Section 3 Business Certification

Robert Damewood, Staff AttorneyRenee Robinson, Certification SpecialistRegional Housing Legal ServicesMWDBE Governmental CommitteeSeptember 16, 2014

A New Tool for Creating Economic Opportunities for Low-Income Businesses in Allegheny County

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 low-income people or that hire low-income people in Allegheny County to connect with contracting opportunities on federally-funded 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

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

There are seven Section 3 agencies in Allegheny County:

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 construction-related 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”

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)

A business that:

“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 36,7502 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 RHLS-certified 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 RobinsonCertification 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

Robert Damewoodbob@rhls.orgStaff Attorney-Development ServicesRHLS Pittsburgh Office710 Fifth Avenue, Suite 1000Pittsburgh, PA 15219phone: (412) 201-4301fax: (412) 281-9987

Renee RobinsonReneeL10@hotmail.comBusiness Certification SpecialistRHLS Pittsburgh Office710 Fifth Avenue, Suite 1000Pittsburgh, PA 15219phone: (412) 304-1890fax: (412) 281-9987