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Section 3 – Creating Economic Opportunitiesfor Low- and Very-Low Income Persons andEligible BusinessesMartina KuehlKuehl Enterprises LLC

Covered Programs ADOH Housing and CommunityDevelopment Financial AssistancePrograms CDBGHOMEHOPWANHTFNSPEconomic Stimulus Funds Other HCD Financial AssistancePrograms ESGUniversity Partnership Grants202/811Lead Hazard ControlHealthy Homes ProductionPublic Housing Financial Assistance Development RAD & Other Mixed FinanceOperations & Management Section 8 project-based assistanceCapital fund2

ADOHCovered ProjectPartnersNew contractseffective 7/1/21RecipientSubrecipientPrime ContractorSubcontractor(s)3

Significant Changes24 CFR Part 135 Requirements & Compliance Requirements & Compliance Separate HCD and public housing 200,000 per project and all publichousing assistance 100,000 per contractor/subcontractorNumerical Goals Same for HCD and public housing 200,000 combined HCD assistance perrecipient per fiscal year 24 CFR Part 75Section 3 residents 30% of new hiresSection 3 businesses 10% of constructionand 3% of non-constructionSection 3 ResidentSection 3 Business Benchmarks Section 3 workers 25% of labor hours Section 3 Targeted workers 5% of laborhoursSection 3 and Targeted Section 3workers Section 3 Business – new definition 4

Section 3 Project Housing rehabilitation, housing construction and other public constructionprojects Site or sites together with any building(s) and improvements located on the site(s)that are under common ownership, management, and financing. Assistance of 200,000 or more Funded in whole or part HUD will adjust threshold not less than every 5 yearsApplies to entire projectMaterial only exemptPublic housing financial assistance All assistance Entity providing housing and community development financial assistance mustfollow public housing rules if HCD assistance 200,0005

Is it a Section 3 Project? CDBG Dog Park Improvements Single bid 345,000 CDBG Sidewalk widening,and improved restroom andparking accessibility 175,000 for sidewalk wideningand 170,000 for accessibilityimprovementsForce account materials Force account labor ( 130,000)and 215,000 materials onlyCDBG Owner-occupied HousingRehab Program Single bid Two bids Multiple bids Four single-family units with rehabranging from 45,000 to 150,000Four single-family units with rehabranging from 45,000 to 150,000HOME Owner-occupied HousingReplacement Program Two single-family unit replacements –one at 135,000 and one at 210,0006

Is it a Section 3 Project? Rental - New Construction LIHTC with 345,000 ADOH HOMEor NHTF gap financingLIHTC with 100,000 CDBGentitlement infrastructureimprovements and 199,999 ADOHHOME or NHTF gap financingLIHTC with 199,999 HOME orNHTF gap financingTransitional housing with 199,999ADOH NHTF and 500,000 local PJHOME CHDO funding. Rental – Rehabilitation 4-plex rehabilitated with 345,000 CDBG fundsFour scattered site-singlefamily transitional units withone nonprofit owner and 345,000 HOME fundsLIHTC with 345,000 ADOHHOME or NHTF gap financingRAD conversion with 4% LIHTCand 199,999 CDBG forinfrastructure improvements7

Section 3 Business, Project Area, Professional Svcs Section 3 Business Meets requirements to perform contractOne of the following1.2. Very-low or low-income persons, or Current public housing residents orresidents residing in Section 8 assistedhousingOver 75% of labor hours within prior 3month period performed by Section 3workersSelf-certification, with supportingdocumentationProject Area 51% or more owned and controlled by:Documentation 1 mile radius OR5,000 populationradiusProfessional Services Non-constructionservices requiring anadvanced degree orprofessionallicensing8

Section 3 and Targeted Section 3 Workers Section 3 WorkerMeets qualifications of position Hire may be new or within past 5years Very-low or low-income Self-certification Employer certification Location and household size permost recent HUD income chart orchart at time of hireDocumentationTargeted Section 3 Worker Meets qualifications of positionHire may be new or within past 5yearsYouthBuild ParticipantProject Area ResidentEmployed by Section 3 businessDocumentation Self-certification YouthBuild Project Area ResidentSection 3 businessEmployer certification 9

