Harris County Community and Economic Development Department Community Housing Development Organization (CHDO) Workshop March 15, 2006

Agenda  Overview of HCCEDD  CHDO Overview  CHDO Assistance  Recordkeeping & Monitoring  Questions & Wrap-up

Resources Available HUD Entitlement Funds, PY2006 Harris County will receive $15,004,622 for PY 2006.

Service Area

Unincorporated Harris County and its 15 cooperative cities. Unincorporated Harris County and its 15 cooperative cities. BellaireSeabrook Deer Park Shoreacres Galena Park South Houston Humble Tomball Jacinto City Waller Katy Webster LaPorte West University Place Morgan’s Point Houston, Baytown and Pasadena receive their own community development funds and are not included in the Harris County service area.

How it Works

The Consolidated Plan The Consolidated Plan  Five-year plan that addresses:  Housing;  Social services;  Infrastructure; and  Community revitalization needs.  Specifies types of projects to be funded  Application for federal funds under HUD’s formula grant programs:  CDBG;  HOME / ADDI; and  ESG.  Basis for assessing performance

The Consolidated Plan aids decision makers in creating strategies to address the following:  Employment and employability;  Affordable housing;  Adequate streets;  Water, sewage and drainage systems;  Quality education and Workforce Development;  Parks and green space;  Community facilities;  Quality health care;  Crime awareness and public safety; and  Safe, peaceful and productive neighborhoods for low- and moderate-income communities.

Request for Proposals (RFP)  Solicitation and acceptance of proposals  According to federal and state procurement laws and standards  Applicants must:  Be a non-profit organization or governmental agency or entity;  Expend funds within a 12-month period;  Have sufficient working capital;  Meet one Consolidated Plan Objective;  Meet one National Objective;  Benefit eligible residents in CEDD’s HUD Service Area.  Used to address objectives identified in Harris County’s Consolidated Plan

Annual Action Plan (AAP)  Detailed description of the allocations of Harris County HUD entitlement dollars (CDBG, HOME, and ESG).  Discusses how resources generated by tax dollars will be utilized for the upcoming program year.

Agencies Receive Allocations  Contracts are developed between Harris County and agencies.  Funds are dispersed on a reimbursement basis.  Grants Management staff monitors all projects.

Consolidated Annual Performance & Evaluation Report (CAPER)  Describes progress.  Reviews and reports county’s use of Entitlement funds.  Benchmark for projects to be funded.  Allows for self- assessment.

CHDO Overview

A Community Housing Development Organization (CHDO) is a private nonprofit, community-based service organization that has obtained or intends to obtain staff with the capacity to develop affordable housing for the community it serves. What is a CHDO?

CHDO Set-Aside  15% of the HOME allocation must be distributed to housing owned, developed, or sponsored by CHDOs. (PY06 CHDO Allocation = $522,746)  Jurisdictions have 24 months to reserve funds for CHDOs.

CHDO Qualifying Criteria CHDOs must meet requirements pertaining to their: CHDOs must meet requirements pertaining to their:  Legal Status  Organizational structure  Capacity and experience

CHDO Qualifying Criteria Legal Status To be eligible, organizations must:  Be organized under state and local law;  Have their purpose as providing decent and affordable housing to low/mod income persons;  Provide no individual benefit;  Have a clearly defined service area; and  Have an IRS non-profit status. (501(c)3 or 501(c)4

CHDO Qualifying Criteria Organizational Structure  1/3 of the board members must be residents of the low-income community  No more than 1/3 of the board members can be from the public sector  Balance is unrestricted except when sponsored/organized by a for-profit

To meet the 1/3 minimum requirement:  Residents of low-income neighborhoods in the community  Residents of the community that are qualified as low income qualified as low income  Elected representatives of low-income neighborhood organizations neighborhood organizations Low-Income Representation CHDO Qualifying Criteria Organizational Structure

 Low-income beneficiaries provide input to CHDOs through an established formal process that is:  Described in writing; and  Stated in by-laws or resolution.  Ways to achieve this:  Special committees or neighborhood advisory councils; and  Open town meetings Low-Income Input CHDO Qualifying Criteria Organizational Structure

 Public sector representatives include:  Elected Officials;  Appointed officials;  Public employees; and  Persons appointed by a public official.  Low-income public officials count against the 1/3 public sector maximum. CHDO Qualifying Criteria Organizational Structure

For-profit entities can sponsor a CHDO:  CHDO cannot be controlled by the for-profit;  Primary purpose of for-profit cannot be housing ownership/management;  For-profit representatives cannot be more than 1/3 of the board; and  CHDO must be free to contract for goods/services from any vendor. CHDO Spin-Offs CHDO Qualifying Criteria Organizational Structure

CHDO Qualifying Criteria Capacity and Experience  Organization must:  Have at least ONE YEAR of experience serving the community;  Demonstrate staff capacity to carry out planned activities; and  Have financial accountability standards.  Capacity must be relevant to type of CHDO activity to be undertaken.

