On July 22, the Housing Authority of the City of Milwaukee (HACM) signed a Voluntary Compliance Agreement (VCA) resolving HUD findings that, despite significant good faith efforts, HACM failed to fully comply with its Section 3 obligations. HACM agreed to improve its policies and practices in order to hire more public housing and other low income residents, and to contract with more businesses that are owned by or employ public housing residents or other low income people. The VCA is in effect for four years; however, HUD will waive the last year if HACM is in compliance.
The purpose of Section 3 of the Housing and Urban Development Act of 1968 is to ensure that when HUD funds assist housing and community development projects, preference for some of the new jobs, training, and contracting opportunities that are created go to low income people, and to businesses owned by low income people or that hire them, “to the greatest extent feasible.” A Section 3 resident is a public housing resident or a low income person living in an assisted-project’s metro area or non-metro county, and a Section 3 business is one primarily owned by or that employs a large number of Section 3 residents.
The VCA is the result of a March 2013 HUD review in response to community complaints about a lack of local residents hired at the Westlawn Redevelopment Project. HACM received $230 million in HUD funding and awarded $60 million in construction and other contracts as part of the project between 2009 and 2012.
A HUD Letter of Findings of Noncompliance dated September 13, 2013 found that no Westlawn residents or residents from other HACM public housing developments were hired to work on the Westlawn Project, and that HACM did not reach one of two goals for providing contracting opportunities at Westlawn to Section 3 businesses. HUD also found that, contrary to Section 3 regulations, HACM exempted contracts less than $50,000 or $100,000. HACM did not require contractors and subcontractors to post information about how to seek employment at the Westlawn Project site, and HACM failed to notify public housing residents about training and employment opportunities related to the project.
The VCA spells out in great detail the activities that HACM agreed to undertake in order to comply with its Section 3 obligations. Much of the detail reiterates the employment, training, and contracting goals specified in the Section 3 regulations. The Section 3 employment goal for public housing agencies (PHAs) is to have 30% of any new hires be Section 3 residents. First priority is to hire residents of the development receiving assistance, such as Westlawn, followed by residents of the PHA’s other developments as a second priority, and then other low income people in the metro area. The hiring goal for PHAs applies to both construction jobs and non-construction jobs, such as office staff.
There are two PHA-related Section 3 business contracting goals: awarding at least 10% of the total dollar amount of all contracts for any “building trades” work (such as maintenance, repair, or construction) to Section 3 businesses, and at least 3% of the total dollar amount of all other (non-building trades) work to Section 3 businesses. At the Westlawn Project, 18.6% of the construction contracting opportunities were awarded to Section 3 businesses; however, the goal was not met for non-building trades contracts.
In addition, HACM agreed to a number of provisions tailored to the situation in Milwaukee. HACM will revise its Section 3 Plan and seek public comment before submitting it to HUD for approval. The VCA specifies that Resident Councils and any community organizations that have communicated with HACM about Section 3 must receive a full copy of the proposed Section 3 Plan for comment. There must be at least one public information and comment session about the proposed plan.
HACM will hire a Section 3 Coordinator, expand its training and outreach activities, and create a $50,000 fund for training and outreach. Each year, HACM must sponsor at least two workshops to provide training for Section 3 businesses or residents interested in starting a Section 3 business.
Within one year, HACM must extend Section 3 benefits beyond HACM public housing residents to other low income people in the community, including all Housing Choice Voucher holders, by having a database of individual’s job qualifications. In addition, HACM must hold quarterly meetings in various neighborhoods, not limited to HACM properties, in order to enable employment offices and workforce development offices to share information with Section 3 residents.
HACM must require contractors to develop their own Section 3 plans that provide specific information about the contractor’s current workforce, plans for hiring additional employees, anticipated subcontracting needs, and strategies for targeting Section 3 residents and businesses. HACM must ensure through contractual terms that all contractors and subcontractors will consider Section 3 residents on a HACM list before making new hires, and explain in writing why a Section 3 resident was not hired, indicating the job qualifications lacking or other reasons. The VCA allows contractors to divide large contracts into smaller contracts more suitable for Section 3 businesses.
A HUD media releases about the VCA is at http://1.usa.gov/1A1BRIw.
The VCA is at http://1.usa.gov/1nRSFfp.
The Letter of Findings is at http://nlihc.org/sites/default/files/HACM_LOF_signed_copy_9-13-13.pdf.
More information about Section 3 is on page 265 of NLIHC’s 2014 Advocates’ Guide, http://bit.ly/XuEWVO.
The current issue of Tenant Talk features the Section 3 program at http://nlihc.org/article/tenant-talk-volume-5-issue-2.