Section 3 Overview, Section 3 Business Registry, and Reporting System

What is Section 3 Section 3 of the Housing and Urban Development Act of 1968 ensures that employment, training and contracting generated by certain HUD financial assistance shall, to the greatest extent feasible, be directed to low- and very low- income persons…and to business concerns which provide economic opportunities to (those) persons. 24 CFR §135

Section 3 and its connection to HUD funding HUD funds are one of the largest sources of federal investment in distressed communities; HUD funds typically result in new employment, training, and contracting opportunities; Section 3 is designed to direct HUD-funded economic opportunities to local low-income residents.

Section 3 More than 5,000 recipients. 40% of HUD’s annual budget. Between 2009-2012 – 190,000 new jobs created almost half – 93,400 section 3 residents. FY 2013 expenditures of HUD generated approximately 61,600 new jobs, nearly 27,200 (44%) went to Section 3 residents. FY 2013 more than 5,600 Section 3 businesses received construction related contracts for $883.4 million.

What programs are covered? Section 3 applies to HUD funded Public and Indian Housing Assistance for development, operating, and modernization expenditures. Covered projects can also include lead based paint abatement. Section 3 also applies to certain HUD funded Housing and Community Development projects that complete housing rehabilitation, housing construction, and other public construction. U.S. Department of Housing and Urban Development

PHA Recipient and Contractor Responsibilities No dollar amount thresholds for Public and Indian Housing Authority Section 3 covered assisted projects. Since PHA’s do not have thresholds, the requirements of Section 3 apply to all Section 3 covered PHA projects regardless of the amount of assistance provided. The Section 3 requirements also apply to all contractors and subcontractors performing work in connection with Section 3.

Thresholds for Community Development Assistance Section 3 applies when recipients receive more than $200,000 combined from all sources in any one year. Section 3 covers the expenditures of any portion of those funds for any activity that involves housing construction, rehab and public construction. Thresholds for Contractors and Subcontractors performing work on Section 3 covered projects. Contracts over $100,000 the recipient can make the contractor and sub-contractor responsible for Section 3 requirements. Recipients still responsible for Section 3 requirements on Section 3 covered projects even if there isn’t a contracts over $100,000.

State and Counties State and counties that distribute funds to other units of local government must attempt to achieve compliance regardless of the number of sub-recipients receiving covered funding.

State and Counties Inform sub-recipients of covered funding about their obligations; Assist with their compliance; and Monitor their performance and the performance of their covered contractors.

Intended Beneficiaries SECTION 3 RESIDENTS Public Housing residents. Low- or very low-income persons residing in metropolitan area or non-metropolitan county where Section 3 covered assistance expended. 80% of area median income.

U.S. Department of Housing and Urban Development Utah Incomes State of Utah 80% family of 4 $55,200 50% family of 4 $34,500 Salt Lake County MSA 80% family of 4 $59,050 50% family of 4 $36,900 U.S. Department of Housing and Urban Development

Intended Beneficiaries SECTION 3 BUSINESSES 51% or more owned by Section 3 Residents; or Substantially employs (30% or more) Section 3 residents; or Can provide evidence of a commitment to award 25% of dollar amount of subcontracts to businesses in categories 1 & 2 above. *Section 3 residents and businesses must meet the qualifications for the job or contract they are seeking.

Minimum Numerical Goals 30% of new hires 10% of the dollar amount of Construction Contracts 3% of the dollar amount of Non- Construction Contracts Section 3 regulations do not require hiring or subcontracting unless it is necessary to complete the project.

To the Greatest Extent Feasible Grantees and their developers/contractors must make every effort to recruit, target, and direct economic opportunities to Section 3 residents and businesses. Affirmative/Proactive measures—e.g., more than advertising in local newspapers. U.S. Department of Housing and Urban Development

Section 3 Proposed Rule No news on when new rule will be implemented. New Rule needed since operating under Interim Rule since 1994. Clarification needed regarding obligations of PHA’s and other grantees. Incorporate new HUD programs created since publication of current regulation. Codify “best practices” of successful employment and contracting opportunities.

New Tool to Assist with Compliance Notify Covered developers/contractors about Section 3 opportunities. By Using the National Section 3 Registry.

Section 3 Business Registry National Section 3 Registry online system that allow businesses to self-certify that they meet one of the definitions of Section 3 business. Registry facilitates the notification of HUD funded contracts to eligible firms. Can use preference for Section 3 businesses.

Added benefits Reduce Administrative burdens for those recipients that had own procedures for locating businesses. Provide uniform self-certification procedures. Increase pool of Section 3 businesses that may submit bids for HUD funded contracts. Assist in meeting goals by increasing HUD funded contracts awarded to Section 3 Businesses.

Section 3 National Registry How Does it Work?

Section 3 Business Registry www.hud.gov/sec3biz

Section 3 Reporting System SPEARS SPEARS – Section 3 Performance and Registry System. New system to submit Section 3 reports – the HUD 60002 form. Must submit electronically. Requires registration in HUD’s Web Access Secure System (WASS). New system interfaces with LOCCS

SPEARS System 2013 and 2014 were due by December 15, 2015. Depending on Fiscal or Reporting Year 2015 reports may be due now. Disbursement Entity Agency and Amount displayed first. Report similar to previous system. Section 1 –information on new hires. Section 2 – Contracting and Section 3 – Summary of efforts to comply. Reports submitted for each program area, i.e. operation, modernization and development.

Update to SPEARS System System no longer uses program codes but will list program areas. Agencies that do not need to report on a particular program can answer no to two questions and scroll to bottom report and click submit. Transaction button which will show all disbursements from LOCCS from each Program funded.

Update to SPEARS System Cont. Grantees can now save and print reports. New reports will show if met all the 3 goals, if don’t meet all 3 goals will not be able to submit report without providing information why didn’t meet the goals. Reports locked from edits 72 hours after submitting. Can request reports to be unlocked from the system. Click on unlock icon. Follow instructions to email 60002questions@hud.gov Need assistance email: 60002questions@hud.gov

QUESTIONS For more information contact: Michele Hutchins, Equal Opportunity Specialist Office of Fair Housing & Equal Opportunity Utah State HUD Office 125 S. State Street, Room 3001 Salt Lake City, UT 84138 (801) 524-6097-Direct line (801) 524-6909-TDD line email: michele.hutchins@hud.gov