4-02-15-2024 Section-3-New-Rule-Guidance-for-CDBG-DR-and-CDBG-MIT-Grantees-CB-508.pdf

Section 3 Job Training, Employment, & Contracting Opportunities

The Purpose

Organizations Residents Self-Sufficiency

To ensure that the employment and other economic opportunities generated by Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low-and very low-income persons, particularly those who are recipients of government assistance for housing.

Section 3 of the Housing and Urban Development Act of 1968

Section 3 is not just a grantee requirement.

It’s a path toward self-sufficiency.

Section 3 is not a program.

It’s a provision of HUD’s law.

Purpose To ensure that the employment and other economic opportunities generated by Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low- and very low-income persons ad m in is tr at io n, m an ag em en t, cl er ic al su pp or t, co ns tr uc tio n:

ac co un tin g, ar ch ite ct ur e, ap pl ia nc e re pa ir, bo ok ke ep in br ic kl ay ca rp en tr y, ca rp et st al la ca te rin ce en t/ as on ry co m pu te r/ fo rm at de ol iti on dr yw al l, el ec tr ic al el ev at or co ns tr uc en gi ne er fe nc flo ris ts

H ea tin g/ H

VA

C, iro n w or ks ja ni to ria l, la nd sc ap la w nc e, le ga l, m ac hi ne op er at ai nt en an ce m an uf ac tu ke yr ol l, ph ot og ra ph y, pl as te pl um bi ng pr in pu rc ha si ng re se ar ch su rv ey til e se tt tr an sp or ta w el di ng w or d pr oc es si ng

JOBS TRAINING CONTRACTS

Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low- and very low-income persons

Local Government

Mortgagor

Builder

Cooperative

Private Agency

Property Manager

Resident Council

Community Housing Development Organization

Public Housing Agency

Nonprofit Developer

Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low- and very low-income persons

First notice of postings

Training for job seekers

Measurable targets

To ensure that the employment and other economic opportunities generated by Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low- and very low-income persons

“To ensure that the employment and other economic opportunities generated by

Federal financial assistance for housing and community development programs shall, to the greatest extent feasible, be directed toward low- and very low-income persons

Section 3 of the Housing and Urban Development Act of 1968

Law is supported by regulation.

How things are changing

24 CFR Part 75

Final Rule The proposed rule seeks to improve effectiveness in several ways, including:

Focusing reporting on key outcome metrics

Promoting sustained employment and career development

Aligning reporting with standard business practices

Changing thresholds for Section 3-covered assistance

Key Change Redefining Section 3 worker

A Section 3 worker is:

A low- or very low-income individual

A Youthbuild participant

OR

Employed by a Section 3 business concern

OR

Redefining Section 3 businesses

A Section 3 business is:

51% or more owned by low or very-low income persons

75% or more labor hours are performed by low- or very low-income persons

51% or more owned by current residents of public housing or Section 8-assisted housing

Key Changes

• Promote sustained employment and career development:

Focuses on labor hours instead of new hires creating an incentive for employers to invest in and retain their newly hired low-income workers.

• Align Section 3 reporting with standard business practices:

Consistent with business practices which already track Davis-Bacon utilization (HUD wage rates, and with the entities’ payroll systems)

• Applicability and Thresholds:

Assistance used for housing rehabilitation, housing construction, and other public construction is subject to Section 3 requirements.

Updated the threshold, exempting projects costing less than $200,000

Provides an exemption threshold for Lead Hazard Control and Healthy Home grants of costing less than $100,000.

• Reporting and Targeted Section 3 Workers:

Targeted Section 3 are those within the “1 Mile Radius” of the worksite.

Reporting and benchmarks will focus on “Targeted Section 3 Workers” representing the highest priority groups.

Priority groups would be low and very-low income workers residing within the service area or neighborhood of the project.

Key Changes

• Benchmarks:

Set by Notice and amended periodically as necessary. HUD can alter expectations and consider tailoring the benchmarks for different geographies and/or different activities as new information becomes available.

