Preference Webinar March 3, 2011

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1 U.S. Department of Housing and Urban Development Section 3 and Vicinity Hiring Preference Webinar March 3, :00 4:00 PM EST

2 Introductions Speakers Carole Burchette, Cloudburst Group Julia Pierson, Cloudburst Group From HUD NSP Team John Laswick David Noguera From FHEO, Office of Economic Opportunities Bruce Bailey 2

3 Agenda Webinar Objectives Purpose of Section 3 and Vicinity Hiring Preference Section 3 Requirements and Responsibilities How Does Section 3 and Vicinity Hiring Preference Apply? Vicinity Hiring Preference Tips to Overcome Obstacles Questions and Answers 3

4 Purpose of Section 3 To ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing i Federal, State and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons. 4

5 To the Greatest Extent Feasible What does this mean? 5

6 The Times Have Changed With the need to create jobs and economic opportunities at this time in our country s history, emphasis on compliance with Section 3 requirements has increased Today s discussion is how to implement creatively the spirit of the law to get results. Perhaps we need a new sub-title: Local Jobs Initiative 6

7 What Section 3 is NOT.. Not race or gender specific Not an entitlement for eligible individuals and businesses Not only applicable to direct recipients Not optional It s the Law! 7

8 Applicability for Housing & Community Development Programs Threshold: $200,000 for grantees and subrecipients $100,000 for contractors and subcontractors Housing rehabilitation (including lead-based paint abatement) Housing construction Demolition Other public construction 8

9 Activities Covered NSP A. Financing B. Purchase & Rehab C. Land Banks D. Demolition E. Redevelopment CDBG Housing Rehabilitation Infrastructure Public Services Public Facilities HOME Housing Rehabilitation New Construction 9

10 Applicability to Entire Project Section 3 requirements apply to the entire project or activity that is funded with Section 3 covered assistance, regardless of whether it is fully or partially funded with Section 3 Covered assistance. Example: leveraged private funds with other programs If a project budget is $500,000, 000 and of that, $250,000 is NSP, $150,000 is state funded, and $100,000 is private bank loans, Section 3 requirements will apply. 10

11 Definitions Housing & Community Development Programs - Employment associated with building trades Building Trades: Carpentry Masonry Plumbing Electrical l Demolition Professional Services: Architectural t Engineering Legal Management and Administrative Support 11

12 Definitions 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. 12

13 Sample Self-Certification Form SECTION 3 RESIDENT PREFERENCE CLAIM FORM Eligibility for Preference A Section 3 Resident seeking the preference in training and employment provided by this part shall certify, or submit evidence to the recipient contractor or subcontractor, if requested, that the person is a Section 3 Resident, as defined in Part I,, (name) am a legal resident of (insert City, County, State) and qualify as a Section 3 Resident because I am a public housing resident OR because my household income does not exceed the income guidelines by family size as published at the bottom of this form*. Name Address (will be verified) Telephone FY 2010 HOUSEHOLD INCOME GUIDELINES Family Size Low Income 1 $22,800 2 $26,050 3 $29,300 4 $32,550 5 $35,150 6 $37,750 7 $40,350 8 $42,950 *Circle the appropriate column based on household size and income I hereby certify that the information provided by me to be true and correct, and understand any falsification of any of the information could subject me to disqualification from participation and punishment under the law. Signature Date Print Name 13

14 Definitions Section 3 Business Concern: 51% or more owned by Section 3 Residents, OR 30% of employed staff are Section 3 Residents, OR 25% of subcontracts committed to Section 3 Businesses 14

15 Sample Section 3 Business Certification CERTIFICATION AS A SECTION 3 BUSINESS CONCERN NAME OF BUSINESS ADDRESS OF BUSINESS CONTACT PERSON TITLE TELEPHONE #: ( ) CELL #: ( ) MUST PROVIDE EVIDENCE OF SECTION 3 STATUS PRIOR TO CONTRACT AWARD The Bidder certifies that it is a Section 3 Business Concern based on: Business is owned, at least 51%, by Section 3 Residents Provide copy of resident lease, evidence of participation in a public assistance program, or signed Certification for Section 3 Resident Provide business license number At least 30% of their permanent, full-time employees are currently Section 3 Residents or were Section 3 Residents within the past 3 years Provide list of full-time employees (Form 2) Provide signed Certification for Section 3 Residents (Form 3) Commitment to subcontract 25% of the dollar award to qualified Section 3 Business Concerns. (Only applicable for Prime Contractors) I hereby certify that the information provided by me to be true and correct, and understand any falsification of any of the information could subject me to disqualification from participation and punishment under the law. Owner Signature Date Witness Signature Date Print Print 15

16 Eligibility for Employment and Contracting A Section 3 Resident must meet the qualifications of the position to be filled A Section 3 Business Concern must have the ability and capacity to perform 16

17 Employment: Numerical Goals 30 percent (30%) of new full-time hires annually (means 1 out of 3 new hires should be qualified Section 3 residents) Contracts: 10 percent (10%) of the total $ amount of all Section 3 covered contracts for building trades work Three percent (3%) of the total dollar amount to all other contracts, like professional services contracts t 17

18 PHA and the NSP Program Public and Indian housing assistance has different Section 3 requirements than those for housing and community development assistance providers As a participant p in NSP activities either as a grantee, subrecipient, or consortium member, PHAs must track their Section 3 goal achievements separately than those goals for the PHA activities 18

19 Responsibilities Implement procedures designed to meet Section 3 requirements have a plan Notify Section 3 Residents and Business Concerns about training and employment opportunities Notify contractors and incorporate the Section 3 clause language Facilitate training and employment of Residents Award contracts to Section 3 Businesses Document actions to comply Submit Annual Summary Report 19

