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

2. 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. 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. 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. 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. 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. 7 FY 2015 Income Limits Persons in Family 12345678 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. 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. 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. 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. 11 Section 3 Reporting  Quarterly Reporting is due following plan approval on the HUD FORM 60002 (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. 12 Section 3 Proposed Rule  HUD's new proposed rule marks the first policy change to the program since 1994.  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, http://www.huduser.org/portal/economicOpportunities.html

13. 13 Contact Information City of St. Louis, Community Development Administration Tynetta Bruce BruceT@stlouis-mo.gov (314) 657-3818 St. Louis Housing Authority 3520 Page Blvd. St. Louis, MO 63106 (314) 531-4770