Section 3: Economic Opportunities

U.S. Department of Housing and Urban DevelopmentOffice of Fair Housing and Equal OpportunityEconomic Opportunity Division

Rafiq MunirNACCED's 36th Annual Conference Los Angeles County, CASeptember 19, 2011

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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

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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

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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

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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.

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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)

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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)

§135.32

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Annual Summary Report of Section 3 Activity

All recipients of Section 3 covered funds must submit Form HUD 60002 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.

§ 135.90

Form HUD 60002 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

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Current Initiatives

Emphasis on annual reporting

Revisions to HUD Form 60002

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

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Questions & Answers

Economic Opportunity DivisionPhone: 202.708.3633Fax 202.708.0413

section3@hud.gov

www.hud.gov/section3/