1 Section 3 Certification City of St. Louis Community Development Administration NOFA Presentation January 29, 2016

2 Section 3  Section 3 is a provision of the Housing and Urban Development Act of 1968 (24 CFR Part 135)  Section 3 requires recipients of certain HUD financial assistance, to the greatest extent possible, to provide job training, employment, and contract opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods

3 Section 3  Section 3 applies to all CDBG, HOME, and NSP funded projects involving housing rehabilitation, housing construction, and other public construction  All contractors or subcontractors that receive over $100,000 in assistance are required to comply  Section 3 applies to the entire project, regardless of whether the activity is fully or partially funded with Section 3 covered assistance.  Section 3 is a mandatory requirement

4 Section 3 Goals  30% of the aggregate number of new hires shall be Section 3 residents  10% of the total dollar amount for all construction contracts shall be awarded to Section 3 businesses  3% of the total dollar amount of all other contracts, IE: professional services, shall be awarded to Section 3 businesses

5 Section 3 vs. MBE/WBE  Section 3 is different from MBE/WBE certifications  Section 3 preferences are based on income and location  Section 3 is race and gender neutral  The goal of Section 3 is to encourage recipients of HUD funding to direct new opportunities to low-income residents, and the businesses that employ these persons, within their community regardless of race and/or gender

6 Section 3 Residents & Business Concerns A Section 3 resident is 1. A public housing resident; or 2. A low- or very-low-income person residing the area where the Section 3 assistance is expended A Section 3 business concern is a business where 1. 51% or more is owned by Section 3 residents; or 2. At least 30% of its full time employees are currently Section 3 residents, or were Section 3 residents within three years of their hire; or 3. Provides evidence, as required, of a commitment to subcontract in excess of 25 percent of the dollar award of all subcontracts to business concerns that meet one of the first two qualifications above

7 FY 2015 Income Limits Persons in Family Very Low (50%) $24,650$28,150$31,650$35,150$38,000$40,800$43,600$46,400 Low (80%) $39,400$45,000$50,650$56,250$60,750$65,250$69,250$74,250 Income Limits are updated by HUD on an annual basis

8 Section 3: Developers & Contractors  Developers and Contractors are required to submit a Section 3 plan to demonstrate their good faith efforts to make low-income persons and business concerns aware of the opportunities and to encourage their application  Developers & General Contractors are held to 10% and 30% goals  Required to include the Section 3 Clause in ALL Subcontracts  Required to report to CDA regarding the funded project  All subcontractors with a contract over $100,000 must submit a separate Section 3 Plan

9 Section 3 Plan  CDA’s forms and instructions are in How to Prepare a Section a Section 3 Plan  Submit a sample subcontract with your Plan that includes the Section 3 Clause  Section 3 Certification must be current. When in doubt request a letter from the subcontractor  New hires should also include subcontractors  Respond fully to the efforts questions and include documentation. Plans with minimal efforts and/or documentation may not be approved

10 Participation and Efforts  HUD requires efforts “to the greatest extent feasible”  Start thinking about Section 3 early—it can be more difficult to try and increase your efforts later  Samples of additional efforts are included in the How to Prepare a Section 3 Plan  Be creative, there are lots of ways to increase participation that might fit with your particular project.  If they quality, CDA can certify existing subcontractors and new hires

11 Section 3 Reporting  Quarterly Reporting is due following plan approval on the HUD FORM (7/15, 10/15, 1/15, 4/15)  Annual/Year End Reporting Due in January for the prior year.  Final Project Report Due on Completion (Forms 7 and 8)  All subcontractors with contracts of $100,000 or more must also submit reports

12 Section 3 Proposed Rule  HUD's new proposed rule marks the first policy change to the program since  The rule aims to clarifying definitions and provisions that are currently open to interpretation, easing the compliance burden on recipients, and establishing best practices.  For more information on the proposed rule please visit,

13 Contact Information City of St. Louis, Community Development Administration Tynetta Bruce (314) St. Louis Housing Authority 3520 Page Blvd. St. Louis, MO (314)