Overview of the Ohfa Chdo Set Aside Program

Contents

OVERVIEW OF THE OHFA CHDO SET ASIDE PROGRAM

CHDO CERTIFICATION CONSIDERATIONS

TO APPLY FOR CHDO STATE CERTIFICATION

PROCESS FOR APPROVING APPLICANT FOR CHDO CERTIFICATION

REFERENCES -CFR 24 §92.2 – Definition of Community Housing Development Organization

CHDO APPLICATION FOR THE 2019 HOUSING TAX CREDIT PROGRAM

QUALIFICATIONS FOR CHDO CERTIFICATION

Legal Status

Capacity of the Organization

Serving the Service Area

Organizational Structure

Table 1 – Proposed Development(s)

Table 2a – The Service Area

Table 2b – Serving the Service Area

Table 3 – Involving the Community

Table 4 - Housing Development History

Table 5a – Housing Development Staff Experience

Table 5b – Housing Development Staff Expertise

Table 6 – Board Composition

APPENDIX

2019 SELF-CERTIFICATION (EXAMPLE) FORM FOR CHDO BOARD MEMBERS...... A

OVERVIEW OF THE OHFA CHDO SET ASIDE PROGRAM

A Community Housing Development Organization (CHDO) is a special type of non-profit housing designation under the HOME Investment Partnership Program created by The Cranston-Gonzalez 1990 National Affordable Housing Act (NAHA). Among the purposes of NAHAare to promote partnerships between states, units of general local government and non-profit organizations.NAHA also expands a non-profit organization’s capacity to develop and manage decent and affordable housing.

The Ohio Housing Finance Agency develops guidelines for its state-certified CHDO program based on the Code of Federal Regulations Title 24- Housing and Urban Development, Part 92 – HOME Investment Partnership Program. Attaining state-certified status indicates that the organization has the capacity to sponsor a particular type of HOME-assisted housing. It also indicates that the organization is in touch with the community it is chartered to serve.

The state of Ohio receives a yearly allocation of HOME funds from the U.S. Department of Housing and Urban Development (HUD). Fifteen percent of those funds must be “set-aside” to be awarded to CHDOs to develop housing. The Ohio Housing Finance Agency will distribute the set-aside funds for Ohio through its 2019 Competitive (9%) Housing Tax Credit (HTC) Program in the form of gap financing for HTC developments. The terms and conditions of the distributionof all HOME funds can be found in the current State of Ohio Consolidated Plan. If the entire set-aside amount is not able to be absorbed by the HTC program, OHFA reserves the right, at its sole discretion, to allocate any remaining funds to other OHFA programs that conform to HOME regulations.

CHDO CERTIFICATION CONSIDERATIONS

• HOME program rules require that housing development organizations (even previously state-certified CHDOs) must be certified as a CHDO each time they apply for a HOME-funded housing development. Consequently, an organization can only be a CHDO if it is involved in a particular HOME-funded development project.

• The organization can only be a state-certified CHDO for the type of development project (example:multi-family rental) for which it can demonstrate the on-staff capacity to sponsor a 9% Housing Tax Credit development. If prior development experience is in building and selling single-family homes, the applicant most likely will not be certified as a CHDO to develop rental housing.

• Pre-Proposal Evaluation:

The goal is for OHFA to issue a CHDO certification before your organization’s submission of the HTC proposal.The certification is conditional upon a final application that is consistent with the information provided within this application.

In addition to confirming that your organization meets the federal CHDO definition, OHFA will also focus on the following:

-The organization’s demonstrated role in prior affordable housing developments

-Evidence that the developments proposed for 2019 are of similar size, scope and complexity as prior developments

-The level of experience of your paid housing staff and whether it correlates to your role in the proposed development (owner, developer/co-developer, or both)

-The financial capacity of the organization

OHFA will confirm that, in a limited partnership(LP), the CHDO or its subsidiary will be the sole general partner.OHFA will also confirm that, in a limited liability company (LLC), the CHDO or its subsidiary will be the sole managing member of the ownership entity. OHFA will determine if the organization has the capacity to carry out this responsibility.

Key submissions include a detailed housing staff experience narrativeand the tables contained in the application. The narrative should be rich with examples of development experience, not just citations of the developments in which individual staff members have been involved. The tables should be filled in completely and accurately.

In order to help confirm CHDO certification at the earliest time in the HTC application process, a desirable submission at this pre-proposal stage is the Partnership Agreement(s), which, among other pertinent information, indicates that if the agreement permits the CHDO to be removed as general partner or sole managing member, the agreement must provide that the removal must be for cause and that the CHDO must be replaced with another state-certified CHDO.Another document that OHFA will use to establish the organization’s capacity is a letter signed by the equity syndicator,which should state that they have evaluated the capacity of the organization, in its role as sole general partner/managing member, and will accept their guarantee for all financial aspects of the project after the issuance of the 8609s. The letter should also indicate that the syndicator understands that no other entity will be providing or supplementing these guarantees. Guarantees includethe ability to cover all reserves and make up the difference for any tax credits that may become subject to recapture. This letter is also required as part of the Final HTC Application; however, submitting it at this early stage makes it likely that the conditional CHDO certification will not be reversed during the final application review.

