Section 3 Plan
A. WHAT IS SECTION 3?
Section 3 is a provision of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) that is regulated by the provisions of 24 CFR 75. Section 3 regulations ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons.
B. PURPOSE OF THIS DOCUMENT
This plan outlines how the Oklahoma City Housing Authority (OCHA) and its subrecipients, contractors and subcontractors will comply with HUD’s Section 3 requirements. OCHA will, to the greatest extent feasible, ensure that employment and other economic opportunities are directed to low- and very low-income persons (Section 3 workers and Targeted Section 3 workers) and to eligible businesses (Section 3 Businesses) and requires the same of its contractors.
OCHA may amend its Section 3 Policies and Procedures document as necessary to ensure continued compliance with HUD’s requirements and/or to reflect updated Section 3 guidance and outreach strategies.
C. APPLICABILITY
For public housing financial assistance, all funding is covered, regardless of the amount of expenditure or size of a contract. This plan applies to development assistance, operating funds, capital funds, and all mixed-finance development.
For housing and community development financial assistance, this plan applies to housing rehabilitation, housing construction, and other public construction projects that exceed $200,000 or more of housing and community development financial assistance from one or more HUD programs. Applicability is determined at the project level.
For projects funded with Lead and Hazard Control and Healthy Homes Programs, this plan applies to projects that exceed $100,000.
This plan also applies to projects that include multiple funding sources. Multiple funding source projects include projects that include public housing financial assistance, housing and community development financial assistance for single or multiple recipients, and the Lead Hazard Control and Healthy Homes Program.
1. Employment, Training, and Contracting Goals
A. SAFE HARBOR COMPLIANCE
OCHA will be considered to have complied with the Section 3 requirements and met safe harbor, if it certifies that it followed the required prioritization of effort and met or exceeded the Section 3 benchmarks, absent evidence of the contrary.
Prior to the beginning of work, contractors and subcontractors will be required to certify that they will follow the required prioritization of effort for Section 3 workers, Targeted Section 3 workers, and Section 3 business concerns as outlined below in section C, herein. After completion of the project, contractors and subcontractors will be required to certify that they followed the prioritization of effort requirements.
If the contractor and subcontractor does not meet the safe harbor requirements, they must provide evidence that they have made qualitative efforts to assist low and very low-income persons with employment and training opportunities.
B. SAFE HARBOR BENCHMARKS
HUD has established employment and training goals that subrecipients, contractors, and subcontractors should meet in order to comply with Section 3 requirements outlined in 24 CFR Part 75.9 - for public housing financial assistance and 24 CFR Part 75.19 - for housing and community development financial assistance. The safe harbor benchmark goals are as follows:
For public housing financial assistance
- Twenty-five (25) percent or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the fiscal year are Section 3 workers;
- Section 3 Labor Hours/Total Labor Hours = 25%
And
- Five (5) percent or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the fiscal year are Targeted Section 3 workers, as defined at 24 CFR Part 11.
- Targeted Section 3 Labor Hours/Total Labor Hours = 5%
For housing and community development financial assistance
- Twenty-five (25) percent or more of the total number of labor hours worked by all workers on a Section 3 project are Section 3 workers;
- Section 3 Labor Hours/Total Labor Hours = 25%
And
- Five (5) percent or more of the total number of labor hours worked by all workers on a Section 3 project are Targeted Section 3 workers, as defined at 24 CFR Part21.
- Targeted Section 3 Labor Hours/Total Labor Hours = 5%
HUD establishes and updates Section 3 benchmarks for Section 3 workers and/or Targeted Section 3 workers through a document published in the Federal Register, not less frequently than once every 3 years. Given that the Section 3 benchmarks are subject to change every three years or sooner, OCHA will review and update the Section 3 Plan at least every three years, or more frequently, as needed.
It is the responsibility of contractors to implement efforts to achieve Section 3 compliance. Any contractor that does not meet the Section 3 benchmarks must demonstrate why meeting the benchmarks were not feasible. All contractors submitting bids or proposals to OCHA are required to certify that they will comply with the requirements of Section 3.
C. CERTIFICATION OF PRIORITIZATION OF EFFORT FOR EMPLOYMENT, TRAINING, AND CONTRACTING
EMPLOYMENT AND TRAINING
Under OCHA’s Section 3 Program, contractors and subcontractors should make best efforts to provide employment and training opportunities to Section 3 workers in the priority order listed below:
For public housing financial assistance
- To residents of the public housing projects for which the public housing financial assistance is expended;
- To residents of other public housing projects managed by OCHA that is providing the assistance or for residents of Section 8-assisted housing managed by OCHA;
- To participants in YouthBuild programs; and
- To low- and very low-income persons residing within the metropolitan area in which the assistance is expended.