• Multiple Funding Sources:

For handling Section 3 for recipients that receive funds through more than one HUD program, and contractors that receive payment from funds under those programs.

Public housing financial assistance fund requirements in subpart B while the community development financial assistance may follow the requirements in subpart B or subpart C.

Ultimately, the same data will be collected across programs for consistency; the only difference will be how it looks when reported.

• Integrate Section 3 into program enforcement:

The new framework anticipates that program staff would incorporate Section 3 compliance into regular program oversight and make Section 3 a more integral part of their daily work.

Benchmarks for Section 3 projects (covers housing rehabilitation, housing construction, and other public construction projects assisted under HUD programs that provide housing and community development financial assistance where the amount of assistance to the project exceeds a threshold of $200,000 (Note: This threshold will not apply to HUD’s Lead Hazard Control and Healthy Homes programs) (That threshold is $100,000)

Section 3 labor hours Total labor hours =25% AND Targeted Section 3 labor hours

Total labor hours = 5%

A labor hour is:

Hours worked by all worker employed on a Section 3 project

A targeted Section 3 worker is:

Employed by a Section 3 business concern

OR

A Section 3 worker living in the project’s service area or neighborhood of the project

OR

A current YouthBuild participant

Workers

Section 3 workers

Targeted workers

Where residents and businesses connect

Opportunity Portal Who does it serve?

Section 3 Recipient Post contract opportunities with a Section 3 preference

Section 3 Business Post training and job opportunities for Section 3 residents

Section 3 Resident Post resume and contact information

The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/

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Employment Opportunities https://hudapps.hud.gov/OpportunityPortal

Section 3 business

Job

Section 3 worker

The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/ https://hudapps.hud.gov/OpportunityPortal AStennett Highlight

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Recipient Responsibilities

Recipient agencies must take an active role in ensuring Section 3 compliance.

Designing and implementing procedures to comply with the requirements of Section 3 Facilitating the training and employment of Section 3 workers Facilitating the award of contracts to

Section 3 business concerns Ensuring Contractor and Subcontractor

Awareness of and Compliance with Section 3 Benchmarks and responsibilities Ensuring Compliance and Meeting

Numerical Benchmarks Reporting Requirements

The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/

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The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/

AStennett Highlight

The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/

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Contract Opportunities https://hudapps.hud.gov/OpportunityPortal

Grantee

Contract

Section 3 business

The HUD Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/ https://hudapps.hud.gov/OpportunityPortal AStennett Highlight

AStennett Highlight

The Opportunity Portal is not accessible.

Link on HUD Website: https://www.hudexchange.info/trainings/courses/section-3-final-rule-for-home-and-htf-overview/

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Self-certification by HUD qualifications

Business Registry http://hud.gov/Sec3Biz

Businesses self-certify to meet the definition of a Section 3 business

Grantees find Section 3 businesses to hire

Residents find Section 3 businesses to inquire about jobs

HUD does NOT appear to have a 'Business Registry'; please click this link for added information https://www.hud.gov/section3 http://hud.gov/Sec3Biz

Am I a Section 3 Business?

HUD does NOT appear to have a 'Business Registry'; please click this link for added information https://www.hud.gov/section3 http://hud.gov/Sec3Biz

Register a Business

HUD does NOT appear to have a 'Business Registry'; please click this link for added information https://www.hud.gov/section3 http://hud.gov/Sec3Biz

Search for a Business

HUD does NOT appear to have a 'Business Registry'; please click this link for added information https://www.hud.gov/section3 http://hud.gov/Sec3Biz

What’s coming in training events and resources

Community Compass

HUD Grantee

Office of Community Planning &

Development TA Provider

Grants Management

Technical Assistance

• Direct (on-site and remote)

• Tools and products

• Needs assessment

• Self-directed and group learning

• Knowledge management

Cooperative Agreement

Departmental TA

• Office of Public and Indian Housing

• Office of Community Planning and Development

• Office of Housing

• Office of Equal Employment Opportunity

• EnVision Centers

• Crosscutting

• Knowledge management

• Fair housing

• Section 3

• Healthy Homes

• Better Buildings

• Disaster preparedness

• Building Future

• Environmental

• Energy

Who is responsible for monitoring Section 3 compliance?

