasonable costs for the operation
of a CHDO including:
Ù Salaries, wages, benefits and employee compensation;
Ù Employee education, training and travel;
Ù Rent and Utilities;
Ù Communication Costs;
Ù Taxes and Insurance; and
Ù Equipment, materials and supplies.
 Project Proceeds

y PJs may allow CHDO to retain some or all proceeds from a

HOME project. Possible sources of proceeds include:
{ Proceeds from permanent financing
{ Interest on HOME loans
y Proceeds must be used for:
{ HOME‐eligible activities OR
{ Other low‐income housing activities
y The CHDO and PJ must have a written agreement which
includes:
{ Whether CHDO will retain any proceeds and
{ The specific use of proceeds.
 Capacity Building Assistance

y Only applies to PJs in first 2 years of participation in

the HOME Program
y HOME funds can be used for CHDO capacity building
{ Up to 20% of CHDO set‐aside
{ Total cannot exceed $150,000
{ Use for intermediary organizations, training and TA or operating
expenses
Applying For
CHDO Status
Most PJs will have an
application form when
applying for CHDO
status. Many PJs have
based their applications
off of the CHDO
Checklist.
 CHDO Requirements

y Nonprofits must meet the CHDO requirements in

order to receive HOME funds through the CHDO Set‐
Aside Program
{ Legal Status
{ Organizational Structure
{ Capacity and Experience
y Applications are reviewed and approved by the PJ
 CHDO Requirements

y Legal Status
{ Organized under state and local law

{ Purpose of the organization must include, provide decent

housing that is affordable to low and moderate income persons.
{ No individual benefit.

{ Clearly defined service area.

{ Nonprofit status
 CHDO Requirements

y Organizational Structure
{ Board Composition
Ù At Least 1/3 must represent the low‐income community
| Residents of low‐income neighborhoods,
| Low‐income residents of the community, or
| Elected representatives of low‐income neighborhood
organizations
Ù No more than 1/3 may be public officials or employees of the PJ
Ù Balance is unrestricted

y Low Income Input

{ Formal process for low‐income beneficiaries and potential
beneficiaries to advise the CHDO on design, location of sites,
development and management of affordable housing.
 CHDO Requirements

y Capacity and Experience

{ A CHDO must have at least one year of experience serving the
community where it intends to develop HOME‐assisted housing.
{ CHDOs must demonstrate the capacity of their key staff to carry
out HOME assisted activities they are planning.
Ù Experienced key staff who have successfully completed projects
similar to those proposed by the CHDO or
Ù Key staff with limited or no experience, and who will use
experienced consultants for the planning and development
activities, as long as there is a plan in place for the consultant to train
key staff
 CHDO Requirements

y Capacity and Experience

{ Financial Standards
Ù CHDO must have financial accountability standards that conform to
24 CFR 84.21, “Standards for Financial Management Systems”
 Application

y Where to apply for CHDO Status and CHDO

Set‐Aside Funds
{ State PJ
{ Local and Consortia PJ
{ http://www.hud.gov/offices/cpd/affordablehousing/programs/h
ome/contacts
 Conclusion

y What is HOME?
y What are HOME’s eligible activities?
y What is a CHDO?
y What are CHDO eligible activities?
y What special assistance is available to CHDOs?
y What are the requirements to be a CHDO?
y Where do you apply for CHDO status and CHDO set‐
aside funds?
Questions