For housing and community development financial assistance
Provide employment and training opportunities to Section 3 workers within the metropolitan area in which the project is located in the priority order listed below:
- Section 3 workers residing within the service area or the neighborhood of the project, and
- Participants in YouthBuild programs.
Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning work and after work is completed.
CONTRACTING
Under OCHA’s Section 3 Program, contractors and subcontractors must make their best efforts to award contracts and subcontracts to business concerns that provide economic opportunities to Section 3 workers in the following order or priority:
For public housing financial assistance
- Section 3 business concerns that provide economic opportunities for residents of public housing projects for which the assistance is provided;
- Section 3 business concerns that provide economic opportunities for residents of other public housing projects or Section-8 assisted housing managed by OCHA that is providing assistance;
- YouthBuild programs; and
- Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area in which the assistance is provided.
For housing and community development financial assistance
- Business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area in which assistance is located in the following order of priority (where feasible):
- Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or the neighborhood of the project; and
- YouthBuild programs.
Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning work and after work is completed.
2. Section 3 Eligibility and Certifications
Individuals and businesses that meet Section 3 criteria may seek Section 3 preference from OCHA or its contractors/subcontractors for training, employment, or contracting opportunities generated by public housing financial assistance or housing and community development financial assistance. To qualify as a Section 3 worker, Targeted Section 3 worker or a Section 3 business concern, each must self-certify that they meet the applicable criteria. See Forms: (1) Section 3 Business Concern Certification for Contracting, (2) HUD 4736C: Section 3 Worker Self Certification (Housing and Community Development), and (3) HUD 4736D: Section 3 Worker Self Certification (Public Housing Financial Assistance).
Businesses who misrepresent themselves as Section 3 business concerns and report false information to OCHA may have their contracts terminated as default and be barred from ongoing and future considerations for contracting opportunities.
A. SECTION 3 WORKER AND TARGETED SECTION 3 WORKER CERTIFICATION
A Section 3 worker seeking certification shall submit self-certification documentation to the recipient contractor or subcontractor, that the person is a Section 3 worker or Targeted Section 3 worker as defined in 24 CFR Part 75. For the purposes of Section 3 worker eligibility, OCHA will use individual income rather than family/household income to determine eligibility. The income limits will be determined annually using the guidelines published at https://www.huduser.org/portal/datasets/il.html.
Persons seeking the Section 3 worker preference shall demonstrate that it meets one or more of the following criteria currently or when hired within the past five years, as documented:
- A low or very low-income resident (the worker’s income for the previous or annualized calendar year is below the income limit established by HUD); or
- Employed by a Section 3 business concern; or
- A YouthBuild participant.
Persons seeking the Targeted Section 3 worker preference shall demonstrate that it meets one or more of the following criteria:
For public housing financial assistance
- Employed by a Section 3 business concern or
- Currently meets or when hired met at least one of the following categories as documented within the past five years:
- A resident of public housing; or
- A resident of other public housing projects or Section 8-assisted housing; or
- A YouthBuild participant.
For housing and community development assistance
- Employed by a Section 3 business concern or
- Currently meets or when hired met at least one of the following categories as documented within the past five years:
PROJECTS INVOLVING MULTIPLE SOURCES OF FUNDING
In cases where Section 3 covered projects include multiple sources of funds, including public housing financial assistance and housing and community development assistance, OCHA must follow the definition of Targeted Section 3 worker and priorities as outlined in subpart B of Part 75. For housing and community development financial assistance, OCHA may follow either subpart B or subpart C of Part 75.
In cases where Section 3 covered projects include multiple housing and development funding sources (financial assistance) from single or multiple recipients, OCHA will follow subpart C of Part 75. Refer to chart in Appendix B.
B. SECTION 3 BUSINESS CONCERN CERTIFICATION
OCHA will encourage contractors and subcontractors to make best efforts to award contracts and subcontracts to Section 3 business concerns.
Businesses that believe they meet the Section 3 Business requirements may self-register in the HUD Business registry, here: http://www.hud.gov/Sec3Biz. Businesses may seek Section 3 Business Concern preference by demonstrating that it meets one or more of the following criteria:
- At least 51 percent of the business is owned and controlled by low- or very low-income persons; or
- At least 51 percent of the business is owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing; or
- Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers.
