Section 3 Vicinity Preference Hiring Webinar - Slides · contracts awarded. Reach out to...

U.S. Department of Housing and Urban Development

Section 3 and Vicinity HiringSection 3 and Vicinity Hiring Preference Webinar

March 3, 20112:00 4:00 PM EST2:00 – 4:00 PM EST

U.S. Department of Housing and Urban Development • Community Planning and Development

IntroductionsIntroductions

• Speakers– Carole Burchette, Cloudburst Group

• [email protected]@cloudburstgroup.com– Julia Pierson, Cloudburst Group

• [email protected]• From HUD NSP TeamFrom HUD NSP Team

– John Laswick• [email protected]

David Noguera– David Noguera • [email protected]

• From FHEO, Office of Economic Opportunities B B il– Bruce Bailey

• [email protected]. Department of Housing and Urban Development • Community Planning and Development

AgendaAgenda

• Webinar Objectives• Webinar Objectives• Purpose of Section 3 and Vicinity Hiring

PreferencePreference• Section 3 Requirements and Responsibilities• How Does Section 3 and Vicinity Hiring• How Does Section 3 and Vicinity Hiring

Preference Apply?• Vicinity Hiring PreferenceVicinity Hiring Preference• Tips to Overcome Obstacles• Questions and AnswersQuestions and Answers

3U.S. Department of Housing and Urban Development • Community Planning and Development

Purpose of Section 3Purpose of Section 3

• “To ensure that employment and other economic• To ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible,

d i i h i i F d l S dand consistent with existing Federal, State and local laws and regulations, be directed to low-and very low-income persons, particularly thoseand 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 veryprovide economic opportunities to low- and very low-income persons.”


“To the Greatest Extent Feasible”

What does this mean?


The Times Have ChangedThe Times Have Changed

• With the need to create jobs and economic• With the need to create jobs and economic opportunities at this time in our country’s history, emphasis on compliance with Section 3

i h i drequirements has increased• Today’s discussion is “how to implement

creatively the spirit of the law to get results ”creatively the spirit of the law to get results.• Perhaps we need a new sub-title: “Local Jobs

Initiative”


What Section 3 is NOTWhat Section 3 is NOT…..• Not race or gender specific• Not race or gender specific• Not an entitlement for eligible individuals and

businessesbusinesses• Not only applicable to direct recipients• Not optional – It’s the Law!• Not optional – It s the Law!


Applicability for Housing & CommunityApplicability for Housing & Community Development Programs

• Threshold: $200,000 for grantees and subrecipients$$100,000 for contractors and subcontractors

Housing rehabilitation (including lead based• Housing rehabilitation (including lead-based paint abatement)

• Housing construction• Housing construction• Demolition• Other public construction• Other public construction


Activities CoveredNSPA. Financing

h R h b B. Purchase & Rehab C. Land BanksD. Demolition E. Redevelopment

CDBGHousing Rehabilitation Housing Rehabilitation Infrastructure Public Services

Public Facilities HOMEHousing Rehabilitation

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Housing Rehabilitation New Construction


Applicability to Entire ProjectApplicability to Entire Project

S ti 3 i t l t th ti• Section 3 requirements apply to the entire project or activity that is funded with Section 3 covered assistance, regardless of whether it is , gfully or partially funded with Section 3 Covered assistance.

E l l d i t f d ith th– Example: leveraged private funds with other programs If a project budget is $500 000 and of that If a project budget is $500,000, and of that,

$250,000 is NSP, $150,000 is state funded, and $100,000 is private bank loans, Section 3 requirements will apply.


DefinitionsDefinitions• Housing & Community Development Programs -Housing & Community Development Programs

Employment associated with building trades

Building Trades: Professional Services:A hit t l– Carpentry

– Masonry– Plumbing

El t i l

– Architectural– Engineering– Legal

Management and– Electrical– Demolition

– Management and Administrative Support


DefinitionsDefinitions

• Section 3 Resident– Public Housing Resident orPublic 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.


