IHCDA CHDO Certification Process IHCDA Real Estate Department

AGENDA Background Benefits of being a CHDO Maintaining CHDO Status Definitions Sections of Application Forms Proposed HOME Final Rule

BACKGROUND The HOME Investment Partnerships Program (HOME) was created under Title II of the Cranston-Gonzalez National Affordable Housing Act of Among its purposes, the National Affordable Housing Act was intended to: (1)promote partnerships among states, units of general local government, and not-for-profit organizations (2) expand the capacity of not-for-profit organizations to develop safe, decent, and affordable housing. Under the HOME Final Rule (24 CFR Part 92), a participating jurisdiction (PJ) must reserve not less than 15% of its HOME allocations for investment in housing to be owned, developed, or sponsored by CHDOs.

BACKGROUND Unless otherwise announced, IHCDA will accept applications for CHDO funds only from IHCDA-certified CHDOs for activities that are located outside of participating jurisdictions (i.e., communities that receive HOME funding directly from HUD). Indiana Participating Jurisdictions Anderson, Bloomington, East Chicago, Evansville, Fort Wayne, Gary, Hammond, Indianapolis, Lafayette Consortium, Lake County, Muncie, South Bend Consortium, and Terre Haute The only exception to this would be any activity that is specifically referenced for use of HOME funds within the most current Indiana Consolidated Plan. Any not- for-profit organization receiving IHCDA HOME-CHDO funding must be certified by IHCDA as a CHDO under 24 CFR 92.2.

BENEFITS OF BEING A CHDO Any not for profit organization that has 501©3 status from the IRS is eligible to apply for HOME funds for a variety of housing activities. CHDOs, through the Strategic Investment Process, have the benefit of also applying for: 1. CHDO Operating Grants 2. Site-specific Predevelopment and/or Seed Money Loans for subsequent HOME-CHDO projects *NOTE– only homebuyer or rental housing where the CHDO acts as the owner, developer, or sponsor) qualify as HOME-CHDO projects. These projects can be new construction or rehabilitation.

MAINTAINING CHDO STATUS At the time an organization receives recertification from IHCDA as a CHDO, it is assessed on all of the eligibility criteria for funding under the HOME regulations. Annually, IHCDA will recertify all CHDOs regardless of the number of years from initial certification. After reviewing this information, IHCDA may decertify a CHDO that ceases to meet certification criteria or fails to participate in the recertification process. Recertification forms will be delivered to all current CHDOs for completion

DEFINITIONS ETC Different CHDO Roles · Owner: The CHDO is an “owner” when it holds valid legal title to or has a long- term (99-year minimum) leasehold interest in a rental property. The CHDO may be an owner with one (1) or more individuals, corporations, partnerships or other legal entities. · Developer: A CHDO is a “developer” when it either owns a property and develops a project, or has a contractual obligation to a property owner to develop a project. If the CHDO owns the property, it must obtain financing and rehabilitate or construct the project. If the CHDO does not own the property, it must be under a contractual obligation with the owner to obtain financing and rehabilitate or construct the project. Under this scenario, the CHDO assumes all of the risks and rewards associated with being the project developer. A written agreement between the CHDO and the property owner must detail the CHDO’s specific obligations.

DEFINITIONS ETC Sponsor: A CHDO is a “sponsor” for HOME-assisted rental or homebuyer housing according to the circumstances outlined below. For HOME-assisted rental housing: The CHDO develops a project that it solely or partially owns and agrees to convey ownership to a second nonprofit organization at a predetermined time. The conveyance may take place prior to, during or upon completion of the development phase. For a HOME-assisted homebuyer’s program: The CHDO owns a property, then shifts responsibility for the project to another nonprofit at some specified time in the development process. The second nonprofit in turn transfers title, along with the HOME loan/grant obligations and resale requirements, to a HOME-qualified homebuyer within a specified timeframe. The other nonprofit being sponsored by the CHDO acquires the completed units, or brings to completion the rehabilitation or construction of the property. The CHDO must always own the property prior to the development phase of the project

DEFINITIONS ETC Financial Accountability Standards of 24 CFR “Standards for Financial Management Systems.” These standards can be found at the following website: Board of Directors 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. There are three ways to meet this requirement:

DEFINITIONS ETC Board of Directors 1. Board members can be residents of a low-income neighborhood in the community. A “low-income neighborhood” is defined as a neighborhood where 51% or more of the residents are low-income; residents of such neighborhoods that sit on CHDO boards do not have to be low-income themselves. 2. Board members can be low-income residents of the community. The CHDO board need not include residents from each county in the CHDO’s proposed service area, but the board’s composition should in some fashion reasonably represent that service area. Low-income residents do not need to submit proof of their income to the CHDO if they are also residents of low- income neighborhoods in the community; if they do not reside in low-income neighborhoods, the CHDO must obtain certification that the residents qualify as low-income. This proof of income need not be submitted to IHCDA, but should be retained by the CHDO

DEFINITIONS ETC Board of Directors. 3. Board members can be elected representatives of low-income neighborhood organizations. A “low-income neighborhood organization” is one that is composed primarily of residents of a low-income neighborhood and whose primary purpose is to serve the interests of the neighborhood residents; such groups can elect representatives to sit on the CHDO board. Block or watch groups, civic associations, neighborhood church groups, and NeighborWorks® organizations could be examples of low-income neighborhood organizations.