• Once the HTC Proposal application is received and more details of the development and the development team become known, OHFA will confirm the organization’sCHDO status. Provided that the information contained in this application and supporting documentation is not contradicted in the HTC Proposal(s) or Final Application(s), the CHDO status will remain the same.

• The HOME program has changed over the years, and developing housing as a CHDO has taken on increased obligations and commitments. Your familiarity with the current HOME regulationsis important: CHDO specific regulations are in Subpart G.

TO APPLY FOR CHDO STATE CERTIFICATION

Complete the attached applicationto apply for state-certified CHDO status. The due date for this CHDO certification application isWednesday, October 31, 2018.

• Some of the responses require the same document to substantiate multiple conditions. You only need to submit each document once. For ease and accuracy of the review, highlight and identifyall of the relevant parts.

• Do not send illegible documents. Scanned documents must be readable.

• Do not send information that is not requested.

• When complete, emailthis application, saved as a Word document with the organization’s name as part of the file name, and all accompanying documentation files, which should be clearly named to be easily identified in the review process. Example: Articles of Incorporation.pdf.

• Send the email to mailto:.

• The subject line of the email should read (name of organization) – 2019 CHDO Certification.

• The email must be received on or beforeOctober 31, 2018

PROCESS FOR APPROVING APPLICANT FOR CHDO CERTIFICATION FOR THE 2019 COMPETITIVE HTC PROGRAM

• The organization completes the application and returns it and all supporting documentation by the due date listed in the 2019 Competitive HTC Program Calendar, which is Wednesday

October 31, 2018.

• The organization will be informedon or before Friday December 14, 2018,if it has met the requirements for CHDO certification.

• Applicants that cannot be certified by this date because of missing or incomplete information will be given the opportunity to respond to the specific reasons why that the requirements were not met. They may submit any additional information to OHFA within one week of the notification to attempt to cure the deficiency.OHFA will notify the applicant of their CHDO status within three weeks of receipt of the additional information.

REFERENCES -CFR 24 §92.2 – Definition of a Community Housing Development Organization

A Community Housing Development Organization (CHDO) is a private nonprofit organization that:

(1) Is organized under State or local laws;

(2) Has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual;

(3) Is neither controlled by, nor under the direction of, individuals or entities seeking to derive profit or gain from the organization. A community housing development organization may be sponsored or created by a for-profit entity, but:

(i) The for-profit entity may not be an entity whose primary purpose is the development or management of housing, such as a builder, developer, or real estate management firm.

(ii) The for-profit entity may not have the right to appoint more than one-third of the membership of the organization's governing body. Board members appointed by the for-profit entity may not appoint the remaining two-thirds of the board members;

(iii) The community housing development organization must be free to contract for goods and services from vendors of its own choosing; and

(iv)The officers and employees of the for-profit entity may not be officers or employees of the community housing development organization.

(4) Has a tax exemption ruling from the Internal Revenue Service under section 501(c)(3) or (4) of the Internal Revenue Code of 1986 (26 CFR 1.501(c)(3)-1 or 1.501(c)(4)-1)), is classified as a subordinate of a central organization non-profit under section 905 of the Internal Revenue Code of 1986, or if the private nonprofit organization is an wholly owned entity that is disregarded as an entity separate from its owner for tax purposes (e.g., a single member limited liability company that is wholly owned by an organization that qualifies as tax-exempt), the owner organization has a tax exemption ruling from the Internal Revenue Service under section 501(c)(3) or (4) of the Internal Revenue Code of 1986 and meets the definition of “community housing development organization;”

(5) Is not a governmental entity (including the participating jurisdiction, other jurisdiction, Indian tribe, public housing authority, Indian housing authority, housing finance agency, or redevelopment authority) and is not controlled by a governmental entity. An organization that is created by a governmental entity may qualify as a community housing development organization; however, the governmental entity may not have the right to appoint more than one-third of the membership of the organization's governing body and no more than one- third of the board members may be public officials or employees of governmental entity. Board members appointed by a governmental entity may not appoint the remaining two-thirds of the board members. The officers or employees of a governmental entity may not be officers or employees of a community housing development organization;

(6) Has standards of financial accountability that conform to 2 CFR 200.302‐.303, (Financial Management and Internal Controls)

(7) Has among its purposes the provision of decent housing that is affordable to low-income and moderate-income persons, as evidenced in its charter, articles of incorporation, resolutions or by-laws;

(8) Maintains accountability to low-income community residents by:

(i) Maintaining at least one-third of its governing board's membership for residents of low-income neighborhoods, other low-income community residents, or elected representative of low-income neighborhood organizations. For urban areas, “community” may be a neighborhood or neighborhoods, city, county or metropolitan area; for rural areas, it may be a neighborhood or neighborhoods, town, village, county, or multi-county area (but not the entire State); and

(ii) Providing a formal process for low-income program beneficiaries to advise the organization in its decisions regarding the design, siting, development, and management of affordable housing;