Don’t make these mistakes:  No geographic boundaries to service area;  Not received IRS tax exempt status letter;  Not recertified each year;  No organizational and financial capacity. *CHDO certifications from neighboring jurisdictions are ineligible for Harris County CHDO Set-Aside Funds. *CHDO certifications from neighboring jurisdictions are ineligible for Harris County CHDO Set-Aside Funds. CHDO Certification* CHDO Qualifying Criteria Capacity and Experience

Eligible uses of CHDO set-aside funds  Acquisition and/or rehab of rental or homebuyer housing  New Construction (rental or homebuyer)  Direct financial assistance  Buyers of HOME-assisted units  Sponsored/developed by CHDO CHDO Qualifying Criteria Capacity and Experience

Ineligible uses of CHDO set-aside funds:  Tenant-based rental assistance (TBRA)  Homeowner rehab  “Brokering” or other real estate transaction CHDO Qualifying Criteria Capacity and Experience

To count toward CHDO set- aside funds, the CHDO must act as: To count toward CHDO set- aside funds, the CHDO must act as:  Owner;  Developer; or  Sponsor. CHDO Roles

 As owner, CHDO:  Holds valid legal title; OR  Has long-term leasehold investment.  CHDO may be an owner in Partnerships:  Must have effective control.  CHDO may be both owner and developer of its own project. CHDO as Owner

 CHDO owns a property OR has contractual obligation to the property owner to:  Obtain financing; AND  Rehabilitate or construct property.  If a rental project, the CHDO may also manage project.  If a homeownership project, CHDO transfers property to homebuyer. CHDO as Developer

Of rental housing, the CHDO:  Develops a project that is solely or partially owned;  Conveys ownership to a second non- profit. Of homebuyer project, the CHDO:  Owns property and shifts responsibility to second non-profit;  Second non-profit transfers title and obligations to homebuyers. CHDO as Sponsor

CHDO Assistance

CHDOs may take on the role of subrecipient CHDOs may take on the role of subrecipient  Not a CHDO set-aside activity  May not receive HOME funds for a project through the subrecipient activity Please note: CHDO may not receive set-aside and general HOME funds for same project. CHDO vs. Subrecipients

Jurisdictions may provide special forms of assistance to CHDOs: Jurisdictions may provide special forms of assistance to CHDOs:  Project pre-development loans;  Operating assistance;  Use of HOME project proceeds;  Capacity-building assistance. Special Assistance

 Costs must be:  Related to a specific project;  For HOME eligible activities.  Uses and costs must be customary and reasonable.  Up to 10% of set-aside.  Not limited to 10% of a project. Pre-Development Funds

 Technical assistance and site control loans  Used to establish preliminary feasibility prior to site control  Do not require environmental clearance  Seed money loans  Cover pre-construction costs  Must have site control Types of Pre-Development Loans

 Up to 5% of HOME allocation may be used for CHDO operating assistance  Eligible uses:  Organizational support;  Housing education;  Administrative expenses; and  Operating expenses. CHDO Operating Assistance

 Assistance may NOT exceed:  $50,000 each fiscal year; OR  50% of CHDOs total annual operating expenses for that year. WHICHEVER IS GREATER!  Admin funds to CHDOs acting as subrecipients do NOT count towards cap. Limitations on Operating Assistance

 Jurisdictions may allow CHDO to retain some or all proceeds.  Proceeds might be:  Proceeds from permanent financing;  Interest on HOME loans.  Proceeds are NOT considered program income. Project Proceeds

 Use of proceeds must be for:  HOME-eligible activities; OR  Other low-income housing activities.  Written agreement with CHDO must include:  Whether CHDO will retain any proceeds; and  The specific use of proceeds. Use of Project Proceeds

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 Capacity-Building Assistance

 Identify potential organizations  Determine eligibility and basic capacity  Use the CHDO checklist  Assess additional needed capacity  Organizational issues  Experience  Financial management Selecting CHDOs

Record Keeping and Monitoring

Recordkeeping & Monitoring Overview  General recordkeeping requirements  Access to records  Retention of records  Monitoring  Reporting requirements

General Recordkeeping Requirements Records should be:  Accurate, complete, orderly; and  Maintained in order to:  Document all CHDO funded activities; and  Demonstrate compliance with all applicable program and other requirements.* * According to U.S. Department of Housing and Urban Development Department (HUD) 24 CFR Part 570 and Part

General Recordkeeping Requirements Establish and maintain Establish and maintain  Administrative records  Financial Records, and  Project/case files.

Access to Records Records are used to create audits, examinations, excerpts and transcripts. The following have access to records of CHDO funded organizations:  CEDD representatives;  HUD representatives;  Comptroller General’s Office of the United States;  Other authorized governmental agencies;  Citizens (24 CFR ).

Retention of Records  Retain records for periods of time after annual project activities have been completed.  Retain records for five years from the date of submission of the CAPER in which activity is reported for the last time. For all organizations (per 24 CFR (b)(3), 24 CFR 85.42, and OMB Circular A-110, Attachment C) For all organizations (per 24 CFR (b)(3), 24 CFR 85.42, and OMB Circular A-110, Attachment C)

Monitoring The primary mission of monitoring is to ensure that organizations are:  In compliance with all regulations governing their administrative, financial, and programmatic operations; and  Achieving their performance objectives within the schedule and budget, as outlined in the Agreement.

Monitoring Five steps in a monitoring visit  Notification letter  Entrance conference  Documentation, data acquisition and analysis  Exit conference  Monitoring letter

Reporting Requirements  Reporting requirements are specified by the Grantee (CEDD) in the Subrecipient Agreement.*  Programmatic and Reimbursement Request Reports are due monthly.  Quarterly and Annual reports may also apply. *24 CFR (b)(2).

Free Legal Advice to CHDOs Christina E. Trejo Staff Attorney Texas C-Bar 712 Main St., Ste Houston, Texas Ph: (713) ext. 153 Fax: (512)

Questions And Answers

Questions?Contact: Lori Wilson-Reynolds Program Analyst (713) , ext Or visit our website at: