AIEBC
American Indian Enterprise & Business Council
Section 3
(Wyandotte County)
The Section 3 Business Registry is a listing of firms that have self-certified that they meet one of the regulatory definitions of a Section 3 business and are included in a searchable online database that can be used by agencies that receive HUD funds, developers, contractors, and others to facilitate the award of certain HUD-funded contracts. The database can also be used by Section 3 residents to identify businesses that may have HUD-funded employment opportunities.
This registry is a helpful tool to assistant recipients of HUD funding (e.g., Public Housing Agencies, local units of government, property owners, etc), developers, and others locate Section 3 businesses within their community. It also enables HUD grantees to meet their Section 3 obligations by reducing some of the burden associated with locating eligible businesses.
It is important to note that Section 3 businesses are not entitled to receive contracts simply by being listed in HUD’s Section 3 Business Registry database. Eligible businesses may need to demonstrate that they are responsible and have the ability to perform successfully under the terms and conditions of proposed contracts. Section 3 requirements at 24 CFR 135, then provides preference for contracts and subcontracts to these firms-but not a guarantee.
While the Department maintains the Business Registry database, it has not verified the information submitted by the businesses and does not endorse the services they provide. Accordingly, it is recommended that users perform due diligence before awarding contracts to firms that have self-certified on this registry by ensuring that they meet the definition of a Section3 business concern as defined by the Department’s regulations at 24 CFR 135.5.
The general public can notify the Department through the Business Registry website if they believe a firm has potentially misrepresented themselves as a Section 3 business. In such situations, HUD will request documentation and additional information from the business to verify that they qualify for inclusion in the database. Businesses found to have misrepresented themselves will be removed from the database and penalized (see registry webpage for more information).
Here at the AIEBC, we want to get you there! We want you to be completely familiar with what you need and don’t need. The last thing you want to hear is misinformation that you only need to be registered in say Jackson County, KCMO and you can carry that here to Wyandotte County. Well, thats just not true and the person misinforming you is not going to say they were wrong or pay your legal fees, fines etc. so please read below. If you have questions, stop by the AIEBC and we’ll be happy to get you on the right path!
Lets start by talking about how Section 3 affects the community:
To start with, it means less of how our community is living now. How many will move from poverty and low to very low income and more to an income that allows the community to raise a family. It’s not anything that needs to be changed except attitudes.
The U.S. Department of Housing and Urban Development (HUD) recently published a notice that updates the interim regulation at 24 CFR Part 135, which provides for compliance with Section 3 of the Housing and Urban Development Act of 1968 (Section 3). Since 1994, the interim regulation has remained unchanged.
Changes
Here it is in a nutshell!
Section 3 recognizes that HUD public housing and housing and community development funds are typically two of the largest sources of federal funding expended in communities through the form of grants, loans, entitlement allocations, and other forms of financial assistance. The purpose of Section 3 is to ensure that when employment or contracting opportunities are generated because a covered project or activity necessitates the employment of additional people or the awarding of contracts for work, preference must be given to low- and very low-income people (Section 3 residents) or business concerns (Section 3 businesses) residing in the community where the project is located.
So lets look at Standards and Definitions:
Standards for Demonstrating Compliance: The notice seeks to clarify the statutory standard for achieving compliance with Section 3. The existing regulation provides two standards: “best efforts” and “to the greatest extent feasible.” The notice removes the distinction in the existing regulation by using only the“to the greatest extent feasible” standard.
Definition of “New Hire:” The existing regulation sets a goal for Section 3 residents to comprise 30 percent of all new hires, without regard to the length of employment. The notice redefines a “new hire” as a Section 3 resident who works a minimum of 50 percent of the average staff hours worked for the job category that they were hired for throughout the duration of time that the category of work is performed on the covered project. For instance, if a Section 3 resident is hired as a painter, and painters typically work 40 hours each week, the Section 3 resident must work a minimum of 20 hours each week to be counted toward the recipient’s minimum numerical goal for employment.
Definition of “Section 3 Business:” The existing regulation requires a Section 3 business to meet one of the following three definitions:
(1) 51 percent owned by Section 3 residents;
(2) at least 30 percent of permanent, full-time employees are Section 3 residents;
(3) provides evidence of a commitment to subcontract 25 percent or more of the dollar amount of all subcontracts to businesses that meet definitions
(1) or (2). The notice removes category
(3) of the definition of a Section 3 business and adds two new categories as follows:
(1) business that meets the definition of a resident-owned business as set forth in 24 CFR 963.5, and
(2) business that demonstrates that at least 20 percent of its permanent full-time employees are Section 3 residents and the business either:
(a) sponsored a minimum of 10 percent of its current Section 3 employees to attend a Department of Labor (DOL) or DOL recognized, State-Apprenticeship Agency- approved, registered apprenticeship or a pre-apprenticeship training program that meets the requirements outlined in DOL/Employment and Training Administration Training and Employment Notice 13-2, or
(b) 10 percent of its employees are participants or graduates of a DOL Youth-build program.
Section 3 Local Area: The definitions of Section 3 resident and Section 3 business in the existing regulation do not specify that such residents and businesses must be located in the proximity of HUD-funded projects or activities. The notice clarifies that Section 3 residents and businesses must be located in the “Section 3 local area,” defined as: the primary statistical area where the Section 3 covered project or activity takes place; or the nonmetropolitan county where the Section 3 covered project or activity takes place.
Numeral Goal for Contracts: The existing regulation requires recipients of HUD funds to award a minimum of 3 percent of the total dollar amount of non-construction contracts to Section 3 businesses. The notices changes this numeral threshold to require recipients of HUD funds to award a minimum of 10 percent of the total dollar amount of all covered contracts, not just non-construction contracts, to Section 3 businesses.
Verification Procedures: The existing regulation does not require recipients of HUD funds to verify that Section 3 residents or businesses meet the applicable definitions. Section 3 residents and businesses must, however, comply with verification procedures required by the recipient of HUD funds. The notice continues to allow recipients to use their discretion for developing verification procedures. Additionally, it provides that recipients may accept self-certifications from residents or businesses or presume that residents or businesses located in disadvantaged census tracts are eligible to be considered Section 3 residents or businesses.
Monitoring Payroll Data: The notice recognizes that recipients of HUD funds combine Section 3 obligations with Davis-Bacon payroll requirements. The notice requires recipients of HUD funds administering Davis-Bacon-covered projects, to monitor contractor payroll data for changes in workforce (i.e., terminations, retirements, transfers, and other new job vacancies) to identify instances where Section 3 obligations may be triggered.
Amendment of Agreements with Labor Unions: The notice requires recipients of HUD funds to amend all existing agreements with labor unions to ensure the inclusion of Section 3 obligations and to prevent labor unions from obstructing the recipients’ ability to achieve compliance with Section 3.
Funding Threshold for Recipients of Section 3 Housing and Community Development Funds: The notice establishes a new threshold for recipients of covered housing and community development assistance based on the expenditure of funds rather than the receipt of funds. Section 3 requirements apply to recipients of housing and community development financial assistance that plan to obligate or commit $400,000 or more in Section 3 covered financial assistance on projects involving housing rehabilitation, housing construction, demolition, or other public construction during an annual reporting period.
HUD also launched a National Section 3 business registry. This registry is a searchable online database for public housing authorities, state and local governments, and contractors to find firms that are self-certified as Section 3 businesses.
We talked about Section 3 before but lets reiterate so there is no confusion or misunderstanding:
This is a means by which HUD fosters local economic development, neighborhood economic improvement, and individual self-sufficiency.
Section 3 is the legal basis for providing jobs for residents and awarding contracts to businesses in areas receiving certain types of HUD financial assistance.
Under Section 3 of the HUD Act of 1968, wherever HUD financial assistance is expended for housing or community development, to the greatest extent feasible, economic opportunities will be given to Section 3 residents and businesses in that area.
Section 3 Policy
Congress established the Section 3 policy to guarantee that the employment and other economic opportunities created by Federal financial assistance for housing and community development programs should, if possible, be directed toward low- and very-low income persons, particularly those who are recipients of government assistance for housing.
Who are Section 3 residents?
Section 3 residents are:
- Public housing residents
- Low and very-low income persons who live in the metropolitan area or non-metropolitan county where a HUD-assisted project for housing or community development is located.
What does that mean? It means that IF your company, not P.O. Box, not a temp. trailer or office but your corporate office is located in that Section 3 Zone the funding is coming from then, your company and at least 30% of your employees MUST come from the Section 3 Zone the funding is coming from, if a company or joint venture cannot do the contract the project moves out further BUT not the employees who should also have their Sect. 3 Certification. If you need an application you are welcome to stop by our office and we will be happy to give it to you or to help you fill it out.
To fill out and register yourself or you’re company, stop in and get into the data base:
AIEBC
825 N. 7th Street
Suite 300B
Kansas City, KS. 66101
A “Section 3 Resident” is:
1) a public housing resident; or
2) a low- or very low-income person residing in the metropolitan area or Non-Metropolitan County where the Section 3 covered assistance is expended.
Section 3 Businesses are those that can provide evidence of meeting one of the following three criteria:
a) 51 percent or more owned by Section 3 residents; or
b) At least 30 percent of its full time employees include persons that are currently Section 3 residents, or were Section 3 residents within three years of the date of first hire*; or
c) Provides evidence, as required, of a commitment to subcontract in excess of 25 percent of the dollar award of all subcontracts to businesses that meet the qualifications of a) or b) above.
Let me share an example: John is a Section 3 resident that is unemployed. He is hired by XYZ Construction Company at a salary of $37,500 per year. The local low-income limit for a one-person household is $35,000. John can be counted as a Section 3 resident by XYZ Construction Company for up to three years towards their efforts to meet the Section 3 business criterion under definition as described above.
Please email johnjhobrien@aiebc.org me or call me to discuss this further if you have any questions or want to come in and enroll into the Section 3 Program.
American Indian Enterprise & Business Council (INGO) (CDC)
(816) 392-7611
Our new main office is located at the Wyandotte Nation ArrowHead Bldg. located at:
825 N. 7th Street
Suite 300B
Kansas City, KS. 66101