The final Section 3 rule was received from HUD by the Office of Information and Regulatory Affairs (OIRA) of the Office of Management and Budget (OMB) on March 26. Comments on HUD’s proposed rule were due on June 3. OIRA will now review it and then return it to HUD, which will subsequently send it to the appropriate congressional subcommittees for a 15-day period before publishing the final rule in the Federal Register. When the final rule is published in Federal Register, NLIHC will summarize and analyze it for advocates.
The proposed rule had several potential improvements, such as using “labor hours worked” instead of “new hires” in many situations and adding residents with Section 8 vouchers or project-based assistance to the cascade of priority categories of “Section 3 workers and businesses.” A potential adverse change included removing the monitoring and enforcement of Section 3 from the Office of Fair Housing and Equal Opportunity (FHEO) and transferring that responsibility to the HUD program offices responsible for the funding program that triggers Section 3, such as the Office of Public and Indian Housing (PIH) and the Office of Community Planning and Development (CPD). Another potential harmful change is establishing a $200,000 per-project threshold before an entity has to comply with Section 3.
The purpose of Section 3 of the Housing and Urban Development Act of 1968 is to ensure that, when HUD funds are used to assist housing and community development projects, “to the greatest extent feasible” preference for some of the jobs, training, and contracting opportunities that are created go to low-income people and to businesses owned or controlled by low-income people or to businesses that hire them. Public housing agencies (PHAs) and jurisdictions using Community Development Block Grant (CDBG), HOME Investment Partnerships program, and other HUD funds must comply with Section 3 and ensure that contractors and subcontractors comply.
The notice that OIRA received the final Section 3 rule is at: https://bit.ly/39pBC2x
NLIHC’s “Summary and Analysis: Proposed Section 3 Regulation” is at: https://bit.ly/2UoeNbq
More about Section 3 is on page 7-66 of NLIHC’s 2019 Advocates’ Guide.