Community Housing Development Organizations: CHDO

Nonprofit organizations can play key roles in the improvement and development of their communities. One special type of nonprofit, called a Community Housing Development Organization (CHDO), is particularly suited to address affordable housing needs at the local level. CHDOs operate through the HOME Investment Partnerships Program, which is a federally funded housing program created in 1990 as part of the Cranston-Gonzalez National Affordable Housing Act, as amended August 23, 2013. The HOME program is intended to create partnerships among federal, state and local governments and for-profit and nonprofit organizations who build, own, manage, finance and support low-income housing.

CHDO Set-Aside

HOME funds are allocated to state and local governments by HUD. A minimum of 15 percent must be set aside for CHDOs for investments in housing to be owned, developed or sponsored by CHDOs. MFA designates CHDOs and administers CHDO set-aside funds in all areas of New Mexico except the cities of Albuquerque and Las Cruces, which receive HOME allocations directly from HUD.

CHDO Operating

MFA may also set aside an additional 5 percent of its HOME allocation for a CHDO operating expense program. Operating expenses are reasonable and necessary costs for the operation of a CHDO and include: employee compensation and benefits; employee education, training, and travel; rent; utilities; communication costs; taxes; insurance; equipment; materials and supplies. CHDO operating funds will be awarded only in conjunction with an MFA Housing Development Department HOME award that meets the requirements of CHDO set-aside per section 92.300 of the Final HOME Rule published in the Federal Register on July 24, 2013 effective August 23, 2013. Development activity can be for rental units or homeownership.

• For rental, a CHDO must meet the definition therein for (i) owner, (ii) developer or (iii) sponsor. If (i) or (ii) the CHDO  must own the property in fee simple absolute or have a long term ground lease. For (iii) the CHDO must be sole general partner or managing member via a wholly owned affiliate. If the project has an investor (e.g. LIHTC projects) the investor and the CHDO must also agree that, if the CHDO is removed for cause, it may only be replaced by another CHDO. See section 92.300 of the Final HOME Rule for more detail. View details of MFA’s HOME rental program here.
• Currently, MFA does not offer a qualifying CHDO set-aside HOME homeownership development activity. Contact the person listed on the tab at the bottom of the page for updates on MFA's efforts to create a similar program.

CHDO Certification

CHDOs will no longer be certified annually. Nonprofits may apply for certification or recertification of CHDO status only at the time they apply for a qualifying CHDO set-aside award. For CHDOs that apply for a project in their current operating area, the maximum operating award will be $40,000. The award may be up to $50,000 if the project is in a new operating area. A CHDO may only apply for one operating award in any program year. Awards may not exceed 50 percent of the CHDO’s annual operating expenses based on the most recent fiscal year audited statement available. CHDO Operating awards will be on a first-come, first-served basis.  Unused funds will not be carried over into the next program year. If a CHDO receives a CHDO Operating award and fails to complete the approved HOME set-aside project, it will not be eligible to apply for CHDO operating funds for up to 24 months from the date of the last operating award, subject to MFA’s discretion.

CHDO Operating Funds

See MFA CHDO Policies and Procedures program guidance. Apply to the program contact listed at the bottom of this page for CHDO status and CHDO operating funds when simultaneously making a qualifying HOME rental CHDO set-aside request. If a nonprofit is designated or recertified as a CHDO by MFA and has an approved qualifying CHDO set-aside award and is approved for CHDO Operating funds, the program contact will forward the necessary agreement(s). MFA and the awardee will sign a CHDO Operating Fund Agreement. Operating funds will be disbursed in one lump sum after the CHDO has provided proof of qualifying expenses (employee compensation only) and after the qualifying project has closed on all funding and broken ground. At that time the CHDO will forward a letter to the program contact requesting disbursement of funds with an attached CHDO Operating Request Exhibit A and an original signed MFA Request for Reimbursement Form.