(9) Has a demonstrated capacity for carrying out housing projects assisted with HOME funds. A designated organization undertaking development activities as a developer or sponsor must satisfy this requirement by having paid employees with housing development experience who will work on projects assisted with HOME funds. For its first year of funding as a community housing development organization, an organization may satisfy this requirement through a contract with a consultant who has housing development experience to train appropriate key staff of the organization. An organization that will own housing must demonstrate capacity to act as owner of a project and meet the requirements of §92.300(a)(2). A nonprofit organization does not meet the test of demonstrated capacity based on any person who is a volunteer or whose services are donated by another organization; and

(10) Has a history of serving the community within which housing to be assisted with HOME funds is to be located. In general, an organization must be able to show one year of serving the community before HOME funds are reserved for the organization. However, a newly created organization formed by local churches, service organizations or neighborhood organizations may meet this requirement by demonstrating that its parent organization has at least a year of serving the community.

CHDO Certification for the 2019 Housing Tax Credit Program

GUIDELINES – PAGE 1

APPLICATION FOR CHDO CERTIFICATION FOR THE

2019 HOUSING TAX CREDIT PROGRAM

Today’s Date - Click here to enter a date.

CHECK THE SERVICES BELOW THAT ARE PROVIDED DIRECTLY BY THE ORGANIZATION:

CHDO Certification for the 2019 Housing Tax Credit Program

APPLICATION – PAGE 1

☐Accessibility Retrofitting

☐Construction Management Services

☐Credit Counseling

☐Down Payment Assistance

☐Employment Training

☐Emergency/Transitional Housing Services

☐Financial Literacy Training

☐Food Pantry

☐Foreclosure Counseling

☐Grant Writing

☐Historical Rehabilitation

☐Homebuyer Education

☐Housing Construction Company Owner/ Subsidiary

☐HUD-Certified Housing Counseling Agency

☐Legal Services

☐Real Estate Development

☐Rental Property Management

☐Rental Property Owner

☐Single Family Rehabilitation

☐Tool Bank

☐Transportation & Delivery Services

☐Weatherization Services

Supportive Housing Special Needs Provider to:

☐Abused Spouses and Their Children

☐Elderly

☐Homeless

☐Elderly

☐Individuals with Developmental Disabilities

☐Individuals with Mental Disabilities

☐Individuals with Physical Disabilities

☐Migrant Farm Workers

☐Persons with Alcohol or Other DrugAddictions

☐Persons with HIV/AIDS

CHDO Certification for the 2019 Housing Tax Credit Program

APPLICATION – PAGE 1

QUALIFICATIONS FOR CHDO CERTIFICATION

Check the boxes that apply and submit the highlighted documentation with the application. Highlight and label the pertinent sections of all documents that you are citing to fulfill these certification requirements.

“Governing Documents” refers to the organization’s bylaws,code of regulations or charter. These documents must all reflect the most current status of the organization, including its legal name and service areas, and any changes to these documents must have been approved by theboard and incorporated into the text prior to submitting this application.

Legal Status

L1.☐The organization is organized under state or local laws, as evidenced by the organization’s Articles of Incorporation.

L2.☐The organization declares that no part of its net earnings benefit any member, founder, contributor or individual, as evidenced by a statement to that effect included in theGoverning Documents.

L3.☐The organization has a tax exemption ruling from the Internal Revenue Service (IRS) under Section 501(c) of the Internal Revenue Code of 1986, as evidenced by a501(c)(3) or 501 (c)(4) Certificate from the IRS

L4.☐The organization has among its purposes the provision of decent housing that is affordable to low-income and moderate-income persons, as evidenced by that statement to that effect included in theGoverning Documents.

L5.☐The organization has a clearly defined geographic service area articulated in the Governing Documents.

Capacity of the Organization

For HTC developments, the CHDO must conform to the HOME definition of “sponsor” (CFR 24 §92.300(a)(4)). Check the C1 box to acknowledge that your organization understands what it means to be a sponsor of the tax credit development for which you are being certified as a CHDO.

C1☐CFR 24 §92.300(a)(4) - Rental housing is “sponsored” by the community development housing organization if it is rental housing “owned”* or “owned and developed” by a subsidiary of a community housing development organization, a limited partnership of which the community housing development organization or its subsidiary is the SOLE GENERAL PARTNER, or a limited liability company of which the community housing development organization or its subsidiary is the SOLE MANAGING MEMBER.The subsidiary of the community housing development organization may be a for-profit or nonprofit organization.

The subsidiary of the community housing development organization must be wholly owned by the community housing development organization.Submit a statement, signed by the authorized signer for theorganization, that the subsidiary is wholly owned by the (potential) CHDO.

If the limited partnership or limited liability company agreement permits the community housing development organization to be removed as general partner or sole managing member, the agreement must provide that the removal must be for cause and that the community housing development organization must be replaced with another community housing development organization.

C2.☐The applicantmust document that the organization employs staff withthe particular housing development experience appropriate for the HTC development and that the staff has the experience in producing the particular type of housing proposed. (Example: multi-family rental)

Staff must be paid by the organization. Volunteers, board members or staff “borrowed” or “donated” from other organizations do not fulfill this requirement. These qualifications can be acquired through a combination of education, training and experience.