HUD To Ramp Up Section 3 Enforcement

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October 16, 2009 
NAHRO Washington Update
HUD Announces Effort to Ramp up Section 3 Enforcement
HUD issued a press release on October 14 announcing that the Department is stepping up enforcement of Section 3 requirements.  Section 3 of the Housing and Urban Development Act of 1968 requires recipients of certain forms of HUD funding to extend training, employment, and other economic opportunities to low- and very-low income persons.  
In its October 14 press release, the Department announced that it recently transmitted letters to over 3,000 state and local entities (such as the City of Middletown) which have not yet met calendar year Section 3 reporting obligations for the 2008 reporting period.  Those agencies contacted by HUD must submit Form HUD-60002 no later than November 30 to prevent an official finding of noncompliance.

In its press release, the Department describes the issuance of these letters as “one of the first in a series of steps to more aggressively enforce Section 3 hiring and contracting requirements.”  HUD officials are currently working to develop revised regulations that will reflect the current administration’s commitment to the aggressive enforcement of Section 3 requirements.  
Background on Section 3 Requirements
Section 3 employment and contracting requirements apply to both Public Housing Agencies plus states and muncipalities that receive various forms of HUD funding that invest $200,000 or more into projects/activities involving housing construction, rehabilitation, or other public construction.  Covered programs include but are not limited to HOPE VI, the Community Development Block Grant (CDBG) program, the Home Investment Partnerships (HOME) program, the Brownfields Economic Development Initiative, Continuum of Care Homeless Assistance programs, Housing Opportunities for Persons with AIDS, Section 202 Supportive Housing for the Elderly, Section 811 Supportive Housing for Persons with Disabilities, and many of the HUD programs funded through the American Recovery and Reinvestment Act of 2009.

Compliance with Section 3 requirements involves meeting, “to the maximum extent feasible,” minimum numerical hiring and contracting goals set forth in regulation.  Recipients of covered HUD funding that fail to meet these numerical goals must demonstrate why it was not possible to do so.  According to HUD, “such justifications should describe the efforts that were taken, barriers encountered, and other relevant information that will allow the Department to make a determination regarding compliance.”
Additional Resources

HUD’s Section 3 FAQ

HUD guidance on Section 3 applicability to ARRA funding

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