SECTION 3 RESIDENT PREFERENCE CLAIM FORM

Sample Self-Certification 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

Name________________Address_______________ (will be verified)Telephone_____________

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 135.5.

( )

FY 2010 – HOUSEHOLD INCOME GUIDELINES

Family Size Low Income

1 $22,800I, ___________________, (name) am a legal resident of ____________________(insert City, County, State) and qualify as a Section 3 Resident because I am a public housing

2 $26,050

3 $29,300

4 $32,550

5 $35,150Resident 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*.

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.

Circle the appropriate column based on household size and income

___________________ ____________Signature Date


g

___________________Print Name

DefinitionsDefinitions• Section 3 Business Concern:Section 3 Business Concern:

– 51% or more owned by Section 3 Residents, OROR

– 30% of employed staff are Section 3 Residents ORResidents, OR

– 25% of subcontracts committed to Section 3 BusinessesBusinesses


CERTIFICATION AS A SECTION 3 BUSINESS CONCERN

Sample Section 3 Business Certification

NAME OF BUSINESS ____________________________________ADDRESS OF BUSINESS__________________________________CONTACT PERSON ____________________TITLE_____________TELEPHONE #: (__)____________ CELL #: (__)_______________

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

MUST PROVIDE EVIDENCE OF SECTION 3 STATUS PRIOR TO CONTRACT AWARD

• 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 ___ 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

Eligibility for Employment andEligibility for Employment and Contracting

• A Section 3 Resident must meet the lifi ti f th iti t b fill dqualifications of the position to be filled

• A Section 3 Business Concern must have the ability and capacity to performability and capacity to perform


Numerical GoalsNumerical Goals• Employment:

– 30 percent (30%) of new full-time hires annually (means 1 out of 3 new hires should be qualified Section 3 residents)be qualified Section 3 residents)

• Contracts:10 percent (10%) of the total $ amount of all– 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

i t tservices contracts17

PHA and the NSP ProgramPHA and the NSP Program

• Public and Indian housing assistance has different Section 3 requirements than those for housing and communitythose for housing and community development assistance providers

• As a participant in NSP activities either as p pa grantee, subrecipient, or consortium member, PHAs must track their Section 3 goal achievements separately than thosegoal achievements separately than those goals for the PHA activities


Responsibilitiesp• Implement procedures designed to meet Section

3 requirements – have a plan• Notify Section 3 Residents and Business

Concerns about training and employment t itiopportunities

• Notify contractors and incorporate the Section 3 clause languageclause language

• Facilitate training and employment of Residents• Award contracts to Section 3 Businesses• Document actions to comply• Submit Annual Summary Report


Annual Summary Reporty p• Annual Summary Report of Section 3 Activity – Applies

to all HUD funded housing activities

– Regulation 24 CFR §135.90 states all grantees of Section 3 covered funds must submit form HUD 60002 annually to HUD HQ Fair Housing Equal60002 annually to HUD HQ Fair Housing Equal Opportunity Office (FHEO)

– Due at the time CAPER Report is submittedp

– 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:Summary Report be online at: http://www5.hud.gov:63001/apps/po/e/srs/Public/form.cfm


Consequences ofConsequences of Non-Compliance

• Non-compliance with HUD’s regulations in 24 CFR Part 135 may result in:y– Sanctions,– Termination of contract for defaultTermination of contract for default,– Debarment, and– Suspension from future HUD contracts– Suspension from future HUD contracts


How Does Section 3 Apply?pp y• 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 since each contract is undermore than $200,000, since each contract is under $100,000, the contractor does not share the responsibility, only falls on the recipient (Grantee)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

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concerns.


How Does Section 3 Apply?pp y• A city is awarded a $1.5 million NSP3 grant and

plans to self-manage the acquisition and p g qrehabilitation 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

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area. U.S. Department of Housing and Urban Development • Community Planning and Development

How Does Section 3 Apply?pp y• A subrecipient is awarded $175,000 to develop a

house and hires a general contractor for g$130,000.

