CHDO Operating Grant Application Instructions

Background

Since 1995, the Colorado Division of Housing (DOH) has made funds available to Community Housing Development Organizations (CHDOs) for pre-development, capacity building, administration, and operating activities that increase the supply of affordable housing in Colorado. The DOH accepts applications for HOME CHDO Operating Grants once a year. CHDO Operating Grants are funded through the federal HOME Investment Partnerships Program (HOME). In order to receive CHDO funds from the DOH, a local housing organization must be formally certified by the DOH at the time of each application for operating grants and CHDO-eligible housing projects.  Funds are currently available for operating expenses only, not pre-development activities. 

Minimum Threshold Criteria

Applicant Requirements

CHDO Applicants must demonstrate compliance with the requirements of 24 CFR 92.2, “Community Housing Development Organization.” For more background, see the CHDO chapter of the HUD Building HOME manual.

1. Legal structure

• The organization is organized under state or local law. 
• The organization has among its purposes the provision of decent housing that is affordable to low-income and moderate-income persons. 
• The organization has no part of its net earnings inuring to the benefit of any member, founder, contributor, or individual.
• The organization is not under the control or direction of any individual or entity seeking to derive profit or gain.
• The organization has one of the following IRS tax-exempt statuses: 
  • Exemption under 501(c)(3) or 501(c)(4); 
  • Subordinate of a central nonprofit under IRC Section 905; or  
  • A private nonprofit that is a wholly owned subsidiary of an organization that has 501(c)(3) or (c)(4) status and meets the CHDO definition.
• The organization is not a governmental entity (any of the following: participating jurisdiction, other jurisdiction, Indian tribe, Public Housing Agency, Indian Housing Authority, housing finance agency, or redevelopment authority).

2. Independence

• If the organization was created by a governmental entity, then the following apply:
  • Public officials and employees of the governmental entity that created the organization may comprise no more than 1/3 of the board.
  • The governmental entity that created the organization may not appoint more than 1/3 of the board members, and board
    members appointed by the governmental entity may not appoint the remaining 2/3 of the board.
  • Officers and employees of a governmental entity cannot be officers or employees of a CHDO.
• If the organization was created by a for-profit entity, then the following apply:
  • The for-profit entity that sponsored or created the organization may not have as its primary purpose the development or
    management of housing, such as a builder, developer, or real estate management firm. 
  • The for-profit entity that created the organization may not appoint more than 1/3 of the board members, and for-profit-appointed members may not appoint the remaining 2/3 of the board.
  • Officers and employees of the for-profit entity that created the organization cannot be officers or employees of the CHDO.
  • The organization must be free to contract for goods and services with others.

3. Accountability to the Low-Income Community

• The organization must have a clearly defined designated service area (i.e., the “community” in which it produces housing). 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).
• Maintains accountability to this community by ensuring that at least 1/3 of the board members are: residents of low-income neighborhoods, low-income beneficiaries of HUD programs, other low-income community residents, designees of low-income neighborhood organizations, or designees of nonprofit organizations in the community that address the housing or supportive service needs of low-income residents or residents of low-income neighborhoods, including homeless providers, Fair Housing Initiatives Program providers, Legal Aid, disability rights organizations, and victim service providers.
• The organization has a formally adopted process for low-income beneficiaries within the community to advise it on decisions regarding the design, location, development, and management of housing.
• The organization has at least 1 year of serving the community, or, if it is formed by local churches, service organizations, or neighborhood organizations, its parent organization meets this requirement.

4. Capacity

• The organization has financial management systems that conform to 2 CFR 200.302 and 200.303.
• The organization has paid employees with demonstrated experience relevant to the CHDO’s role in undertaking the HOME activity to be funded. This capacity experience may be supplemented, but not entirely replaced, by board members or officers of the organization who are volunteers. During the first year of an organization’s funding as a CHDO only, capacity can be demonstrated through a contract with a consultant who has housing development experience to train appropriate key staff of the organization.

5. CHDO Operating

• The organization is funded from the set-aside for a project under development or is reasonably expected to be funded from the CHDO set-aside within 24 months (see CHDO set-aside project details below).
• The operating expense funds will be used for eligible operating costs that are reasonable and necessary.
• Operating expense funding (including from other PJs and any Pass-Through funding) in the fiscal year will not exceed the greater of $50,000 or 50% of the organization’s total operating expenses in that year.

CHDO Set-Aside Project

Applicants for CHDO Operating Grants must have demonstrated capacity for carrying out housing projects assisted with HOME funds, and intend to own, develop, or sponsor a HOME-eligible project within 24 months in accordance with 24 CFR §92.300. More information on applying for CHDO set-aside funds can be found on the DOH’s funding application webpage.

CHDOs can undertake either homebuyer or rental projects, as described below, with CHDO set-aside funds:

1. Homebuyer projects in accordance with 24 CFR §92.254  

• Develop: The organization is or will be the owner in fee simple and the developer of new or rehabilitated units for sale to low-income buyers. The organization will control the development process, including, at a minimum, arranging financing for the project and being in sole charge of construction.