Businesses that seek Section 3 preference shall certify, or demonstrate to OCHA, contractors or subcontractors, that they meet the definitions provided above. Businesses may demonstrate eligibility by submitting the Section 3 Business Concern Certification form.
Section 3 Business Concern Certification Forms must be submitted at the time of bid/proposal. If the OCHA previously approved the business concern to be Section 3 certified, then the certification can be submitted along with the bid, as long as the form is submitted within the prescribed expiration date. The Section 3 Business Concern Certification Form will expire after six (6) months. Establishing a six (6) month certification of eligibility period allows OCHA the ability to assess contractor performance to ensure the business is striving to meet the required goals.
3. Assisting Contractors with Achieving Section 3 Goals
In an effort to assist contractors with meeting or exceeding the Section 3 goals, OCHA shall strive to do the following:
- Share this Section 3 Plan with contractors and subcontractors and explain policies and procedures.
- Require contractors wishing to submit a bid/offer/proposal to attend pre-bid meeting.
- Require contractor to sign the Section 3 Plan at any pre-construction conference.
- Review Section 3 benchmarks and prioritization of effort with contractors and subcontractors to ensure that the goals are understood. It is not intended for contractors and subcontractors to terminate existing employees, but to make every effort feasible to meet Section 3 benchmark goals by utilizing existing qualified workforce and by considering qualified eligible Section 3 workers and Targeted Section 3 workers (per the prioritization of effort outlined in Section #3) before any other person, when hiring additional employees is needed to complete proposed work to be performed.
- At the time of bid, require the contractor to present a list, of the number of total labor hours, Section 3 worker labor hours, and Targeted Section 3 worker labor hours expected to be generated from the initial contract and a list of projected number of available positions, to include job descriptions and wage rates.
- Maintain a local Section 3 worker/Targeted Section 3 worker database and provide the contractor with a list of interested and qualified Section 3 workers and Targeted Section 3 workers and contact information.
- Inform contractors about the HUD Section 3 Opportunity Portal: https://hudapps.hud.gov/OpportunityPortal/
- Require contractors to notify OCHA of their interests regarding employment of Section 3 workers prior to hiring.
- Encourage local businesses to register on the HUD Business Registry and direct contractors to the HUD Section 3 Business Registry: https://www.hud.gov/section3businessregistry
- Leverage OCHA’s communication outlets (social media, website, etc.) to effectively communicate employment and contracting opportunities that arise.
- Require contractors to submit a list of core employees (including administrative, clerical, planning and other positions pertinent to the construction trades) at the time of contact award.
4. Section 3 Outreach
A. OUTREACH EFFORTS FOR EMPLOYMENT AND TRAINING
In order to educate and inform workers and contractors, stakeholders should be prepared to provide training and technical assistance on a regular basis per program guidelines. When training opportunities are available, contractors and subcontractors should, to the greatest extent feasible:
- Notify OCHA when training opportunities are available
- Provide information/handouts about Section 3 training opportunities to potential Section 3 workers and Targeted Section 3 workers
- Conduct an annual training for Section 3 workers and Section 3 businesses
Contractors and subcontractors should employ several active strategies to notify Section 3 workers and Targeted Section 3 workers of Section 3 job opportunities, including:
- Clearly indicating Section 3 eligibility on all job postings with the following statement: “This job is a Section 3 eligible job opportunity. We encourage applications from individuals that are low income and/or live in Public Housing and/or receive a Section 8 voucher”;
- Including the Section 3 Worker and Targeted Section 3 Worker Self-Certification Form in all job postings
- Working with OCHA to connect Section 3 workers and Targeted Section 3 workers, to be input in an OCHA database, with opportunities and/or utilize HUD’s Section 3 Opportunity Portal to find qualified candidates
- Establishing a current list of Section 3 eligible applicants
- Contacting local community organizations and provide them with job postings for Section 3 eligible applicants; and
- Coordinating a programmatic ad campaign, which results in widespread job posting across diverse ad networks including:
- Advertising job opportunities via social media, including LinkedIn and Facebook;
- Advertising job opportunities via flyer distributions and mass mailings and posting ad in common areas of housing developments and all public housing management offices
- Contacting resident councils, resident management corporations, and neighborhood community organizations to request their assistance in notifying residents of available training and employment opportunities
B. OUTREACH EFFORTS FOR CONTRACTING
When contracting opportunities arise, OCHA may employ the following strategies to notify Section 3 Business Concerns of Section 3 contracting opportunities, including but not limited to:
- Adding Section 3 language to all RFPs, procurement documents, bid offerings and contracts.
