A revised and expanded set of Section 3 Frequently Asked Questions (FAQ) is now on the Office of Fair Housing and Equal Opportunity (FHEO) website. The FAQ is a useful guide for residents, advocates, state and local jurisdictions, and public housing agencies (PHAs). The revamped FAQ is clearer and more comprehensive than the previous version. There are 29 new questions and answers, several other improvements, and one ongoing disappointment.
The purpose of Section 3 is to ensure that jobs and other economic opportunities generated when HUD funds are used for housing and community development projects go to low income people “to the greatest extent feasible.”
Notable improvements include:
- Detailed elaboration on six new items specifying the responsibilities of recipient agencies such as PHAs and state and local governments. For example, recipient agencies must take an active role in ensuring Section 3 compliance; facilitate training and employment of “Section 3 residents” (public housing residents or low income residents of the metropolitan area); and monitor contractor compliance.
- Recommendation that recipient agencies establish a Section 3 program, assign a staff person the responsibility of coordinating Section 3, and maintain a list of eligible residents and businesses.
- Items 16, 17, and 28 make it clear that once a state or local government receives more than $200,000 in a year from any combination of HUD housing and community development assistance (such as CDBG, HOME, ESG), then Section 3 applies to any portion of those funds used at a housing or public infrastructure construction activity. The previous FAQ required more than $200,000 be invested in a given project before triggering Section 3 obligations, thereby exempting Section 3 compliance for many types of projects.
Item 29, however, continues a harmful policy that NLIHC has frequently asked FHEO to change. In addition to the $200,000 threshold for state and local governments, the regulations do not obligate contractors and subcontractors to attempt to achieve Section 3 goals unless they have a contract that is greater than $100,000. The new FAQ still maintains that contracts are not cumulative, effectively exempting contractor compliance for most CDBG, HOME, and Neighborhood Stabilization Program (NSP) rehab. For example, a contractor might receive $1 million in CDBG, HOME, and NSP money for rehab in a single year but never have to attempt to train or hire low income residents because few, if any, home rehab contracts will ever exceed $100,000.
The new FAQ is at: http://www.nlihc.org/doc/Section_3_FAQ_FHEO.pdf. FHEO’s Section 3 webpage is http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/section3/section3.
More information about Section 3 is on page 187 of the 2011 Advocates’ Guide, http://www.nlihc.org.