1. Section 3 Economic Opportunities for Low and Very Low-Income Persons 2010 Fair Housing Policy Conference New Orleans, LA Staci Gilliam Hampton, Director Economic Opportunity Division Washington, DC 20410 202-402-3468 section3@hud.gov www.hud.gov/section3

2. 2 Section 3 History  Civil Rights Movement and Protests of the 1960’s  Race Riots 1965-1968  Los Angeles (Watts), Chicago, Detroit, Newark

3. 3 Section 3 History Kerner Commission—1968  President Lyndon Johnson  What happened?  Why?  What can be done to prevent from happening again?  7 months of investigation

4. 4 Section 3 History Kerner Commission—1968 Findings:  Riots occurred because of frustration with the lack of economic opportunities.  “Our nation is moving to toward two societies, one black, one white—separate and unequal.  Dr. King called the report: “a physician’s warning of approaching death, with the prescription for life”.

5. 5 Section 3 History Kerner Commission—1968 Recommendations :  Create Jobs  Construct New Housing  Stop de-facto segregation  Hire diverse and sensitive police force  Open suburban residential areas to minorities  Government programs were needed to provide these services (HUD, DOJ, DOL, etc)

6. 6 Section 3 History Kerner Commission—1968 Outcome :  Lyndon Johnson rejected the Commission’s recommendations  April 1968 (one month after Report was released) Dr. Martin Luther King, Jr. was assassinated  Rioting broke out in more than 100 cities  Most of the Commission’s recommendations were ultimately adopted

7. Statute and Regulation  Section 3 of the Housing and Urban Development Act of 1968  12 U.S.C. 1701u  Economic Opportunity Regulation  24 CFR Part 135

8. 88 Regulatory Description To ensure that economic opportunities generated from HUD funded projects, to the greatest extent feasible, will be directed to low and very low-income persons - particularly those receiving assistance for housing, and the businesses that provide them economic opportunities

9. To the Greatest Extent Feasible???   Recipients must make every effort to recruit, target, and direct economic opportunities to Section 3 residents and businesses.   Comprehensive strategies that are beyond normal procedures.

10. Simply Stated…  HUD funds are one of the largest sources of federal investment in distressed communities  These funds typically result in new employment, training and contracting opportunities  Section 3 is designed to direct new economic opportunities to local residents and businesses 10

11. Intent  HUD funding creates opportunities “beyond bricks and mortar”  Promote Self-Sufficiency amongst low-income persons  Multiplier Effect for HUD dollars 11

12. Intent  Not intended to require recipients or their contractors to hire, provide training or award contracts beyond what is absolutely required  If there are going to be new job, training, or contracting opportunities –Section 3 applies

13. 13 Applicability  Public and Indian Housing  Development  Operation  Modernization  Housing and Community Development  Housing rehabilitation  Housing construction  Other public construction

14. 14 Section 3 Covered Assistance  PIH Allocations  Operations, Capital, Modernization, HOPE VI  CDBG Funding  HOME Funding  NAHASDA funding  Competitive Grants  EDI and BEDI  Lead Based Paint  202/811  ROSS  Project Based Vouchers

15. 15 2010 Proposed HUD Budget Public and Indian Housing$7,749 billion Public Housing Capital Fund Choice Neighborhoods (formerly HOPE VI) Public Housing Operating Fund Native American Housing Block Grants Native Hawaiian Housing Block Grants Housing$1,015 billion Housing for the Elderly (202 Grants) Housing for Persons with Disabilities (811 Grants) Community Planning and Development$8,456 billion Community Development Block Grant Fund HOME Investment Partnerships Program Self-Help Homeownership Opportunity Program (SHOP) Housing Opportunities for Persons with Aids (HOPWA) Lead Hazard Control Grants$69 million TOTAL Section 3 Covered Funds$17,289 billion 40% of HUDs Budget Section 3 Covered Funding

16. 16 Applicability to Economic Stimulus Funds  PIH Public Housing Capital Funds  Neighborhood Stabilization Program  Community Development Block Grants  Native American Housing Block Grants  Assisted Housing Energy & Green Retrofits  Lead Hazard Control (LHC Grants Only) Total: $7.8 Billion (57% of HUD’s Stimulus Funds) (57% of HUD’s Stimulus Funds)

17. 17 Section 3 Compliance Certification(s)  Annual Certifications  Signed by Highest-Elected Officials  Westchester County, NY  Failing to comply with Section 3 Certifications could have severe consequences

18. 18 Failure to Comply with Section 3 HUD holds direct recipients of covered funding accountable for their own compliance, and the compliance of their subrecipients and contractors

19. 19 Penalties for Noncompliance Sanctions for noncompliance may include:  Debarment  Suspension  Limited Denial of Participation in HUD Programs

20. Section 3 Beneficiaries &Responsibilities

21. Section 3 Resident  Public Housing Resident, or  A resident of metropolitan area or non-metropolitan county in which the Section 3 covered assistance is expended, and who qualifies as a low- or very low-income person.

22. 22 Low- and Very Low-Income HUD sets the low-income limit at 80% and very low income limits at 50% of the median family income for counties or metropolitan areas across the country http://www.huduser.org/portal/datasets/il.html

23. Section 3 Preference  Not Minority/Women Business Enterprise requirements  The preferences provided under Section 3 are based on income and location.

