SECTION 3 CONTRACT COMPLIANCE PACKAGE

1 INTRODUCTION

This document provides the necessary information, forms, and procedures for Contractors and Subcontractors of the project (“Project”) to comply with Section 3 of the Housing and Urban Development Act of 1968 (“Act”). On November 30, 2020, HUD implemented a Final Section 3 Rule (“Final Rule”) for all recipients. The Final Rule is found at 24 CFR Part 75 and replaced the previous rule found at 24 CFR Part 135. Please take note that the Final Rule is significantly different from the previous rule.

Every contractor must ensure this package is included in their applicable contracts and sub-contracts through all tiers. Every sub-contractor must include this package in their lower-tiered sub-contracts.

This new rule exempts all material and supply only agreements. The rule applies to all service-related contracts/agreements despite the dollar amount or project duration. Certain professional services are also exempt, such as CPA’s, Attorneys, Engineers, and Architects.

2 TABLE OF CONTENTS

1 INTRODUCTION

3 SECTION 3 BENCHMARKS & SUMMARY

3.1 BENCHMARKS

3.2 NOTES

3.3 SECTION 3 WORKER CLASSIFICATIONS (HOUSING & COMMUNITY DEVELOPMENT) . 3

3.4 REPORTING REQUIREMENTS

3.5 SECTION 3 BUSINESS QUALIFICATIONS

4 PROJECT MONTHLY REPORTING INSTRUCTIONS

4.1 STEP ONE: COMPLETE SECTION 3 REPORTING FORM (“ATTACHMENT A”)

4.2 STEP TWO: ENTER SECTION 3 BUSINESS STATUS (“ATTACHMENT A”)

4.3 STEP THREE: ENTER HOURS WORKED (“ATTACHMENT A”)

4.4 STEP FOUR: CERTIFY (“ATTACHMENT A”)

4.5 STEP FIVE: SUBMIT (“ATTACHMENT A”)

4.6 STEP SIX: ADDITIONAL REQUESTS

5 QUALITATIVE EFFORTS

5.1 QUALITATIVE EFFORTS REPORTING

6 SECTION 3 CONTRACT INCLUSIONS

6.1 SECTION 3 CLAUSE (“ATTACHMENT F”)

6.2 SECTION 3 COMPLIANCE ACKNOWLEDGMENT (“ATTACHMENT H”)

6.3 SECTION 3 BROCHURE (“ATTACHMENT B”)

7 ATTACHMENTS

7.1 ATTACHMENT A – SECTION 3 REPORTING FORM

7.2 ATTACHMENT B – SECTION 3 BROCHURE

7.3 ATTACHMENT D – SECTION 3 EMPLOYER CERTIFICATION – PH

7.4 ATTACHMENT E – SECTION 3 BUSINESS CERTIFICATION

7.5 ATTACHMENT F – SECTION 3 CONTRACT CLAUSES

7.6 ATTACHMENT G – QUALITATIVE EFFORTS REPORT

7.7 ATTACHMENT H – SECTION 3 COMPLIANCE ACKNOWLEDGMENT

3 SECTION 3 BENCHMARKS & SUMMARY

3.1 BENCHMARKS

1. Twenty-Five (25%) percent or more of the total number of labor hours worked by all workers employed on the Project are Section 3 workers; and

2. Five (5%) percent or more of the total number of labor hours worked by all workers employed on the Project are Targeted Section 3 workers.

3.2 NOTES

1. There are no specific hiring or contracting goals under this new rule.

2. There can be no solicitation points awarded for being a Section 3 Business.

3. All persons and/or businesses must be fully qualified to perform the work.

3.3 SECTION 3 WORKER CLASSIFICATIONS (HOUSING & COMMUNITY DEVELOPMENT)

1. Section 3 Worker - Any low or very low-income persons residing in the Metropolitan area.

2. Targeted Section 3 Worker – Employee of a Section 3 Business, Section 3 Worker residing within the service area of the project (typically 1-mile radius), and YouthBuild participants.

3.4 REPORTING REQUIREMENTS

1. Contractors and Subcontractors (all tiers) will provide these three (3) data sets to the Section 3

Coordinator by the 15th of the following month after the hours have been worked by every person that worked directly on the contract (“Attachment A”).

a. Total Hours Worked by all workers;

b. Total Hours Worked by Section 3 Workers (Individual Certification Required); and

c. Total Hours worked by Targeted Section 3 Workers (Individual Certification Required)

3.5 SECTION 3 BUSINESS QUALIFICATIONS

1. It is at least 51 percent owned by low- or very low-income persons; with businesses at least 6 months old.

2. Over 75 percent of the labor hours performed for the business are performed by low- or very low-income persons; or (Based on the prior 90 days of full business payrolls).

