Section_3-Attachment_Complete_(FY23).pdf

SECTION 3 PROGRAM

Fosters local economic development, job opportunities, and self-sufficiency.

The City of Tucson’s Housing and Community Development Department (HCD) is a direct recipient of HUD Public and Indian Housing funding and other housing and community development funding which have Section 3 requirements. All contractors and vendors are required to comply with the Section 3 Program and New Rule regulations found at 24 CFR Part 75 as applicable.

Nature of Program: Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), as amended, requires that when new jobs or contracts are created as a result of the usage of certain HUD funds (including Public and Indian Housing funds), priority consideration is given, to the greatest extent feasible, to low- and very low-income persons residing in the community in which the funds are spent, and to businesses that provide economic opportunities for these persons.

All direct recipients of HUD funds that are covered by Section 3 must document actions taken to comply with the regulatory requirements found at 24 CFR Part 75 (New Rule) and submit reports annually. Pursuant to the regulation, HUD not only reviews this information for compliance, but also conducts periodic compliance reviews of recipients and contractors. Additionally, HUD investigates complaints filed by Section 3 residents and business concerns alleging noncompliance. Agencies that are found to be in noncompliance may be subject to sanctions including debarment, suspension, or limited denial of participation in HUD programs.

Legal Authority: Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u).

Housing & Community Development Section 3 Project Coordinator:

Rebecca (Becky) Chavez - Office: 520-837-5307 Email: HCDSEC3MBEWBE@tucsonaz.gov

7/1/2022 mailto:HCDSEC3MBEWBE@tucsonaz.gov

SECTION 3 CONTRACT CLAUSE

EFFECTIVE JULY 1, 2021

The Section 3 New Rule is located at 24 CFR Part 75

All Section 3 covered contracts and subcontracts shall include the following Section 3 Contract Clause:

A. The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (Section 3). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3, shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing.

B. The parties to this contract agree to comply with HUD's regulations in 24 CFR Part 75, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the Part 75 regulations.

C. The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause, and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number and job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; and the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin.

D. The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR Part 75, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR Part 75. The contractor will not subcontract with any subcontractor where the contractor has notice or knowledge that the subcontractor has been found in violation of the regulations in 24 CFR Part 75.

E. The contractor will certify that any vacant employment positions, including training positions, that are filled (1) after the contractor is selected but before the contract is executed, and (2) with persons other than those to whom the regulations of 24 CFR Part 75 require employment opportunities to be directed, were not filled to circumvent the contractor's obligations under 24 CFR Part 75.

F. Noncompliance with HUD's regulations in 24 CFR Part 75 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD-assisted contracts.

G. With respect to work performed in connection with Section 3 covered Indian housing assistance, section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e) also applies to the work to be performed under this contract. Section 7(b) requires that to the greatest extent feasible (i) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises. Parties to this contract that are subject to the provisions of Section 3 and section 7(b) agree to comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with section 7(b).

7/1/22

CITY OF TUCSON | Section 3 Benchmarks 7/1/2022

SECTION 3 NEW DEFINITIONS & BENCHMARKS

EFFECTIVE JULY 1, 2021

OVERVIEW OF TITLE 24 CFR Part 75

• New definitions for Section 3 Workers AND Business Concerns

• Income Limits - no longer include total household income for individuals to qualify, therefore many more employees should qualify as Section 3 Workers

• New benchmarks for compliance tracking labor hours

• Prioritization in hiring depending upon funding source (PHA vs. PCD)

NEW DEFINITIONS

A SECTION 3 WORKER is any resident who currently meets, or when hired (since Dec. 1, 2020) met at least one of the following criteria:

1. The worker’s individual income for the previous or annualized calendar year is at or below $42,950 (Income Limit effective 6/15/2022).

2. The worker is employed by a Section 3 business concern.

3. The worker is a YouthBuild participant.

A TARGETED SECTION 3 WORKER for Public Housing Projects is a Section 3 Worker who:

1. Is employed by a Section 3 Business concern, or

2. Who currently meets, or when hired (since Dec. 1, 2020) met at least one of the following:

a. Lives in HUD Public Housing or HUD Section 8-Assisted Housing

b. Lives in other Public Housing or Assisted Housing managed by the Public Housing Authority (PHA).

c. Is a YouthBuild participant

A TARGETED SECTION 3 WORKER for Planning and Community Development Projects is a Section 3 Worker who:

1. Is employed by a Section 3 Business concern, or

2. Who currently meets, or when hired (since Dec. 1, 2020) met at least one of the following:

a. Lives within the service area or the neighborhood of the project as defined in 24 CFR 75.5

b. A YouthBuild participant

A SECTION 3 BUSINESS CONCERN is a business concern which meets one of the below criteria, documented within the last six-month period:

1. The business is at least 51% owned and controlled by low-income residents of Tucson (each owner earns no more than $42,950 annually).

2. Over 75% of the labor hours performed over the past three-month period were performed by Section 3 workers.

3. The business is at least 51% owned and controlled by current residents of HUD public housing or HUD-assisted housing (Section 8 housing).

CITY OF TUCSON | Section 3 Benchmarks 7/1/2022

To be certified as a Section 3 Business Concern under one of the three options, this is what must be provided:

Section 3 Business Category Additional Required Data

1. It is at least 51 percent owned by low-income persons.

Proof of ownership showing all owners and their percentages and a completed Section 3 Individual Certification form for all low-income owners.

2. Over 75 percent of the labor hours performed for the business are performed by low-income persons.

Provide the last 90 days full payrolls for the entire company, make a list of the names from the payrolls of the Section 3 workers, and provide a completed Section 3 Individual Certification for all low-income workers you list.*

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.

Proof of ownership showing all owners and their percentages and a Section 3 Individual Certification for all public housing and/or Section 8 owners

*If a business concern doesn’t have a time and attendance system in place, then a good-faith estimate will be accepted.

NEW BENCHMARKS

Contractors must report all labor hours worked, labor hours worked by Section 3 Workers, labor hours worked by Targeted Section 3 Workers, and new hires.

To be considered in compliance with Section 3:

• 25% or more of all labor hours worked must be performed by Section 3 Workers.

• 5% or more of all labor hours worked must be performed by Targeted Section 3 Workers (this is a subset of the 25% Section 3 Workers).

For example, if a project takes 1000 total labor hours to complete, then the benchmarks to be met are 250 labor hours (25%) are worked by Section 3 Workers, and 50 labor hours (5%) are worked by Targeted Section 3 Workers.

To calculate, divide the total labor hours worked by Sec 3 Workers by the total number of labor hours worked by all workers to see if the 25% benchmark has been met. To calculate for Targeted Section 3 Workers, divide the total of all labor hours worked by Targeted Workers by the total number of labor hours worked by all workers to see if the 5% benchmark has been met.

JOB OPPORTUNITIES

If the need to hire presents itself there is a HUD-required prioritization of effort, to the greatest extent feasible, to hire/subcontract according to 24 CFR 75.9 for PHA (Public Housing Authority) projects, and according to 24 CFR 75.19 for PCD (Planning & Community Development) projects. Please refer to these regulations for further detail.

DISCLAIMER: This document is a brief overview of the main changes regarding the new Section 3 regulations;

it is NOT comprehensive. Please review the complete regulations at 24 CFR Part 75.

Section 3 New Definitions Benchmarks (Updated FY23).pdf