Neighborhood Transformation

Neighborhood Transformation

The HOME Program and CHDOs
By Jamie Ross
1000 Friends of Florida, Inc.

The Cranston-Gonzalez 1990 National Affordable Housing Act created, among other things, the HOME Investment Partnership Act, commonly referred to as the HOME program.

The purpose of the HOME program is to expand the supply of affordable housing through the acquisition, rehabilitation, new construction, and tenant-based rental assistance. The primary emphasis in the HOME program is for rental housing for very low and low income Americans. HOME monies can be used for loans or grants.

The HOME program provides approximately 55 million dollars ($55,000,000.00) for affordable housing to Florida every year. The federal government distributes these monies through an allocation formula to local governments known as PJs, (participating jurisdictions) and to the State of Florida, which is itself considered a PJs The largest portion of HOME monies are distributed to local government participating jurisdictions. These are generally the same larger entitlement communities that are also eligible for such programs as Community Development Block Grants. The balance is received by the state through the Florida Housing Finance Agency. The state's program is approximately sixteen million ($16,000,000.00) annually.

SET-ASIDE FOR A CERTAIN TYPE OF NON-PROFIT

Both the local government and the state's HOME monies contain a fifteen percent set aside for Community Housing Development Organizations (CHDOs). CHDOs are eligible to apply for all HOME monies, but only CHDOs are eligible to apply for the CHDO set-aside. This creates a tremendous funding opportunity for those who qualify as CHDOs.

WHAT MAKES AN ORGANIZATION A CHDO

The following highlights are the more substantive elements of what qualifies an organization to be a CHDO. The complete statutory checklist for a CHDO is found in 24 CFR Part 92.2 which includes matters such as financial accounting requirements, rules governing for-profit sponsored organizations, and CHDOs chartered by state or local government:
  • A CHDO must be a nonprofit organization, either 501(c)(3), or (4). No part of its earnings may inure to the benefit of any member, founder, contributor, or individual. The CHDO may also be a subordinate organization of a central organization nonprofit under section 905 of the Internal Revenue Code. If the CHDO is sponsored or created by a for-profit entity, the for-profit entity may not appoint more than one-third of the membership of the CHDO's governing body, and the board members appointed by the for-profit entity may not, in turn, appoint the remaining two-thirds of the board members.

  • It must have among its purposes the provision of decent housing that is affordable to low-and moderate-income people. This statement of purpose may be evidenced in the organization's charter, articles of incorporation, by-laws, or board resolutions.

  • The organization must have a demonstrated capacity for carrying out activities assisted with HOME funds. An organization may satisfy this requirement by having an experienced staff or by contracting with an experienced consultant with a plan for that consultant to train key staff members in the undertakings contemplated in the HOME project.

  • The organization must have a history of serving the community where housing to be assisted with HOME funds will be used. This can be satisfied by a statement that documents at least one year of experience in serving the community, or for a newly created organization formed by local churches, service or community organizations, a statement that documents that its parent organization has at least one year of experience in serving the community. This service can be such things as developing new housing, rehabilitating housing, managing housing, or delivering nonhousing services to the community such as counseling, food services, or child care facilities.

  • The organization must maintain at least one-third of its governing board's membership for residents of low-income neighborhoods, Other low-income community residents, or elected representatives of low-income neighborhood organizations. Under the HOME program, for urban areas, the term "community" is defined as one or several neighborhoods, a city, county, or metropolitan area. For rural areas, "community" is defined as one or several neighborhoods, a town, Village, county, or multi-county area (but not the whole state).