3. It is a business at least 51 percent owned by current public housing residents or residents who currently live in Section 8-assisted housing, with businesses at least 6 months old.

4 PROJECT MONTHLY REPORTING INSTRUCTIONS

4.1 STEP ONE: COMPLETE SECTION 3 REPORTING FORM (“ATTACHMENT A”)

1. Enter the name of the project you are working on and your company name in the appropriate boxes in the form.

4.2 STEP TWO: ENTER SECTION 3 BUSINESS STATUS (“ATTACHMENT A”)

1. Select your Section 3 Business Status from the appropriate check boxes.

4.3 STEP THREE: ENTER HOURS WORKED (“ATTACHMENT A”)

1. For each month worked on the project, report the total number of hours worked on the project in

Row 12 of the form.

2. Utilizing the current Section 3 income limit for the project (found in Row 6), enter the names of any Section 3 Workers in the appropriate boxes in Column A underneath the Total Hours Worked cell.

a. List each Section 3 Worker’s total hours worked per month in Columns C-N.

b. In Column B, mark ‘Yes’ or ‘No’ to the Targeted Section 3 Worker status, defined in

Row 3.

3. Please keep in mind that you are required to provide additional supporting documentation upon request to support your selections.

4.4 STEP FOUR: CERTIFY (“ATTACHMENT A”)

1. In Row 24 (or lower if there are additional Section 3 Workers requiring more rows), enter the name of the authorized signatory submitting the form. The signatory is certifying under penalty of fraud that the information on the form is true and accurate to the best of their knowledge. Fill in the Date field in Row 24 (or lower) based on the date of completion.

4.5 STEP FIVE: SUBMIT (“ATTACHMENT A”)

1. Submit this report monthly, no later than the 10th of each month for the month prior. Reports should be submitted to:

COMPLIANCE@MOTIVATION-INC.COM

4.6 STEP SIX: ADDITIONAL REQUESTS

1. Contractors and subcontractors (all tiers) must comply with all additional information requests, including detailed employee certification forms (“Attachment C” or “Attachment D”) as well as Section 3 Business Certification (“Attachment D”) and any other supporting documentation required by PROJECT.

mailto:COMPLIANCE@MOTIVATION-INC.COM

5 QUALITATIVE EFFORTS

5.1 QUALITATIVE EFFORTS REPORTING

1. Qualitative Efforts are required to be reported by the General Contractor (“GC”) for the Project if it fails to meet the Section 3 Benchmarks listed in Section 3.1 of this document. Qualitative Efforts must be reported using the Qualitative Efforts Report (“Attachment G”). Examples of Qualitative Efforts include but are not limited to:

• Advertise in local/neighborhood newspapers/publications.

• Post opportunity flyers/notices in the common areas of PROJECT public housing communities.

• Contact and post flyers/notices at the local Business Information Centers, local and ethnic Chambers of Commerce, SBA, etc.

• At the job site, post the job opportunity notice and the Section 3 poster where the public may reasonably view it.

• Contact local job training centers, or labor organizations.

• Refer low- and very low-income individuals to their local American Job Center for employment and training supportive services.

6 SECTION 3 CONTRACT INCLUSIONS

6.1 SECTION 3 CLAUSE (“ATTACHMENT F”)

1. The Section 3 Clause (“Attachment F”) document must be included in all Contracts and

Subcontracts (all tiers) for Section 3 applicable work. All material Supply Contracts and some Professional Services Contracts are exempt from Section 3.

6.2 SECTION 3 COMPLIANCE ACKNOWLEDGMENT (“ATTACHMENT H”)

2. Each contractor and subcontractor (all tiers) must complete the Section 3 Compliance

Acknowledgment (“Attachment H”) at the time of contract execution.

6.3 SECTION 3 BROCHURE (“ATTACHMENT B”)

1. The Section 3 Brochure (“Attachment B”) should be included in all Contracts and Subcontracts

(all tiers) as an additional resource providing information about Section 3.

7 ATTACHMENTS

7.1 ATTACHMENT A – SECTION 3 REPORTING FORM

7.2 ATTACHMENT B – SECTION 3 BROCHURE

7.3 ATTACHMENT D – SECTION 3 EMPLOYER CERTIFICATION – PH

7.4 ATTACHMENT E – SECTION 3 BUSINESS CERTIFICATION

7.5 ATTACHMENT F – SECTION 3 CONTRACT CLAUSES

7.6 ATTACHMENT G – QUALITATIVE EFFORTS REPORT

7.7 ATTACHMENT H – SECTION 3 COMPLIANCE ACKNOWLEDGMENT