Monitoring

Monitoring Section 3 will be the responsibility of the

Program

CPD is updating Section 3 Checklists

Grant Managers will be trained on how to monitor

Reporting

Performance Evaluation And Registry System

Disaster Recovery Grant Reporting

Disaster Recovery recipients will report Section 3 labor hours using Disaster Recovery Grant Reporting System (DRGR)

DRGR Section 3 Performance Measures

• New performance measures have been created in DRGR to allow grantees to report Section 3 labor hours

• For all applicable construction activity types, grantees must now enter projected Section 3 labor hours in DRGR Action Plan activities and report actual Section 3 labor hours in the Quarterly Performance Report (QPR) for the following performance measures:

• # of Total Labor Hours

• # of Section 3 Labor Hours

• # of Targeted Section 3 Labor Hours

DRGR Section 3 Applicable Activity Types

• Acquisition, construction, reconstruction of public facilities

• Affordable Rental Housing

• Clearance and Demolition

• Construction of buildings for the general conduct of government

• Construction of new housing

• Construction of new replacement housing

• Construction/reconstruction of streets

• Construction/reconstruction of water lift stations

• Construction/reconstruction of water/sewer lines or systems

• Dike/dam/stream-river bank repairs

• MIT - Public Facilities and Improvements-Covered Projects Only

• MIT - Public Facilities and Improvements-Non-Covered Projects

• MIT - Rehabilitation/reconstruction of residential structures

• MIT - Residential New Construction

• Privately owned utilities

• Rehabilitation/reconstruction of a public improvement

• Rehabilitation/reconstruction of other non-residential structures

• Rehabilitation/reconstruction of public facilities

• Rehabilitation/reconstruction of public housing

• Rehabilitation/reconstruction of residential structures

Grantee Steps for Reporting Section 3 Labor Hours

• Activities Previously Setup in DRGR Action Plan:

• A grantee must review activities with applicable construction activity types and Section 3 meeting threshold requirements and provide projected accomplishments for Section 3 labor hour performance measures.

• Note: This step is required for grantees to report on these measures in the QPR.

• New Activities Created in DRGR Action Plan:

• Grantees should enter projected Section 3 accomplishments when setting up new activities with the applicable construction activity types and meeting threshold requirements.

• Note: In instances where projections are unavailable at the time of activity selection, a grantee may enter “0” as a placeholder until actual projections are available for entry.

• Reporting Section 3 Labor Hours in Quarterly Performance Report:

• Similar to how grantees report other DRGR performance measures accomplishments, Section 3 actual accomplishments are entered into the QPR for Section 3 requirements and benchmarks.

• Note: Once projected Section 3 measures are entered in the Action Plan, the proposed measures will appear in the data tables in the QPR as a row in the Proposed Accomplishments section.

DRGR Action Plan – Manage Activity

DRGR Action Plan – Manage Activity pr

DRGR Action Plan – Proposed Accomplishments

Manage Performance Report – Activity

Manage Performance Report – Edit Accomplishments

Manage Performance Report – Measures

Manage Performance Report - Qualitative Efforts:

Failure of Meeting Section 3 Benchmarks

MicroStrategy: Section 3 Report

• Report developed to assist grantees and HUD evaluate a grantee’s progress toward meeting the

Section 3 benchmarks for applicable activities

• Section 3 report will be available in MicroStrategy > DRGR Analytics > Global Performance Folder

• Report Name: P35 – QPR – Section 3 Hours (Pending Final Approval)

Contacts Hana Nelson

Hana.Nelson@hud.gov

Bonnie Newcomb

Bonnie.l.Newcomb@hud.gov

Jamesha Cox

Jamesha.L.Cox@hud.gov