CHDO as a Sponsor

Information by State  Print version   Related Information The key words below offer an explanation of each CHDO role and examples of CHDOs serving those roles.   Developer or Sponsor   Developer   Owner How to Beome a CHDO   Characteristics   Roles and funding   Special assistance   Use of funds Did You Know? A CHDO’s role as a sponsor may be very similar to that of a CHDO as a developer. For a brief discussion comparing the two, click here to see a discussion of CHDOs as developers or sponsors.

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.