Sec. 05.12.01.09. Allocation of Funds — Community Housing Development Organizations

A. Eligible Organizations. Community housing development organizations are eligible if they meet the criteria set forth in 24 CFR §92.2.

B. CHDO Set Asides.

(1) Fifteen percent of the total allocation to the HOME Investment Trust Fund shall be reserved for and used by CHDOs in accordance with 24 CFR §92.300. Up to 10 percent of the funds reserved for CHDOs may be reserved for loans made under §§C and D of this regulation.

(2) To the extent not reserved for loans under §§C and D of this regulation, the reserved CHDO funds shall be allocated to the DHCD housing programs. If set asides are committed at a rate slower than the rate necessary to use the set aside within the required time period, the Administration may:

(a) Initiate aggressive marketing for set-aside eligible projects;

(b) Give priority to set-aside eligible projects;

(c) Provide expedited pipeline processing for set-aside eligible projects; or

(d) Restrict remaining funds for use only to meet the set-aside requirements.

C. Eligible Uses - Technical Assistance and Site Control.

(1) Loans under this section shall be processed and made by the Division of Development Finance.

(2) A CHDO may apply to use HOME funds for technical assistance and site control loans in the early stages of site development for an eligible project.

(3) Loans under this section may be used to pay:

(a) Project expenses necessary to determine project feasibility;

(b) Consulting fees;

(c) Costs of preliminary financial applications;

(d) Legal, architectural, and engineering fees;

(e) Engagement of a development team;

(f) Option to acquire property; and

(g) Site control and title clearance.

(4) Loans under this section may not be used to pay for the general operational expenses of a CHDO.

(5) Loans under this section shall be repaid from construction loan proceeds or other project income, unless the Department finds that there are impediments to project development that are reasonably beyond the control of the CHDO, in which case the Department may waive repayment, in whole or in part.

D. Eligible Uses - Seed Money Loans.

(1) Loans under this section shall be processed and made by the Division of Development Finance.

(2) A CHDO may apply to use HOME funds to provide CHDOs with funds to pay reasonable and customary preconstruction costs of a project, including, but not limited to, the costs of:

(a) Obtaining firm construction loan commitments;

(b) Architectural plans and specifications;

(c) Zoning approvals;

(d) Engineering studies; and

(e) Legal fees.

(3) In order to qualify for a loan under of this section, a CHDO is required to have:

(a) Control of the site evidenced by a deed, a sales contract, or an option contract to acquire the property;

(b) Obtained a preliminary financial commitment; and

(c) Formed a capable development team.

(4) Loans under this section shall be repaid from construction loan proceeds or other project income, unless the Department finds that there are impediments to project development that are reasonably beyond the control of the CHDO, in which case the Department may waive repayment, in whole or in part.

E. Special Terms and Conditions - Tenant Rights and Obligations. A CHDO which receives HOME assistance shall:

(1) Adhere to a fair lease and grievance procedure approved by the Department; and

(2) Develop and follow a plan of tenant participation in CHDO management decisions.