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U.S. Department of Housing and Urban Development

U.S. Department of Housing and Urban Development. Fair Housing and Equal Opportunity Office of Economic Opportunity. Section 3 Economic Opportunities for Low and Very Low-income Persons. June 10, 2009 Tampa, Florida Candace M. Tapscott Miami FHEO Center Director.

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U.S. Department of Housing and Urban Development

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  1. U.S. Department of Housing and Urban Development Fair Housing and Equal Opportunity Office of Economic Opportunity

  2. Section 3Economic Opportunities for Low and Very Low-income Persons June 10, 2009 Tampa, Florida Candace M. Tapscott Miami FHEO Center Director

  3. Section 3Summary of Course • Historical perspective • General provisions • Regulation – 24 CFR § 135 • Definitions • Applicability • Recipient responsibilities • Preferences and contracting • Complaints and compliance review • Reporting and record keeping

  4. History/Background • 1968 – Became a provision of the HUD Act (12 U.S.C. 1701u - Section 3) • 1969 - Expanded coverage to other HUD programs • 1974 – CDBG Program Included • 1980 – Amended to change location preference • 1992 – Clarified coverage and facilitated implementing regulations

  5. History – (continued) • 1992 Amendments: • Identified intended beneficiaries • Established priorities for preferences • 1994– Interim Rule issued to establish standards and procedures: 24 CFR § 135

  6. Purpose of Section 3 To ensure that economic opportunities resulting from HUD financial assistance will be directed to low and very low-income persons - particularly those receiving government assistance for housing. § 135.1

  7. Applicability • Public and Indian Housing • Development assistance • Operating assistance • Modernization assistance • Housing and Community Development • Housing rehabilitation (including lead-based paint abatement) • Housing construction • Other public construction § 135.3

  8. Thresholds • Public and Indian Housing Threshold: None (no threshold for PIH Authorities) • Housing and Community Development Threshold: Recipient/Project - $200K Contractor/Subcontractor - $100K § 135.3(a)3

  9. Applicability to Entire Project • Section 3 requirements apply to the entire project or activity, regardless of whether it is fully or partially funded. (Example: leveraged private funds associated with HOPE VI or CDBG.) • Section 3 requirements also apply to Indian Housing Authorities. § 135.3(b)

  10. Definitions Employment opportunities generated by section 3 covered assistance PIH assistance: All employment opportunities. • Housing & Community Dev.: Employment associated with building trades, including management and administrative support, architectural, engineering and professional services § 135.5

  11. Definitions (continued) Section 3 Resident: • Public Housing Resident, or • Resident of metro area or non metro county in which the Section 3 covered assistance is expended, and who qualifies as a low-income or very low-income person. • Low-income - 80% median area income • Very low-income 50% median area income § 135.5

  12. 1 person - $ 24,000 2 person - $ 27,450 3 person - $ 30,850 4 person - $ 34,300 5 person - $ 37,050 6 person - $ 39,800 _______ *FY 2004 1 person - $ 38,400 2 person - $ 43,900 3 person - $ 49,400 4 person - $ 54,900 5 person - $ 59,250 6 person - $ 63,650 Baltimore, MD MSA Income Limits*Very LowLow

  13. Definition (continued) Section 3 Business Concern • 51% or more owned by Section 3 Residents, or • 30% of employees are Section 3 Residents; or • 25% of subcontracts committed to Section 3 Businesses. § 135.5

  14. Requirements for HUD NOFAs • All notices of funding availability issued by HUD covered by Section 3 include a provision stating its applicability. • Applicants must certify compliance with Section 3 regulations. § 135.9

  15. Section 3 regulations do not supersede the general requirement that (material only) procurement transactions be conducted in a competitive manner. Consistent with 24 CFR § 85.36(c)(2), Section 3 encourages a geographic preference in the evaluation of bids. § 135.11(a) Procurement Standards

  16. Trainees hired under Section 3 may work subject to HUD determined prevailing wage rates and ratios of apprentices to journeymen in approved training programs. § 135.11(c) Federal Labor Standards

  17. Minority Business Enterprise • A minority business enterprise shall be required to present Section 3 certification to receive preference. • Section 3 of the HUD act is race-neutral. • The preference provided by this federal act is based on income and location.

  18. Contracts awarded on Section 3 governed projects are made without regard to affiliation to any Collective Bargaining Union. Collective Bargaining Unions

  19. Executive Order 11246 • The recipient shall ensure full compliance with E.O. 11246 - equal treatment without regards to race, religion, color or ethnic background. • The recipient shall ensure that all contractors and subcontractors participating on Section 3 governed projects comply with E. O. 11246. § 135.11(e)

  20. Numerical Goals • Goals apply to the entire amount of Section 3 covered assistance awarded to a recipient in any Federal Fiscal Year. • Goals represent minimum numerical targets. § 135.30(e)

  21. Numerical Goals (continued) Employment: 30 percent of new hires annually (counted for up to 3 years). Applies to: • PIH Programs • Firms managing 500+ units w/housing assistance • Community DevelopmentAssistance § 135.30(b)

  22. Numerical Goals (continued) Contracts • 10 percent of the total $ amount of all Section 3 covered contracts for building trades work. • 3 percent of the total $ amount of all other Section 3 covered contracts. § 135.30(c)

  23. Safe Harbor and Compliance • A recipient that meets numerical goals will be considered in compliance. • A recipient that has not met the numerical goals has the burden of demonstrating why. • All documented efforts taken to assist Section 3 residents and businesses will be considered. § 135.30(d)

