Section 3: Economic Opportunities U.S. Department of Housing and Urban Development Office of Fair Housing and Equal Opportunity Economic Opportunity Division Rafiq Munir NACCED's 36th Annual Conference Los Angeles County, CA September 19, 2011

2 Section 3 Applicability Section 3 regulations do not require hiring or subcontracting unless it is necessary to complete the project. Section 3 is not an entitlement, it is an opportunity

3 Covered Programs. Examples of covered funding:  HOPE VI, CN, CFP  CDBG, HOME, Section 108, NSP  SHOP  Lead Base Paint Abatement  Section 202 / 811 § 135.3

4 Covered Activities of Recipients of Housing and Community Development Assistance Construction Related Activities include: housing rehabilitation; housing construction; other public construction (ex. infrastructure) Section 3 is not project specific, it applies to all construction related activities undertaken by recipient agencies and grantees. § 135.1

Section 3 Threshold Section 3 is not project specific, it applies to all construction related activities undertaken by covered grantees. Pursuant to 24 CFR § 135.3(a)(3), grantees that receive more than $200,000 in housing and community development assistance are required to comply Section 3. Contractors and/or subcontractors that receive more than $100,000 share the responsibility with the grantee.

Exempt Activities Land banking Land acquisition “Soft” Second Mortgages Down Payment Assistance Social Service Programs

7 Applicability to Entire Project Section 3 requirements apply to the entire project or activity, regardless of whether it is fully or partially funded by HUD. Mixed Financed Projects leveraged with State, local or private funding including LIHTC( except TCAP) § 135.3(b)

Certification of Section 3 Residents and Section 3 Businesses Recipient agencies and grantees must certify eligible Section 3 residents and Section 3 businesses At a minimum, a self certification process can be utilized. Sample forms are posted on the HUD Section 3 website. 8

9 Eligibility for employment and contracting Section 3 of the HUD act is race and gender-neutral. A Section 3 resident must meet the qualifications of the position to be filled. §135.34(c) A Section 3 business concern must have the ability and capacity to perform. §135.34(a)(2)

10 Recipient Responsibilities Notify Section 3 residents and business concerns about economic opportunities Notify covered contractors and incorporate the Section 3 clause into contracts Facilitate training and employment of residents Award contracts to Section 3 Businesses §135.32

Recipient Responsibilities -continued Meet annual numerical goals Facilitate compliance among contractors Document other actions taken to achieve compliance Submit annual report (60002 form) §

12 Annual Summary Report of Section 3 Activity  All recipients of Section 3 covered funds must submit Form HUD annually.  Reporting cycle – Simultaneously with funding annual report, at project completion or January 10th, annually.  Should be submitted to HUD HQ, preferably on-line, by direct recipients only, not contractors or sub-recipients. §

Form HUD Tips Submit one report for each major program funding source [ CDBG, HOME, NSP, etc.] Box #3 “Award Amount” must be greater than or equal to Part II A. + B. [ construction + non- construction contracting] Use Quarter 4 only for annual reporting Enter an explanation of effort undertaken in Part III 13

14 Current Initiatives  Emphasis on annual reporting  Revisions to HUD Form  Section 3 N.O.F.A. Competition  Business Registry Pilot: D.C., L.A., Detroit, New Orleans & Miami  Re-examination of regulatory provisions  Listening Sessions with Stakeholders

Strategies for Implementation Network/Collaborate with local agencies Designate a Section 3 Coordinator Adopt and Execute a Section 3 Plan Provide Guidance for Contractors Participate in a Regional Consortium 15

16 Questions & Answers Economic Opportunity Division Phone: Fax