CERTIFICATION APPLICATION Forms to be completed to apply for CHDO status with IHCDA, are located on the HOME page of the IHCDA website: Before getting started on your application forms, please make sure you have the following documents in place for submission and to assist in adding and/or referencing information within the application Articles of Incorporation (approved by the Secretary of State) 501©3 exempt ruling from the IRS or Group Exemption Letter By Laws (approved by governing body) Most current annual budget and two most recent audited financial statements Procurement Standards Fair Lease and Tenant Grievance Policy Organization’s Plan for involving tenants in management’s decisions

CERTIFICATION APPLICATION Legal Status Organized and acknowledged by the IN Sec. of State Net earnings will not benefit any member, founder, contributor, or individual Tax Exemption ruling from the IRS under Section 501© per Internal Revenue Code of 1986 Provision of decent, safe, affordable housing that is affordable to low and moderate-income people within organizational mission/purpose

CERTIFICATION APPLICATION Capacity Conforms to the financial accountability standards of 24 CFR 84.21, “Standards for Financial Management Systems” Demonstrated capacity for carrying out activities assisted with HOME funds (rental and/or homebuyer) History of serving the community where housing to be assisted with HOME funds will be used (at least one year)

CERTIFICATION APPLICATION Organizational Structure One third (1/3) of board membership must be represent a low/mod category as listed Provides a formal process for low-income program beneficiaries to advise the organization in all decisions regarding the design, siting, development, and management of all HOME assisted affordable housing projects If chartered by State of local government, proof that the government entity cannot appoint more than one third (1/3) of board membership, that that those appointed board members may not, in turn, appoint the remaining two thirds (2/3) of the board, and that no more than one thirds(1/3) of the board members are public officials.

CERTIFICATION APPLICATION Relationship with For-Profit Entities Note: This section is only applicable to organizations that are sponsored or created by a for profit entity If applicable, the for profit may not appoint more than one third (1/3) of board membership and the board members appointed by the for profit may not, in turn, appoint the remaining two thirds (2/3) of the board The mission/purpose of the for profit must include the development or management of housing The CHDO must be free to contact for goods and services from vendor(s) if its own choosing

CERTIFICATION APPLICATION Other CHDOs must adhere to a fair lease and grievance procedure approved by IHCDA List of counties to be included in proposed CHDO Service Area Mail completed forms and required attachments to: Attn: Real Estate Production Analyst/CHDO Certification Indiana Housing and Community Development Authority 30 South Meridian Street, #1000 Indianapolis, IN 46204

LOOKING AHEAD/MOVING FORWARD The FY 2012 HOME Appropriations Law was released earlier in More details regarding the Law can be found via the following link: Focus should be on the July 12, 2012 session titled - For CHDOs: Understanding the CHDO Capacity Development Requirement A portion of this Law specifically references proposed changes to the HOME program as it relates to CHDO Development Capacity For example – “PJs may only provide FY2012 HOME funds for development activities to Community Housing Development Organizations (CHDOs) that have demonstrated that they have staff with demonstrated development experience

LOOKING AHEAD/MOVING FORWARD Proposed HOME Final Rule HUD published a significant proposed regulation for the HOME Program in the Federal Register on December 16, The proposed changes are intended to enhance performance and accountability, and clarify certain existing provisions. It is anticipated that HUD will make a final ruling on these proposed changes during the fall of Specific to CHDOs: pay particular attention to the area on CHDO Capacity Example of proposed change: To qualify as CHDO, organization must have paid staff with housing development experience. This means that organizations will have to discontinue the use of consultants to show capacity for completing a HOME-CHDO project.. More details regarding the Law can be found via the following link:

LOOKING AHEAD/MOVING FORWARD Proposed HOME Final Rule Example of proposed change: To qualify as CHDO, organization must have paid staff with housing development experience. This means that organizations will have to discontinue the use of consultants to show capacity for completing a HOME-CHDO project.. More details regarding the Law can be found via the following link: pdf

ADDITIONAL RESOURCES IHCDA HOME Program Page Becoming a CHDO Additional HUD CHDO Guidance m

ADJOURN THANK YOU!!! AND GOOD LUCK!!!