Gilliam Policy Conference

1. Section 3Section 3
Economic Opportunities for Low andEconomic Opportunities for Low and
Very Low-Income PersonsVery Low-Income Persons
20102010
Fair Housing Policy ConferenceFair Housing Policy Conference
New Orleans, LANew Orleans, LA
Staci Gilliam Hampton, DirectorStaci Gilliam Hampton, Director
Economic Opportunity DivisionEconomic Opportunity Division
Washington, DC 20410Washington, DC 20410
202-402-3468202-402-3468
section3@hud.govsection3@hud.gov
www.hud.gov/section3www.hud.gov/section3

2. 2
Section 3 HistorySection 3 History
 Civil Rights Movement andCivil Rights Movement and
Protests of the 1960’sProtests of the 1960’s
 Race Riots 1965-1968Race Riots 1965-1968
 Los Angeles (Watts), Chicago,Los Angeles (Watts), Chicago,
Detroit, NewarkDetroit, Newark

3. 3
Section 3 HistorySection 3 History
Kerner Commission—1968Kerner Commission—1968
 President Lyndon JohnsonPresident Lyndon Johnson
 What happened?What happened?
 Why?Why?
 What can be done to preventWhat can be done to prevent
from happening again?from happening again?
 7 months of investigation7 months of investigation

4. 4
Section 3 HistorySection 3 History
Kerner Commission—1968Kerner Commission—1968
Findings:Findings:
 Riots occurred because of frustration with theRiots occurred because of frustration with the
lack of economic opportunities.lack of economic opportunities.
 ““Our nation is moving to toward two societies,Our nation is moving to toward two societies,
one black, one white—separate and unequal.one black, one white—separate and unequal.
 Dr. King called the report: “a physician’sDr. King called the report: “a physician’s
warning of approaching death, with thewarning of approaching death, with the
prescription for life”.prescription for life”.

5. 5
Section 3 HistorySection 3 History
Kerner Commission—1968Kerner Commission—1968
RecommendationsRecommendations::
 Create JobsCreate Jobs
 Construct New HousingConstruct New Housing
 Stop de-facto segregationStop de-facto segregation
 Hire diverse and sensitive police forceHire diverse and sensitive police force
 Open suburban residential areas to minoritiesOpen suburban residential areas to minorities
 Government programs were needed to provideGovernment programs were needed to provide
these services (HUD, DOJ, DOL, etc)these services (HUD, DOJ, DOL, etc)

6. 6
Section 3 HistorySection 3 History
Kerner Commission—1968Kerner Commission—1968
OutcomeOutcome::
 Lyndon Johnson rejected the Commission’sLyndon Johnson rejected the Commission’s
recommendationsrecommendations
 April 1968 (one month after Report wasApril 1968 (one month after Report was
released) Dr. Martin Luther King, Jr. wasreleased) Dr. Martin Luther King, Jr. was
assassinatedassassinated
 Rioting broke out in more than 100 citiesRioting broke out in more than 100 cities
 Most of the Commission’s recommendationsMost of the Commission’s recommendations
were ultimately adoptedwere ultimately adopted

7. Statute and RegulationStatute and Regulation
 Section 3 of the Housing and UrbanSection 3 of the Housing and Urban
Development Act of 1968Development Act of 1968
 12 U.S.C. 1701u12 U.S.C. 1701u
 Economic Opportunity RegulationEconomic Opportunity Regulation
 24 CFR Part 13524 CFR Part 135

8. 88
Regulatory DescriptionRegulatory Description
To ensure that economic
opportunities generated from HUD
funded projects, to the greatest
extent feasible, will be directed to
low and very low-income persons -
particularly those receiving
assistance for housing, and the
businesses that provide them
economic opportunities

9. To the Greatest Extent
Feasible???
Recipients must make every
effort to recruit, target, and direct
economic opportunities to
Section 3 residents and
businesses.
 Comprehensive strategies that
are beyond normal procedures.