2. Rental projects in accordance with 24 CFR §92.252

• Own: The organization is or will be the owner in fee simple absolute (or will hold a long-term ground lease) for at least the period of affordability. The organization may contract with another entity to act as a developer. 
• Develop: The organization is or will be an owner in fee simple absolute (or will hold a long-term ground lease) for at least the period of affordability. The organization will control the development process, including, at a minimum, arranging financing for the project and being in sole charge of construction.
• Sponsor:  Must meet one of the following:
  • The organization will own and develop a project that will be conveyed at a predetermined time after completion to a
    designated private nonprofit (that was not created by a governmental entity).
  • The project will be owned and/or developed by an eligible CHDO affiliate, including: 
    • A wholly owned subsidiary of the CHDO; or 
    • A limited partnership of which the CHDO or its wholly-owned subsidiary is the sole general partner; or 
    • A limited liability company of which the CHDO or its wholly-owned subsidiary is the sole managing member.

Required Document Uploads

Prior to submitting an application, interested parties must submit a Letter of Intent (LOI) using the template found on the DOH website. See the Timeline section of these application instructions.

Applicants must submit a complete application through the Neighborly portal. Required uploads include:

• DOH CHDO Operating Budget Spreadsheet
  • Blank CHDO Operating Spreadsheet
• Board Member List, and self-certification from low-income representatives
• Organization Bylaws
• Documentation of a formally adopted process for low-income beneficiaries to advise the organization on decisions regarding design, siting, development, and management of housing
• Proof of Publication - Pre-Application Legal Notice of application to DOH
  • Must be dated at least 10 business days (to allow time for a public hearing to be requested) and no more than 3 months prior to the application submission deadline.
  • Template Pre-Application Legal Notice
• IRS Determination Letter
• Most recent audited financial statements, single audits, or CPA-prepared financial statements (whichever applies)
  • Include the most recent full year plus the most recent self-prepared year-to-date.
  • Balance sheets and Profit & Loss statements must be provided.
• Organization’s Section 504 Self-Certification
  • Template Section 504 Self-Certification
• Resolution to Apply and Signatory Authority with backup documentation
  • Template Sample Resolution to Apply and Delegation of Signatory Authority
  • Backup documentation (a board resolution, bylaws, policy, etc.) that clearly confirms that the individual named is authorized to apply to DOH for funding and has full signatory authority regarding all contracts and corresponding documents associated with agreements entered into with the State.
• Certificate of Good Standing
  • Download from the CO Secretary of State website
• W-9 State of Colorado Version dated within 90 days of application submission
  • Blank W-9 Form
  • Example W-9 Form
• Unique Entity Identifier (UEI)
  • Provide a copy of the SAM.gov entity profile for the borrower/grantee showing the Unique Entity ID and active registration.
• Signature Block in Word format
  • Example Signature Block
• Any letters of funding support as applicable

Evaluation Criteria

Due to the limited nature of CHDO funds, the application process is highly competitive. DOH may give priority to:

• Organizations whose clearly defined designated service area is in a rural county, or a multi-county area including a majority of rural counties, or other underserved areas. The organization's offices/headquarters and low-income community board representation must also be located in the rural/underserved area.
• Organizations that don't receive CHDO funding from other local governments.
• Organizations with a proven track record of production of affordable housing units within the past 24 months.
• Under-resourced organizations are based on a review of financial statements.

Timeline

Interested parties wishing to submit an application for CHDO Operating funds must submit a Letter of Intent (LOI) using the template found on the DOH website, due by August 15. Please send the LOI to Bradley Wood via email at bradley.a.wood@state.co.us, and include details of the proposed HOME-eligible CHDO set-aside project in your LOI.

Once the LOI has been accepted, DOH staff will contact you to begin an application. DOH accepts applications for CHDO Operating funding through the Neighborly Participant Portal, due by September 1.  Applications must be completed in their entirety. DOH staff will review applications for completeness within ten days of the application due date. Applicants will be given 7 days to cure any application deficiencies. If deficiencies are not cured within the 7-day timeline, the application
will be considered incomplete and will not be accepted.

The table below shows the model application processing timeline.  The length of every stage of the process is variable and dependent upon the application/applicant’s readiness to proceed.  Applicants who are unable to meet the threshold review by the end of the cure period will not proceed.  While it is DOH’s goal to adhere to these timelines, please note these are target dates for review times and may not always be met.  Actual timelines for application reviews may vary depending on the project and staff capacity at the time of submission.

Anticipated Timelines

• Letter of Intent: August 15
• Application Submittal: September 1
• Threshold Review: September 10
• Threshold Review Cure Period: 7 calendar days
• DOH Staff Application Review: Within 30 days of the application passing the Threshold Review
• Award Letter: Mid-October
• Contract drafting begins: Early November
• DOLA Executes Contract: Early January
• Process Payment Request: Two weeks after the request is received, for executed agreements (see additional details
  below).
• Expiration Date of Contract: December 31

Agreement Requirements

Reporting

Organizations awarded CHDO Operating Funds who have executed an agreement with DOH are required to submit quarterly performance reports to DOH, covering progress on any development projects, including the HOME-eligible project(s), and confirming continued compliance with board makeup requirements.

Payment Requests

Organizations with an active, executed CHDO Operating agreement may submit pay requests on a monthly or quarterly basis. Requests must include:

• Payment Request Form (Please download to use)
• Time and Effort Tracking spreadsheet (Please download to use)
• Timesheets
• Paystubs

The date that the cost was incurred and the date paid must be within the agreement’s effective and expiration dates. The State’s fiscal year ends on June 30. Pay requests may not bridge fiscal years. Any costs incurred in a different fiscal year must be submitted in a separate pay request. Contact your Asset Manager for additional information about requirements during the active agreement period.