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 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 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 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” 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 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 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 ReneeL10@hotmail.com Business Certification Specialist RHLS Pittsburgh Office 710 Fifth Avenue, Suite 1000 Pittsburgh, PA 15219 phone: (412) 304-1890 fax: (412) 281-9987 Robert Damewood bob@rhls.org Staff Attorney-Development Services RHLS Pittsburgh Office 710 Fifth Avenue, Suite 1000 Pittsburgh, PA 15219 phone: (412) 201-4301 fax: (412) 281-9987