- Coordinating mandatory pre-bid meetings to inform Section 3 Business Concerns of upcoming contracting opportunities. OCHA personnel will participate in these meetings to explain and answer questions related to Section 3 policy.
- Advertising contracting opportunities in local community papers and notices that provide general information about the work to be contracted and where to obtain additional information.
- Providing written notice of contracting opportunities to all known Section 3 Business Concerns. The written notice will be provided in sufficient time to enable business concerns the opportunity to respond to bid invitations.
- Coordinating with the prime contractor to publicize contracting opportunities for small businesses.
- Coordinating with the OCHA’s Business/Economic Development Department and all other business assistance agencies and contractor associations to inform them of contracting opportunities and request their assistance in identifying Section 3 business concerns. Could include local community development organizations, business development agencies (Chamber of Commerce), and minority contracting associations.
- Connecting Section 3 business concerns with resources to support business development to assist in obtaining contracting opportunities (e.g., bonding and insurance assistance, etc.). Contractors will also be encouraged to collaborate with OCHA as subcontract opportunities arise in an effort to notify eligible Section 3 business concerns about the contracting opportunities.
5. Section 3 Contracting Policy and Procedure
All contractors/businesses seeking Section 3 preference must, before submitting bids/proposals to OCHA be required to complete certifications, as appropriate. Such certifications shall be adequately supported with appropriate documentation as referenced in the Section 3 Business Concern Certification Form.6. Section 3 Provisions/Contract Language
OCHA will include standard Section 3 language in all of its contracts to ensure compliance with regulations in 24 CFR Part 75. OCHA will take appropriate actions upon finding that a contractor is in violation of 24 CFR Part 75. OCHA will not knowingly contract with any contractor that has been found in violation of the Section 3 regulations. On a periodic basis OCHA may audit its contractors for compliance with the minimum Section 3 requirements outlined in this Section 3 Plan.
In addition, contractors and subrecipients are required to include language in all Section 3 covered contracts or agreements for subcontractors to meet the requirements of 24 CFR Part 75.9 (for public housing financial assistance) or 24 CFR Part 75.19 (for housing and community development financial assistance).
For businesses, noncompliance with HUD’s regulations in 24 CFR part 75 may result in sanctions, termination of this contract for default, and debarment or suspension from future HUD assisted contracts.
7. Reporting Requirements
For Section 3 covered contracts, contractors must submit monthly activity reports to OCHA on a monthly basis, and the annual reporting requirement set forth in that form’s instructions.
A. MONTHLY REPORTING
- Contractors are required to submit monthly activity reports to OCHA by the fifth (5th) day following each reporting month.
B. ANNUAL REPORTING
- Once a project is completed, contractors must submit a final Section 3 cumulative report for the program year.
- Upon the completion of a project, OCHA will conduct a final review of the project’s overall performance and compliance.
- OCHA will submit the Section 3 data to HUD.
C. REPORTING ON PROJECTS WITH MULTIPLE FUNDING SOURCES
- For Section 3 projects that include public housing financial assistance and housing and community development financial assistance, OCHA will report on the project as a whole and will identify the multiple associated recipients.
- For projects assisted with funding from multiple sources of housing and community development assistance that exceed the thresholds of $200,000 and $100,000 for Lead Hazard Control and Healthy Homes Programs (LHCHH), OCHA will follow subpart C of Part 75 and will report to the applicable HUD program office, as prescribed by HUD. Note: LHCHH assistance is not included in calculating whether the assistance exceeds the $200,000 threshold. HUD public housing financial assistance and HUD housing and community development financial assistance is not included in calculating whether the assistance exceeds the LHCHH $100,000 threshold. Refer to chart in Appendix B.
8. Internal Section 3 Complaint Procedure
In an effort to resolve complaints generated due to non-compliance through an internal process, OCHA encourages submittal of such complaints as follows:
- Complaints of non-compliance should be filed in writing and must contain the name of the complainant and brief description of the alleged violation of 24 CFR Part 75.
- Complaints must be filed within thirty (30) calendar days after the complainant becomes aware of the alleged violation.
- An investigation will be conducted if complaint is found to be valid. OCHA will conduct an informal, but thorough investigation affording all interested parties, if any, an opportunity to submit information pertinent to the complaint.
- OCHA will provide written documentation detailing the findings of the investigation. OCHA will review the findings for accuracy and completeness before it is released to complainants. The findings will be made available no later than sixty (60) days after the filing of complaint. If complainants wish to have their concerns considered outside of OCHA a complaint may be filed with the HUD program office responsible for the public housing financial assistance or the Section 3 project, or to the local HUD field office. These offices can be found through the HUD website, hud.gov/.