10. Simply Stated…Simply Stated…
 HUD funds are one of the largestHUD funds are one of the largest
sources of federal investment insources of federal investment in
distressed communitiesdistressed communities
 These funds typically result in newThese funds typically result in new
employment, training andemployment, training and
contracting opportunitiescontracting opportunities
 Section 3 is designed to direct newSection 3 is designed to direct new
economic opportunities to localeconomic opportunities to local
residents and businessesresidents and businesses10

11. IntentIntent
 HUD funding creates opportunitiesHUD funding creates opportunities
“beyond bricks and mortar”“beyond bricks and mortar”
 Promote Self-Sufficiency amongstPromote Self-Sufficiency amongst
low-income personslow-income persons
 Multiplier Effect for HUD dollarsMultiplier Effect for HUD dollars
11

12. IntentIntent
 Not intended to require recipients orNot intended to require recipients or
their contractors to hire, providetheir contractors to hire, provide
training or award contracts beyond whattraining or award contracts beyond what
is absolutely requiredis absolutely required
 If there are going to be new job, training,If there are going to be new job, training,
or contracting opportunities –Section 3or contracting opportunities –Section 3
appliesapplies

13. 1313
ApplicabilityApplicability
 Public and Indian HousingPublic and Indian Housing
 DevelopmentDevelopment
 OperationOperation
 ModernizationModernization
 Housing and CommunityHousing and Community
DevelopmentDevelopment
 Housing rehabilitationHousing rehabilitation
 Housing constructionHousing construction
 Other public constructionOther public construction

14. 14
Section 3 Covered AssistanceSection 3 Covered Assistance
 PIH AllocationsPIH Allocations
 Operations, Capital, Modernization,Operations, Capital, Modernization,
HOPE VIHOPE VI
 CDBG FundingCDBG Funding
 HOME FundingHOME Funding
 NAHASDA fundingNAHASDA funding
 Competitive GrantsCompetitive Grants
 EDI and BEDIEDI and BEDI
 Lead Based PaintLead Based Paint
 202/811202/811
 ROSSROSS
 Project Based VouchersProject Based Vouchers

15. 15
2010 Proposed HUD Budget
Public and Indian Housing $7,749 billion
• Public Housing Capital Fund
• Choice Neighborhoods (formerly HOPE VI)
• Public Housing Operating Fund
• Native American Housing Block Grants
• Native Hawaiian Housing Block Grants
Housing $1,015 billion
• Housing for the Elderly (202 Grants)
• Housing for Persons with Disabilities (811 Grants)
Community Planning and Development $8,456 billion
• Community Development Block Grant Fund
• HOME Investment Partnerships Program
• Self-Help Homeownership Opportunity Program (SHOP)
• Housing Opportunities for Persons with Aids (HOPWA)
Lead Hazard Control Grants $69 million
TOTAL Section 3 Covered Funds $17,289 billion
40% of HUDs Budget
Section 3 Covered Funding

16. 16
Applicability to EconomicApplicability to Economic
Stimulus FundsStimulus Funds
 PIH Public Housing Capital FundsPIH Public Housing Capital Funds
 Neighborhood Stabilization ProgramNeighborhood Stabilization Program
 Community Development Block GrantsCommunity Development Block Grants
 Native American Housing Block GrantsNative American Housing Block Grants
 Assisted Housing Energy & GreenAssisted Housing Energy & Green
RetrofitsRetrofits
 Lead Hazard Control (LHC Grants Only)Lead Hazard Control (LHC Grants Only)
Total: $7.8 BillionTotal: $7.8 Billion
(57% of HUD’s Stimulus Funds)(57% of HUD’s Stimulus Funds)

17. 17
Section 3 ComplianceSection 3 Compliance
Certification(s)Certification(s)
 Annual CertificationsAnnual Certifications
 Signed by Highest-Elected OfficialsSigned by Highest-Elected Officials
 Westchester County, NYWestchester County, NY
 Failing to comply with Section 3Failing to comply with Section 3
Certifications could have severeCertifications could have severe
consequencesconsequences

