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CHDO as a Sponsor

A CHDO may be a sponsor for both HOME-assisted rental housing and homebuyer housing.

  • A CHDO sponsor must always own the project prior to and/or during the development phase of the project.

For HOME-assisted rental housing - The CHDO is considered a sponsor when it 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 occur prior to or during development or upon completion of the development of the project. In this situation, the following requirements apply:

  • HOME funds must be invested in the project owned by the CHDO sponsor.
  • The CHDO sponsor must identify the particular nonprofit organization that will obtain ownership of the property prior to commitment of HOME funds.
  • The second nonprofit must assume all HOME obligations (including repayment of loans and tenant and rent requirements) for the project from the CHDO at a specified time. If the property is not transferred to the nonprofit organization, the CHDO sponsor will remain liable for the HOME obligations
  • The nonprofit organization must be financially and legally separate from the CHDO sponsor. (The second nonprofit may have been created by the CHDO, nevertheless it is a separate entity from the CHDO.)
  • The CHDO must provide sufficient resources to the nonprofit organization to ensure the completion of the development and long-term operation of the project.

HOME-assisted homebuyer projects - The CHDO is considered a sponsor when it owns a property and then shifts responsibility for the project to another nonprofit at a specified time in the development process. The second nonprofit, in turn, transfers title, along with the HOME obligations and resale/recapture requirements, to a HOME-qualified homebuyer within a specified time frame. In this situation, the following requirements apply:

  • The HOME funds must be invested in the property owned by the CHDO.
  • The other nonprofit being sponsored by the CHDO must acquire the completed units or complete the rehabilitation or construction of the property.
  • Upon completion of the rehabilitation or construction, the sponsored nonprofit is required to sell (transfer) the property, along with the HOME loan/grant obligations, to a qualified homebuyer.
  • This sponsorship role could include a lease-purchase approach, whereby the sponsor would lease the property to a homebuyer for a period not to exceed two years. At the expiration of the lease, the sponsor must sell or transfer the property, along with the HOME loan/grant obligations, to the homebuyer. If the property is not transferred, the sponsored nonprofit retains ownership and all HOME rental requirements will apply.

Example of a CHDO as a Sponsor

A CHDO enters into a legally-binding agreement with ElderCare, an existing nonprofit organization experienced in providing enhanced housing services to the elderly. The CHDO agrees to purchase and rehabilitate a vacant 50-unit property and convey the property to ElderCare upon completion of the construction phase.

ElderCare will assume responsibility for the long-term management of the project and the fulfillment of all obligations and requirements associated with the use of the HOME funds.

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