Complainants may be eligible to bring complaints under other federal laws. The U.S. Equal Employment Opportunity Commission (EEOC) is responsible for enforcing federal laws that make it illegal to discriminate against a job applicant or an employee because of the person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information (medical history or predisposition to disease). For more information about complainant rights, please contact EEOC at: www.EEOC.gov.
The Department of Labor Office of Federal Contract Compliance Programs (OFCCP) enforces, for the benefit of job seekers and wage earners, the contractual promise of affirmative action and equal employment opportunity required of those who do business with the Federal government. More information about the services they provide can be obtained at: http://www.dol.gov/ofccp/.
9. Appendices
APPENDIX A: DEFINITIONS
The terms HUD, Public housing, and Public Housing Agency (PHA) are defined in 24 CFR part 5.
The following definitions also apply to 24 CFR Part 75 HUD’s Economic Opportunities for Low-and Very Low-Income Persons:
1937 Act means the United States Housing Act of 1937, 42 U.S.C. 1437 et seq. activities related to Public Housing
Contractor means any entity entering into a contract with:
(1) A recipient to perform work in connection with the expenditure of public housing financial assistance or for work in connection with a Section 3 project; or
(2) A subrecipient for work in connection with a Section 3 project.
Labor hours means the number of paid hours worked by persons on a Section 3 project or by persons employed with funds that include public housing financial assistance.
Low-income person means a person as defined in Section 3(b)(2) of the 1937 Act, at or below 80% AMI. Note that Section 3 worker eligibility uses individual income rather than family/household income.
Material supply contracts means contracts for the purchase of products and materials, including, but not limited to, lumber, drywall, wiring, concrete, pipes, toilets, sinks, carpets, and office supplies.
Professional services means non-construction services that require an advanced degree or professional licensing, including, but not limited to, contracts for legal services, financial consulting, accounting services, environmental assessment, architectural services, and civil engineering services.
Public housing financial assistance means assistance as defined in 24 CFR Part 75.3(a)(1).
Public housing project is defined in 24 CFR 905.108.
Recipient means any entity that receives directly from HUD public housing financial assistance or housing and community development assistance that funds Section 3 projects, including, but not limited to, any State, local government, instrumentality, PHA, or other public agency, public or private nonprofit organization.
Section 3 means Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u).
Section 3 business concern means:
(1) A business concern meeting at least one of the following criteria, documented within the last six-month period:
(i) It is at least 51 percent owned and controlled by low- or very low-income persons;
(ii) Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers; or
(iii) It is a business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing.
(2) The status of a Section 3 business concern shall not be negatively affected by a prior arrest or conviction of its owner(s) or employees.
(3) Nothing in this part shall be construed to require the contracting or subcontracting of a Section 3 business concern. Section 3 business concerns are not exempt from meeting the specifications of the contract.
Section 3 project means a project defined in 24 CFR Part 75.3(a)(2).
Section 3 worker means:
(1) Any worker who currently fits or when hired within the past five years fit at least one of the following categories, as documented:
(i) The worker's income for the previous or annualized calendar year is below the income limit established by HUD.
(ii) The worker is employed by a Section 3 business concern.
(iii) The worker is a YouthBuild participant.
(2) The status of a Section 3 worker shall not be negatively affected by a prior arrest or conviction.
(3) Nothing in this part shall be construed to require the employment of someone who meets this definition of a Section 3 worker. Section 3 workers are not exempt from meeting the qualifications of the position to be filled.
Section 8-assisted housing refers to housing receiving project-based rental assistance or tenant-based assistance under Section 8 of the 1937 Act.
Service area or the neighborhood of the project means an area within one mile of the Section 3 project or, if fewer than 5,000 people live within one mile of a Section 3 project, within a circle centered on the Section 3 project that is sufficient to encompass a population of 5,000 people according to the most recent U.S. Census.
Subcontractor means any entity that has a contract with a contractor to undertake a portion of the contractor's obligation to perform work in connection with the expenditure of public housing financial assistance or for a Section 3 project.
Subrecipient has the meaning provided in the applicable program regulations or in 2 CFR 200.93.
Targeted Section 3 worker has the meanings provided in 24 CFR Part 75.11, 75.21, or 75.29, and does not exclude an individual that has a prior arrest or conviction.
Very low-income person means the definition for this term set forth in section 3(b)(2) of the 1937 Act (at or below 50% AMI).
YouthBuild programs refers to YouthBuild programs receiving assistance under the Workforce Innovation and Opportunity Act (29 U.S.C. 3226).