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Community Housing Development Organizations

Federal Regulations:  definition of CHDO

24 CFR 92.2  Definitions

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

(5) Does not include a public body (including the participating  jurisdiction). An organization that is State or locally chartered may qualify as a community housing development organization; however, the  State or local government 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 the participating jurisdiction or State recipient. Board  members appointed by the State or local government may not appoint the  remaining two-thirds of the board members;

(6) Has standards of financial accountability that conform to 24 CFR  84.21, "Standards for Financial Management Systems;"

(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 activities assisted  with HOME funds. An organization may satisfy this requirement by hiring  experienced key staff members who have successfully completed similar  projects, or a consultant with the same type of experience and a plan to  train appropriate key staff members of the 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.