20 Annual Summary Report Annual Summary Report of Section 3 Activity Applies to all HUD funded housing activities Regulation 24 CFR states all grantees of Section 3 covered funds must submit form HUD annually to HUD HQ Fair Housing Equal Opportunity Office (FHEO) Due at the time CAPER Report is submitted If no CAPER is required to be submitted to HUD, then the Annual Summary Report is due by Jan. 10 of each year or within 10 days of project completion However, FHEO would prefer that the Annual Summary Report be online at: 20

21 Consequences of Non-Compliance Non-compliance with HUD s regulations in 24 CFR Part 135 may result in: Sanctions, Termination of contract for default, Debarment, and Suspension from future HUD contracts 21

22 How Does Section 3 Apply? A contractor is awarded 5 separate contracts of $60,000 each to rehab 5 houses. Section 3 applies to the Grantee if they received more than $200,000, 000 since each contract is under $100,000, the contractor does not share the responsibility, only falls on the recipient (Grantee) HOWEVER, the recipient is still responsible for meeting its Section 3 goals, so it should award 10% of its contracts to Section 3 qualified business concerns. 22

23 How Does Section 3 Apply? A city is awarded a $1.5 million NSP3 grant and plans to self-manage the acquisition and rehabilitation of 20 houses. It plans to hire a construction manager and a rehab inspector. Contracting goal: 10% of all construction contracts awarded. Reach out to contractors with employees in the vicinity hiring target area. New Hires: 1 should be a Section 3 Resident living in the vicinity hiring target area. 23

24 How Does Section 3 Apply? A subrecipient is awarded $175,000 to develop a house and hires a general contractor for $130,000. The subrecipient is exempt from Section 3 The contractor is also exempt, since the subrecipient is exempt. 24

25 QUESTIONS?? We will stop here for a few minutes and take questions. 25

26 NSP3 & Vicinity Hiring Preference Required in Dodd-Frank Wall Street Reform and Consumer Protection Act, January 5, (a)(8) Vicinity defined as: each neighborhood identified by NSP3 grantees as being the areas of greatest need Local approach to vicinity hiring part of NSP3 application narrative 26

27 NSP3 & Vicinity Hiring Preference How does this relate to Section 3? Does not replace your responsibilities under Section 3 Section 3 applicability thresholds for community development assistance apply Numeric goals for new hires and Section 3 Business Concerns apply 27

28 How is Vicinity Hiring Preference Reported? Good Question! There is no separate reporting requirement; possibility: Narrative description added to Annual Summary Report 28

29 Section 3 & NSP Hiring Priorities Priority NSP1 and NSP2 NSP3 First Neighborhood or Service Area Vicinity Preference NSP3 (an area no greater than the Target Area unit of general local government, such as a city.) Second HUD Youthbuild participants Neighborhood or Service Area (an area no greater than the unit of general local government, such as a city.) Third Other Section 3 residents in HUD Youthbuild Participants the metro area or non metro county Fourth Other Section 3 residents in the metro area or non metro county 29

30 Tips to Overcome Obstacles Our contractors say that Section 3 requirements are complicated. Try: Review the Section 3 requirements for each contract during the preconstruction conference. Set clear numeric goals based on the actual contract amount and number of new hires anticipated. Put this in writing. i Our contractors do not take Section 3 seriously. Try: Require a Section 3 report in order to release a final draw retainage payment. For larger contracts, require a Section 3 progress report with each draw request. 30

31 Tips to Overcome Obstacles Our contractors are small businesses and use the same crew for all their work. They say they do not have new hires. Try: New hires are any employees who are added to the payroll full-time to work on a contract. They need to the greatest extent feasible have 1 out of 3 of these new hires be Section 3 residents. 31

32 Tips to Overcome Obstacles Our Section 3 program has not resulted in any Section 3 contracts or new hires. Try: Partner with a workforce program, housing authority, minority business program, small business incubator, contractor training program, community college, etc., that serves residents of your area. Start a pilot program the first year, then build the program over time. Conduct training for contractors who want to work in your target areas. Have the partner make a presentation to contractors about training opportunities. 32

33 Tips to Overcome Obstacles In our rural county, we are working with Section 3 Businesses and Residents from other areas. Try: First preference must go to those in your area, then to Section 3 Businesses and Residents from other areas. 33

34 Strategies for Implementation Network and collaborate with local housing authority and training providers in target area Designate responsibility to "Section 3 Coordinator" Adopt and execute a Section 3 Plan that describes: - Section 3 purpose/policy statement - Section 3 action plan and goals - Contracting policy and procedures - Certification procedures - Training opportunities - The evaluation of Section 3 proposals - Reporting and recordkeeping requirements 34

35 Section Initiatives Increase Section 3 reporting rates and overall compliance and enforcement for noncompliance Provide more training/technical assistance Updates to Reporting Forms and online reporting Pilot Program - Section 3 Business Concern Registry Demonstration o will take place in 5 cities: Atlanta Detroit Los Angeles Memphis Washington, DC 35

36 Best Practice Success Stories Sabrina Riley-Randolph Randolph - Valdosta, GA srandolph@valdostacity.com Guy Stockard - Michigan State Housing Development Agency (MSHDA) stockardg@michigan.govgov 36

37 Resource Information US U.S. Department tof fhousing and dub Urban Development (HUD) Links to Section 3 Help: FOR NSP: h / di / /S i dnsp df Section 3 Regulations: g _ HUD Form 60002: 37

38 Your Feedback Is Important to Us! 38

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