Transcript Section 3 Implementation: A Practitioner’s Perspective

Section 3 Business Certification
A New Tool for Creating Economic Opportunities for Low-Income
Businesses in Allegheny County
Robert Damewood, Staff Attorney
Renee Robinson, Certification Specialist
Regional Housing Legal Services
MWDBE Governmental Committee
September 16, 2014
RHLS
Regional Housing Legal Services
is a nonprofit law firm with unique
expertise in affordable, sustainable
housing and its related components
— community and economic
development, utility matters and
preservation of home ownership.
RHLS provides innovative project
and policy solutions that help create
sustainable communities offering
decent, safe and affordable housing
for lower-income Pennsylvanians
RHLS Section 3 Business
Certification Program
The RHLS Section 3
Business Certification
Program helps businesses
that are owned by lowincome people or that hire
low-income people in
Allegheny County to
connect with contracting
opportunities on federallyfunded projects
HUD Section 3
 Section 3 is a provision of the U.S. Housing and
Urban Development Act of 1968
 Enacted in the aftermath of riots sparked by urban
renewal and widespread job discrimination
 To ensure that economic opportunities generated by
HUD assistance will, to the greatest extent feasible,
be directed to low-income residents of the areas
where HUD-funded projects are located
Section 3 and MBE/WBE
 Similar goals – expand economic opportunities to
underserved populations
 Section 3 is race and gender neutral - preference is
based on income and location
 Section 3 is easier to enforce – clear standards for
compliance and strict penalties for violation
 “Greatest extent feasible” vs. “good faith intentions”
Covered Projects
 HUD-funded housing/community development:
Contracts worth over $100,000 on projects
receiving over $200,000 in Section 3 covered
funds
 Includes CDBG, HOME, ESG, HOPWA, NSP,
Section 108 loan guarantees and HOPE VI
 Public housing: All contracting and employment is
covered – no monetary thresholds
 Over $100 million in Section 3 covered funds is
received by Allegheny County agencies each year
Section 3 Agencies
There are seven Section 3 agencies in Allegheny County:
 Pittsburgh Urban Redevelopment Authority
 Housing Authority of the City of Pittsburgh
 Allegheny County Economic Development
 Allegheny County Housing Authority
 City of McKeesport
 McKeesport Housing Authority
 Municipality of Penn Hills
Section 3 Requirements
 Section 3 requires HUD recipients to hire and
contract with low-income residents of the area
where the HUD-funded project is located “to the
greatest extent feasible”
 “Greatest extent feasible” means every effort must
be made
 Recipients of Section 3 covered funds must meet
or exceed HUD safe harbor thresholds in order
to demonstrate compliance - recipients that fail to
meet the thresholds are presumed to be out of
compliance
Safe Harbor Thresholds
 At least 30% of all new hires must be Section 3
residents (In one case, HUD interpreted this to me
that at least 30% of the hours worked by new hires
must be worked by Section 3 residents)
 At least 10% of the dollar value of all constructionrelated contracts must be awarded to Section 3
business concerns
 At least 3% of the dollar value of all other contracts
must be awarded to Section 3 business concerns
“Section 3 Business Concern”
A business that:
 Is 51% or more owned by Section 3 residents
 Employs Section 3 residents (30% or more of all
permanent full-time employees must be Section 3
residents or must have been Section 3 residents
within 3 years of the date of hire) or
 Subcontracts with Section 3 businesses (at least
25% of the dollar amount of all subcontracts must
be with Section 3 firms)
“Section 3 Resident”
 A resident of public housing or a low-income
resident (at or below 80% AMI) of the metropolitan
area or non-metropolitan county where the project
is located
 For public housing, hiring priority is given to
residents of the affected housing development
 For other housing and community development
projects, hiring priority is given to residents of the
neighborhood where the project is located
Income Guidelines
Income limits are published annually by HUD.
The 2014 income limits are:
1 PERSON 36,750
2 PERSON 42,000
3 PERSON 47,250
4 PERSON 52,500
5 PERSON 56,700
EACH ADDITIONAL 4,200
Benefits of Section 3
Certification
 Certification establishes eligibility for a contracting
preference on Section 3 covered projects in Allegheny
county
 Registered businesses can use the RHLS website to
find contracting opportunities on Section 3 covered
development projects
 Registered businesses can also sign up to receive RSS
notification when new contracting opportunities are
posted
Local Section 3 Contracting
 In 2010, Allegheny County recipients filing Section
3 reports with HUD awarded only $271,000 (out of
$56 million in covered contracts) to Section 3
Business Concerns
 That worked out to only 0.5% of the dollar amount
of all covered contracts
 In 2013, $2,292,740 was awarded to RHLScertified Section 3 businesses on one project
alone
How to Become Section 3
Certified
Visit the RHLS Section 3
website
https://section3.rhls.org
Or call to make an
appointment
Renee Robinson
Certification Specialist
(412) 304-1890
How to Become Section 3
Certified
Register to use the RHLS website
How to Become Section 3
Certified
Complete the online application
How to Become Section 3
Certified
 The RHLS Team will review your application making
sure you have the necessary eligibility documents
and everything is completed on the application
 You should hear back from us within one week
 Certification under criteria #1 (businesses that are
owned by Section 3 residents) is valid for 3 years
 Certification under criteria #2 (businesses that
provide substantial employment opportunities for
Section 3 residents) is valid for 1 year
How to Find Section 3
Contracting Opportunities
Use the “Find Contracting Opportunities” tab
For More Information
 Section 3 Statute: 12 U.S.C. § 1701u
 Section 3 Regulations: 24 C.F.R. Part 135
 HUD: www.hud.gov/section3
 RHLS: https://section3.rhls.org
Renee Robinson
[email protected]
Business Certification Specialist
RHLS Pittsburgh Office
710 Fifth Avenue, Suite 1000
Pittsburgh, PA 15219
phone: (412) 304-1890
fax: (412) 281-9987
Robert Damewood
[email protected]
Staff Attorney-Development Services
RHLS Pittsburgh Office
710 Fifth Avenue, Suite 1000
Pittsburgh, PA 15219
phone: (412) 201-4301
fax: (412) 281-9987