18. 1818
Failure to Comply withFailure to Comply with
Section 3Section 3
HUD holds directHUD holds direct
recipients of coveredrecipients of covered
funding accountable forfunding accountable for
their own compliance, andtheir own compliance, and
the compliance of theirthe compliance of their
subrecipients andsubrecipients and
contractorscontractors

19. 1919
Penalties forPenalties for
NoncomplianceNoncompliance
Sanctions for noncomplianceSanctions for noncompliance
may include:may include:
 DebarmentDebarment
 SuspensionSuspension
 Limited Denial of Participation inLimited Denial of Participation in
HUD ProgramsHUD Programs

20. Section 3 BeneficiariesSection 3 Beneficiaries
&&
ResponsibilitiesResponsibilities

21. Section 3 ResidentSection 3 Resident
 Public Housing Resident,Public Housing Resident,
oror
 A resident of metropolitan areaA resident of metropolitan area
or non-metropolitan county inor non-metropolitan county in
which the Section 3 coveredwhich the Section 3 covered
assistance is expended, andassistance is expended, and
who qualifies as a low- or verywho qualifies as a low- or very
low-income person.low-income person.

22. 22
Low- and Very Low-IncomeLow- and Very Low-Income
HUD sets the low-income limitHUD sets the low-income limit
atat 80%80% and very low incomeand very low income
limits atlimits at 50%50% of theof the medianmedian
family incomefamily income for counties orfor counties or
metropolitan areas across themetropolitan areas across the
countrycountry
http://www.huduser.org/portal/datasets/il.html

23. Section 3 PreferenceSection 3 Preference
 Not Minority/Women BusinessNot Minority/Women Business
Enterprise requirementsEnterprise requirements
 The preferences providedThe preferences provided
under Section 3 are based onunder Section 3 are based on
income and locationincome and location..

24. Race and Gender NeutralRace and Gender Neutral
 Poverty is color-blind
 Low-Income persons in urban
areas “may” be minorities
 HUD funds assist persons with
the greatest economic needs
regardless of race or gender

25. Today Section 3 ResidentsToday Section 3 Residents
May Include….May Include….
 Residents of Public HousingResidents of Public Housing
 Section 8 Voucher HoldersSection 8 Voucher Holders
 Recently UnemployedRecently Unemployed
 VeteransVeterans
 Recipients of Other Federal AssistanceRecipients of Other Federal Assistance
(TANF, unemployment, etc)(TANF, unemployment, etc)
 Single Mothers Re-entering theSingle Mothers Re-entering the
WorkforceWorkforce
 Recent College GraduatesRecent College Graduates

26. Section 3 Business ConcernSection 3 Business Concern
 51%51% or more owned by Section 3or more owned by Section 3
Residents, orResidents, or
 30%30% of employed staff areof employed staff are
currently Section 3 Residents orcurrently Section 3 Residents or
were Section 3 residents withinwere Section 3 residents within
three years of the date of firstthree years of the date of first
employment; oremployment; or
 25%25% of the dollar award of allof the dollar award of all
subcontracts committed to Sectionsubcontracts committed to Section
3 Businesses.3 Businesses.

27. Eligibility for employment andEligibility for employment and
contractingcontracting
A Section 3 resident must meetA Section 3 resident must meet
the qualifications of the positionthe qualifications of the position
to be filled.to be filled.
A Section 3 business concernA Section 3 business concern
must have the ability andmust have the ability and
capacity to perform.capacity to perform.