  • The organization must provide a formal process for low-income program beneficiaries to advise the organization in all of its decisions regarding the design, siting, development, and management of all HOME assisted affordable housing projects. This provision for accountability to the low- income community, entails, at a minimum, a written procedure adopted by the board for obtaining input from the community regarding the delivery of housing whenever HOME funds are used.
An existing nonprofit such as a Community Development Corporation (CDC) can qualify as a CHDO if it meets the requirements set forth on the statutory checklist. A CDC will most likely meet or exceed the board composition requirement. The cornerstones of a bona fide CHDO is community input and control. A CHDO can be the owner, developer, sponsor, or combination of owner, developer, and sponsor of the affordable housing project. A CHDO can not be a religious organization, although a religious parent organization may establish a secular organization that could qualify as a CHDO.

HOW A CHDO ACCESSES HOME FUNDS

An organization located within a PJ makes application directly to the PJ (local government) for certification as a CHDO, Each local government PJ has a HOME program administrator, usually found in the local government's community development division. The local HOME administrator can inform a CHDO "want-to-be" about local HOME program uses, requirements, and NOFAS, and the process for Iocal certification of a CHDO.

Organizations not located in a PJ apply for certification to be a CHDO within the application process for HOME funding from the state. The organization provides evidence to the Florida Housing Finance Agency that it complies with all the items in the statutory checklist and submits its application as a CHDO at the time it makes application for HOME funding from the state. If the application is successful and the state determines that the organization meets the requirements in the checklist, it receives its HOME loan/grant and its HOME CHDO certification at the same time. The state will not, however, certify an organization as a CHDO if it is not already a HOME funding recipient. The state has two HOME program cycles each year, one for homeownership and one for rental.

CHDOs located in PJs will most likely seek HOME funding from the PJ, in other words, the local government. CHDOs not located in a PJ will most likely seek HOME funds from the state. Each local government participating jurisdiction and the state have their own strategies for expending HOME monies. Their strategies are designed pursuant to the consolidated planning process which every participating jurisdiction, including the state is requited to do for participation in the HOME program. CHDOs within a local PJ should participate in the planning process in their local government and should make it their business to be knowledgeable about the permitted uses of HOME funds and the process for obtaining HOME funds within their local government.

PARTNERSHIP IS KEY

Every participating jurisdiction is charged under the HOME program to make all reasonable effort to maximize participation by the private sector, including nonprofit and for-profit entities, in the implementation of the jurisdiction's approved consolidated plan, including participation in the financing, development, rehabilitation, and management of affordable housing.

It is important for all CHDOs to remember that the status of a CHDO is not enough to obtain CHDO set-aside funds. Whether a CHDO is successful in accessing funds will be a function of the merits of its proposed project, project feasibility, ability to proceed, and the strength of its partnership in and with the participating jurisdiction. The strength of the partnership between the local government participating jurisdiction and the CHDO has a great deal to do with communication and respect. Any organization seeking CHDO status should meet with the HOME administrator in the jurisdiction about the organization's plans before proceeding down the CHDO path.

The local government participating jurisdiction also has the ability to obtain free technical assistance for the CHDO. Technical assistance for CHDOs is provided by the Department of Housing and Urban Development (HUD) through contracts with a variety of national and statewide technical assistance organizations. CHDO direct one-on-one technical assistance for CHDOs in urban areas of Florida is contracted to the Enterprise Foundation with a subcontract to the Florida Housing Coalition; rural areas are contracted to the Housing Assistance Council, and workshops with associated direct assistance are contracted to Development Training Institute. Accessing this technical assistance requires designation from the local participating jurisdiction.

For more information about the federal HOME program or technical assistance under the program contact Linda Dresdner, Technical Assistance Coordinator for HUD at (904) 232-1202. For information about the State HOME program contact Angela Hatcher, Florida Housing Finance Agency HOME program administrator, at (904) 488-4197.

The rules which govern the HOME program are found in Tides I and 11 of the Cranston-Gonzales National Affordable Housing Act, Volume 24 of the Code of Federal Regulations (24 CFR. Part 92.) State statutes and rules which govern the state HOME program are found in Section 420.5089 of the Florida Statutes, and Rule 91,34, Florida Administrative Code.