Labor Hours and Labor Hours Benchmarks Labor HoursPaid hours worked by persons on aSection 3 project Professional services labor hoursmay be reported Any worked by Section 3workers count towardsbenchmark Non Section 3 do not counttowards total hoursLabor Hours Benchmark Not less than 25% of labor hoursworked by Section 3 workers All workersSection 3worker – 25%TargetedSection 3worker – 5%Not less than 5% of labor hours byTargeted Section 3 workers Part of 25% Section 3 workers10

Qualitative Activities Section 3 and Targeted Section 3Workers Outreach to generate job applicantsTraining or apprenticeship programsConnect to or provide employmentsearch, preparedness, and supportservices Job fairsHUD Section 3 Opportunity Portal Assistance applying for highereducation or vocational/technicaltrainingFinancial literacy training & coachinghttps://hudapps.hud.gov/OpportunityPortal/ Section 3 Businesses Procurement Outreach to identify & secure bids Technical assistance on bidding process Dividing contracts into smaller jobs Bonding assistance/guarantees to supportviable bidsBusiness registries HUD Section 3 Opportunity Portal Other documented activities , engagement & referrals Workforce investment agencies, small businessdevelopment centers, etc. Promotion of HUD’s business registryOther documented activities11ADOH Activities

Reporting and Recordkeeping RequirementsADOH Reports toHUD annually TotalSection 3 workerTargeted Section 3 workerSection 3 businessesQualitative effortsRecordkeeping Subcontractorreports tocontractor witheach payrollLabor hours Subrecipient reports torecipient and recipientreports to ADOH witheach performance reportContractor reports torecipient orsubrecipient with eachpayrollReports Labor hoursContracts and subcontractsSection 3 and Targeted Section 3worker certificationsSection 3 business certificationsQualitative efforts12

Reporting/Compliance starts with Procurement Preference for Section 3 businesses With written opinion of legal counselSub/contractor must demonstrateability to perform successfullyAwarded based on lowest price No more than 10% higher than otherqualified source Required documents Contractor Assurance attached to each bidSection 3 Clause included in each RFP, RFQ,bid, contractPermanent & Project WorkforceBreakdown form submitted with each bidRFP/RFQ May assign rating points13

Contractor and Subcontractor Reporting -report-form Instructions and 4 tabs in Microsoft excel format Submitted with each payroll Tab 1 – Complete this Tab First14

Contractor and Subcontractor Labor Hours Reporting Tab 2 – Labor Hours15

Contractor and Subcontractor Reporting Tab 3 – Subcontracts16

Contractor and Subcontractor Reporting Tab 4 – Qualitative Activities17

Recipient and Subrecipient Reporting report-form Instructions and 4 tabs in Microsoft excel format Submitted with each performance report Tab 1 – Complete this Tab First18

Recipient and Subrecipient Labor Hours Reporting Tab 2 – Labor Hours19

Recipient and Subrecipient Reporting Tab 3 – Section 3 Businesses20

Recipient and Subrecipient Reporting Tab 4 – Qualitative Activities21

HUD will provide 1.Additional guidancea.How to calculate labor hoursb.How to properly report when multiple funding sources are involvedc.Complaint handling and routingd.Reporting per program area2.Sub-regulatory guidance on a program-by-program basis3.Quantitative and qualitative reporting forms4.Technical assistance and best practices5.Web tool for determining service areaa.Possible mobile tool to help with monitoring and compliance6.Updated business registry system – DONE!7.Adjusted IDIS data collection system to ease administrative burden and eliminateredundancy8.Tools and publications22

Handbook and Forms https://housing.az.gov/form-type/handbooks Recipient Report Form Contractor Report Form Sample Employment Survey Section 3 Notice Targeted Section 3 Worker Employer Certification Form Targeted Section 3 Worker Self-certification Form Section 3 Worker Employer Certification Form Section 3 Worker Self-certification Form Section 3 Business Self-certification Form Section 3 Assurances23

Labor Hours and Labor Hours Benchmarks Labor Hours Paid hours worked by persons on a Section 3 project Professional services labor hours may be reported Any worked by Section 3 workers count towards benchmark Non Section 3 do not count towards total hours Labor Hours Benchmark Not less than 25% of labor hours worked .