28. Eligibility for employment andEligibility for employment and
contractingcontracting
Section 3 is not intended to create anSection 3 is not intended to create an
“entitlement” for eligible residents and“entitlement” for eligible residents and
businesses—it createsbusinesses—it creates opportunitiesopportunities
Simply meeting the definitions doesSimply meeting the definitions does
not automatically mean that they willnot automatically mean that they will
be given jobs or contractsbe given jobs or contracts

29. Overview ofOverview of
Recipient ResponsibilitiesRecipient Responsibilities

30. 30
Recipient AgenciesRecipient Agencies
Direct Recipients of covered HUDDirect Recipients of covered HUD
funding or recipients of coveredfunding or recipients of covered
funding from another direct recipientfunding from another direct recipient
 CITIES, COUNTIES, STATESCITIES, COUNTIES, STATES
 UNITS OF LOCAL GOVERNMENTUNITS OF LOCAL GOVERNMENT
 PUBLIC OR INDIAN HOUSING AUTHORITIESPUBLIC OR INDIAN HOUSING AUTHORITIES
 DEVELOPERSDEVELOPERS
 NON-PROFIT ORGANIZATIONSNON-PROFIT ORGANIZATIONS
 PRIVATE AGENCIESPRIVATE AGENCIES

31. 31
Responsibility #1Responsibility #1
Design and implementDesign and implement
procedures to complyprocedures to comply
with the requirements ofwith the requirements of
Section 3Section 3

32. 32
Responsibility #2Responsibility #2
Notify Section 3Notify Section 3
residents about trainingresidents about training
and employmentand employment
opportunities andopportunities and
Section 3 businessesSection 3 businesses
about contractingabout contracting
opportunitiesopportunities

33. 33
Responsibility #3Responsibility #3
Notify coveredNotify covered
contractors about thecontractors about the
requirements ofrequirements of
Section 3Section 3

34. 34
Responsibility #4Responsibility #4
Incorporate the SectionIncorporate the Section
3 clause into covered3 clause into covered
solicitations andsolicitations and
contractscontracts
--24 CFR Part 135.38--24 CFR Part 135.38

35. 35
Responsibility #5Responsibility #5
Facilitate training andFacilitate training and
employment of Section 3employment of Section 3
residents and the awardresidents and the award
contracts to Section 3contracts to Section 3
businesses, as appropriatebusinesses, as appropriate
to reach the minimumto reach the minimum
numerical goalsnumerical goals

36. Minimum Numerical Goals:Minimum Numerical Goals:
 30% of new hires annually30% of new hires annually
 10% of the total dollar amount of10% of the total dollar amount of
covered construction contractscovered construction contracts
 3% of the total dollar amount of3% of the total dollar amount of
covered non-constructioncovered non-construction
contractscontracts
Responsibility #6Responsibility #6

37. 37
Employment OpportunitiesEmployment Opportunities
Public Housing AuthoritiesPublic Housing Authorities
 All jobs with PHA or contractorsAll jobs with PHA or contractors
Housing & Community DevelopmentHousing & Community Development
 Construction LaborConstruction Labor
 Management & Administrative SupportManagement & Administrative Support
 Architectural, Engineering andArchitectural, Engineering and
Professional servicesProfessional services

38. 38
Contracting OpportunitiesContracting Opportunities
Public Housing AuthoritiesPublic Housing Authorities
 All contracts and subcontracts awardedAll contracts and subcontracts awarded
with Public Housing funds regardless ofwith Public Housing funds regardless of
the dollar amountthe dollar amount
Housing & Community DevelopmentHousing & Community Development
 Contracts for activities involvingContracts for activities involving
housing construction, rehabilitation, orhousing construction, rehabilitation, or
other public constructionother public construction
 Contractors may also haveContractors may also have
responsibilities depending on the dollarresponsibilities depending on the dollar
amount of their award.amount of their award.

39.  24 CFR Part 135.3024 CFR Part 135.30
 Numerical Targets (may beNumerical Targets (may be
exceeded)exceeded)
 Safe Harbor ComplianceSafe Harbor Compliance
 Other Efforts Taken to AchieveOther Efforts Taken to Achieve
Compliance—To the GreatestCompliance—To the Greatest
Extent FeasibleExtent Feasible
Minimum Numerical GoalsMinimum Numerical Goals

40. Assisting and activelyAssisting and actively
cooperating with thecooperating with the
Assistant Secretary inAssistant Secretary in
obtaining the complianceobtaining the compliance
of contractorsof contractors
Responsibility #7Responsibility #7