The subrecipient is exempt from Section 3 –The subrecipient is exempt from Section 3 The contractor is also exempt, since the subrecipient is exempt.subrecipient is exempt.


QUESTIONS??QUESTIONS??

• We will stop here for a few minutes and takeWe will stop here for a few minutes and take questions.


NSP3 & Vicinity HiringNSP3 & Vicinity Hiring Preference

• Required in Dodd-Frank “Wall Street Reform and Consumer Protection Act,” January 5, 2010 , y ,§1497(a)(8)

• Vicinity defined as: each neighborhood identified by NSP3 grantees as being the areas of greatestby NSP3 grantees as being the areas of greatest need– Local approach to vicinity hiring part of NSP3 oca app oac o c y g pa o S 3

application narrative


NSP3 & Vicinity HiringNSP3 & Vicinity Hiring Preference

• How does this relate to Section 3?D t l ibiliti d– Does not replace your responsibilities under Section 3Section 3 applicability thresholds for– Section 3 applicability thresholds for community development assistance apply

– Numeric goals for new hires and Section 3Numeric goals for new hires and Section 3 Business Concerns apply


How is Vicinity Hiring PreferenceHow is Vicinity Hiring Preference Reported?

• Good Question!• There is no “separate” reportingThere is no separate reporting

requirement; possibility:—Narrative description added to Annual p

Summary Report


Section 3 & NSP Hiring PrioritiesgPriority NSP1 and NSP2 NSP3

First Neighborhood or Service Area Vicinity Preference – NSP3 g(an area no greater than the unit of general local government, such as a city.)

yTarget Area

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 the metro area or non‐metro

HUD Youthbuild Participants

county

Fourth Other Section 3 residents in the metro area or non‐metro county

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metro area or non metro county


Tips to Overcome ObstaclesTips 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 Setcontract during the preconstruction conference. Set clear numeric goals based on the actual contract amount and number of new hires anticipated. Put this i i iin writing.

• Our contractors do not take Section 3 seriously.Try: Require a Section 3 report in order to release a– 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.


Tips to Overcome ObstaclesTips 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– 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.


Tips to Overcome ObstaclesTips 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 businessauthority, 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– Conduct training for contractors who want to work in your target areas. Have the partner make a presentation to contractors about training opportunities.


Tips to Overcome ObstaclesTips 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 fromthen to Section 3 Businesses and Residents from other areas.


Strategies for Implementation g p• 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

R ti d dk i i t- Reporting and recordkeeping requirements


Section 3 - 2011 Initiatives• Increase Section 3 reporting rates and overall

compliance and enforcement for noncompliance

• Provide more training/technical assistance

• Updates to Reporting Forms and online reportingg g

• Pilot Program - Section 3 Business Concern Registry

– Demonstration will take place in 5 cities:e o st at o ta e p ace 5 c t es• Atlanta• Detroit• Los Angeles• Memphis• Washington, DC


Best Practice Success StoriesBest Practice Success Stories

Sabrina Riley Randolph Valdosta GA– Sabrina Riley-Randolph - Valdosta, GA• [email protected]

Guy Stockard Michigan State Housing– Guy Stockard - Michigan State Housing Development Agency (MSHDA)• stockardg@michigan gov• [email protected]


Resource InformationResource Information

U S D t t f H i d U b• U.S. Department of Housing and Urban Development (HUD)– Links to Section 3 Help:Links to Section 3 Help:

• www.hud.gov/section3– FOR NSP:

h //h d h l i f / di / /S i 3 dNSP df• http://hudnsphelp.info/media/resources/Section3andNSP.pdf– Section 3 Regulations:

• http://www.access.gpo.gov/nara/cfr/waisidx_98/24cfr135_98.htmlp gp g _ _– HUD Form 60002:

• http://www.hud.gov/offices/adm/hudclips/forms/files/60002.pdf


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