  24. Recipient Responsibilities • Notifying residents • Notifying contractors and incorporating Section 3 clause • Facilitating training and employment of residents • Awarding contracts- Sec 3 Bus. • Assisting with compliance among contractors • Documenting actions to comply • Attempt to reach numerical goals § 135.32

  25. Preference for Training and Employment Order of Priority for PIH Programs • Category 1 – Residents of the housing development • Category 2 – Residents of other housing developments managed by the Housing Authority • Category 3 – Participants in HUD’s Youthbuild program • Category 4 – Other Section 3 Residents § 135.34(a)(1)

  26. Preference for Training and Employment Order of priority for Housing and Community Development Programs • Category 1 – Residents in the service area or neighborhood • Category 2 – Participants in HUD’s Youthbuild program • Category 3 -Homeless persons in the service area • Category 4 – Other Section 3 Residents § 135.34(a)(2)

  27. Preference for Training and Employment Order of priority for Programs funded by the McKinney Act • Category 1 – Homeless persons in the service area • Category 2 – Residents in the service area or neighborhood • Category 3 - Participants in HUD’s Youthbuild program • Category 4 – Other Section 3 Residents § 135.346(a)(2)

  28. Preference for Section 3 Business Concerns Order of priority for PIH programs. • Category 1 – Section 3 businesses that are owned or staffed by residents of the housing development. • Category 2 – Section 3 businesses that are owned or staffed by residents of other housing dev. managed by the HA. § 135.36(a)(1)

  29. Preference for Section 3 Business Concerns (continued) Order of priority for PIH programs. • Category 3 – Youthbuild programs operated in the metro area. • Category 4 – Section 3 businesses that are owned or staffed by other Section 3 residents or that subcontract in excess of 25% to Section 3 businesses. § 135.36(a)(1)

  30. Preference for Section 3 Business Concerns (continued) Order of priority for Housing and Community Development programs • Category 1 – Section 3 businesses that provide jobs and training for local residents. • Category 2 –Applicants selected to administer HUD Youthbuild programs. • Category 3 – Other Section 3 business concerns. § 135.36(a)(2)

  31. Eligibility for employment and contracting 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 successfully under the terms and conditions of the proposed contract. § 135.34(a)(2)

  32. Section 3 Clause All section 3 covered contracts shall include the Section 3 clause found at 24 CFR § 135.38 in its entirety, verbatim – parts A through G. § 135.38

  33. Compliance Reviews • Conducted for selected recipients and contractors to determine compliance • Consists of a comprehensive analysis and evaluation of compliance • Recipient will be advised of deficiencies for remediation • Continued noncompliance may result in debarment, suspension and limited denial of participation pursuant to 24 CFR § 24 § 135.74

  34. Section 3 ComplaintsWho May File a Complaint? • Section 3 Resident • Section 3 Business Concern • A Representative for either of the above § 135.76(a)

  35. Where Is A Complaint Filed? Assistant Secretary for FHEO U.S. Department of Housing and Urban Development 451 7th Street, Room 5100 Washington, DC 20410 § 135.76(b)

  36. When Must a Complaint Be Filed? Not later than 180 days from the occurrence. (Unless an extension is approved by the assistant secretary for fair housing and equal opportunity) § 135.76(c)

  37. What Information Is Needed In The Complaint? • Complainant’s name and address • Respondent’s name and address • Description & date of complaint • Corrective action sought NOTE: The Department may seek corrective remedies to ensure compliance. § 135.76(d)

  38. Section 3 Complaint Register Form HUD-958

  39. Issues For Non-Compliance Failure to: • Meet numerical goals; • Ensure that contractors and subs comply with Section 3; • Notify Section 3 Business Concerns about contracting opportunities; • Notify potential contractors about Section 3 requirements;

  40. Issues For Non-Compliance (continued) Failure to: • Incorporate the Section 3 Clause in solicitations or contracts; • Train and/or employ Section 3 Residents; • Award contracts to Section 3 Business Concerns • Provide preference for Section 3 Residents and Section 3 Businesses

  41. Resolution of Complaint • The recipient has 30 days after receipt of complaint to submit a written response if they believe the complaint lacks merit. • The recipient has 60 days to resolve the matter with the complainant if they determine the complaint has merit. § 135.76(e)

  42. Resolution of Complaint(continued) • HUD will dismiss the complaint if it fails to present a valid allegation. • HUD will attempt to obtain a voluntary resolution if the complaint is valid. • HUD will impose a resolution if voluntary resolutions fail. • Resolution(s) may be appealed within 15 days for further consideration. § 135.76(f)

  43. Resolution of Complaint(continued) • Sanctions that may be imposed include debarment, suspension and limited denial of participation. • HUD may investigate a complaint directly. • Retaliatory acts against the complainant are prohibited. • Complainant may exercise the right to seek redress through judicial procedures. § 135.76(g) to (j)

  44. Reporting & Recordkeeping • Recipients are required to submit an annual report for the purpose of determining the effectiveness of Section 3. (HUD Form 60002) • HUD shall have access to all records, reports and other documents that are maintained to demonstrate compliance with Section 3. § 135.90 to 135.92

  45. Collaboration for Success Appendix to Regulations: • 20 examples of efforts to provide training and employment opportunities; • 22 examples of efforts to award contracts to Section 3 business concerns; and • 3 examples of procurement procedures to provide preference for Section 3 business concerns. § 135, Appendix

  46. Where to get more information • HUD’s Office of Economic Opportunity – (202) 708-3633 • Local HUD Field Office (305) 536-4479 • Regulation 24 CFR Part135: www.gpoaccess.gov/cfr/index.html • HUD Website- www.hud.gov/offices/fheo/section3/section3.cfm

  47. QuestionsandAnswers

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