24. Race and Gender Neutral   Poverty is color-blind   Low-Income persons in urban areas “may” be minorities   HUD funds assist persons with the greatest economic needs regardless of race or gender

25. Today Section 3 Residents May Include….  Residents of Public Housing  Section 8 Voucher Holders  Recently Unemployed  Veterans  Recipients of Other Federal Assistance (TANF, unemployment, etc)  Single Mothers Re-entering the Workforce  Recent College Graduates

26. Section 3 Business Concern  51% or more owned by Section 3 Residents, or  30% of employed staff are currently Section 3 Residents or were Section 3 residents within three years of the date of first employment; or  25% of the dollar award of all subcontracts committed to Section 3 Businesses.

27. Eligibility for employment and contracting A Section 3 resident must meet the qualifications of the position to be filled. A Section 3 business concern must have the ability and capacity to perform.

28. Eligibility for employment and contracting Section 3 is not intended to create an “entitlement” for eligible residents and businesses—it creates opportunities Simply meeting the definitions does not automatically mean that they will be given jobs or contracts

29. Overview of Recipient Responsibilities

30. 30 Recipient Agencies Direct Recipients of covered HUD funding or recipients of covered funding from another direct recipient  CITIES, COUNTIES, STATES  UNITS OF LOCAL GOVERNMENT  PUBLIC OR INDIAN HOUSING AUTHORITIES  DEVELOPERS  NON-PROFIT ORGANIZATIONS  PRIVATE AGENCIES

31. 31 Responsibility #1 Design and implement procedures to comply with the requirements of Section 3

32. 32 Responsibility #2 Notify Section 3 residents about training and employment opportunities and Section 3 businesses about contracting opportunities

33. 33 Responsibility #3 Notify covered contractors about the requirements of Section 3

34. 34 Responsibility #4 Incorporate the Section 3 clause into covered solicitations and contracts --24 CFR Part 135.38

35. 35 Responsibility #5 Facilitate training and employment of Section 3 residents and the award contracts to Section 3 businesses, as appropriate to reach the minimum numerical goals

36. Minimum Numerical Goals:  30% of new hires annually  10% of the total dollar amount of covered construction contracts  3% of the total dollar amount of covered non-construction contracts Responsibility #6

37. 37 Employment Opportunities Public Housing Authorities  All jobs with PHA or contractors Housing & Community Development  Construction Labor  Management & Administrative Support  Architectural, Engineering and Professional services

38. 38 Contracting Opportunities Public Housing Authorities  All contracts and subcontracts awarded with Public Housing funds regardless of the dollar amount Housing & Community Development  Contracts for activities involving housing construction, rehabilitation, or other public construction  Contractors may also have responsibilities depending on the dollar amount of their award.

39.  24 CFR Part 135.30  Numerical Targets (may be exceeded)  Safe Harbor Compliance  Other Efforts Taken to Achieve Compliance—To the Greatest Extent Feasible Minimum Numerical Goals

40. Assisting and actively cooperating with the Assistant Secretary in obtaining the compliance of contractors Responsibility #7

41. Refraining from entering into contracts with contractors that fail to comply Responsibility #8

42. Documenting actions taken to comply with the requirements of Section 3, results of actions taken, and impediments, if any Responsibility #9

43. 43 Section 3 Reporting  Form HUD-60002  Online Reporting System  Reports submitted to FHEO in Washington, DC

44. 44 Determining Compliance  Absent Evidence to the Contrary  Meeting Minimum Numerical Goals—Safe Harbor  Narrative Explanations

45. Section 3 Complaint Investigations Form HUD-958

46. 46 Complaint Processing  Form HUD 958 filed within 180 days of alleged noncompliance  Most complaints are associated with contracting issues  Preference- to conciliate  May result in sanctions

47. Other Section 3 Enforcement Actions  Compliance Reviews  Limited Monitoring Reviews  On-Site Technical Assistance Visits  VCAs

48. 48 2008 Outcomes/Results  75% 0f Covered Agencies submitted reports  Overall 38% of employment and training opportunities were provided to Section 3 residents (17,569 economic opportunities)  9.4% of Construction Contracts were awarded to Section 3 businesses ($354 Million)  Many larger recipients still failed meet minimum goals or provide adequate explanations

49. 49  Increase Section 3 reporting rates and accuracy  Increase overall compliance  Provide more training/technical assistance  Listening Sessions 2010 & 2011 Initiatives

50. 50  New Guidance Materials  New Section 3 reporting forms and online system  Revised Section 3 regulation  Section 3 Business Concern Registry—Pilot Program 2010 & 2011 Initiatives

51. 51  Section 3 Implementation and Coordination NOFA  Incorporate Section 3 compliance into Annual Plans and Performance Assessments  Enforce penalties for noncompliance 2010 & 2011 Initiatives

52. 52 Additional Resources Please visit our webpage: www.hud.gov/section3  Guidance Materials  Sample Documents  Link to Online Reporting  Upcoming Trainings  Model Programs  Contact Information  Section3@hud.gov Section3@hud.gov