41. Refraining fromRefraining from
entering into contractsentering into contracts
with contractors thatwith contractors that
fail to complyfail to comply
Responsibility #8Responsibility #8

42. Documenting actionsDocumenting actions
taken to comply with thetaken to comply with the
requirements of Section 3,requirements of Section 3,
results of actions taken,results of actions taken,
and impediments,and impediments,
if anyif any
Responsibility #9Responsibility #9

43. 43
Section 3 ReportingSection 3 Reporting
 Form HUD-60002Form HUD-60002
 Online Reporting SystemOnline Reporting System
 Reports submitted to FHEO inReports submitted to FHEO in
Washington, DCWashington, DC

44. 4444
Determining ComplianceDetermining Compliance
 Absent Evidence to the ContraryAbsent Evidence to the Contrary
 Meeting Minimum NumericalMeeting Minimum Numerical
Goals—Safe HarborGoals—Safe Harbor
 Narrative ExplanationsNarrative Explanations

45. Section 3Section 3 ComplaintComplaint
InvestigationsInvestigations
Form HUD-958Form HUD-958

46. 46
Complaint ProcessingComplaint Processing
 Form HUD 958 filed within 180Form HUD 958 filed within 180
days of alleged noncompliancedays of alleged noncompliance
 Most complaints are associated withMost complaints are associated with
contracting issuescontracting issues
 Preference- to conciliatePreference- to conciliate
 May result in sanctionsMay result in sanctions

47. Other Section 3Other Section 3
Enforcement ActionsEnforcement Actions
 Compliance ReviewsCompliance Reviews
 Limited Monitoring ReviewsLimited Monitoring Reviews
 On-Site Technical AssistanceOn-Site Technical Assistance
VisitsVisits
 VCAsVCAs

48. 4848
2008 Outcomes/Results2008 Outcomes/Results
 75% 0f Covered Agencies submitted reports75% 0f Covered Agencies submitted reports
 Overall 38% of employment and trainingOverall 38% of employment and training
opportunities were provided to Section 3opportunities were provided to Section 3
residents (residents (17,569 economic opportunities17,569 economic opportunities))
 9.4% of Construction Contracts were awarded9.4% of Construction Contracts were awarded
to Section 3 businesses ($354 Million)to Section 3 businesses ($354 Million)
 Many larger recipients still failed meetMany larger recipients still failed meet
minimum goals or provide adequateminimum goals or provide adequate
explanationsexplanations

49. 4949
 Increase Section 3 reportingIncrease Section 3 reporting
rates and accuracyrates and accuracy
 Increase overall complianceIncrease overall compliance
 Provide more training/technicalProvide more training/technical
assistanceassistance
 Listening SessionsListening Sessions
2010 & 2011 Initiatives2010 & 2011 Initiatives

50. 5050
 New Guidance MaterialsNew Guidance Materials
 New Section 3 reporting formsNew Section 3 reporting forms
and online systemand online system
 Revised Section 3 regulationRevised Section 3 regulation
 Section 3 Business ConcernSection 3 Business Concern
Registry—Pilot ProgramRegistry—Pilot Program
2010 & 2011 Initiatives2010 & 2011 Initiatives

51. 5151
 Section 3 Implementation andSection 3 Implementation and
Coordination NOFACoordination NOFA
 Incorporate Section 3 complianceIncorporate Section 3 compliance
into Annual Plans and Performanceinto Annual Plans and Performance
AssessmentsAssessments
 Enforce penalties for noncomplianceEnforce penalties for noncompliance
2010 & 2011 Initiatives2010 & 2011 Initiatives

52. 5252
Additional ResourcesAdditional Resources
Please visit our webpage:Please visit our webpage:
www.hud.gov/section3www.hud.gov/section3
 Guidance MaterialsGuidance Materials
 Sample DocumentsSample Documents
 Link to Online ReportingLink to Online Reporting
 Upcoming TrainingsUpcoming Trainings
 Model ProgramsModel Programs
 Contact InformationContact Information
 Section3@hud.govSection3@hud.gov