I 

114TH CONGRESS 

1ST SESSION H. R. 3697 

To modernize and improve the program for economic opportunities for lowincome persons under section 3 of the Housing and Urban Development 

Act of 1968, and for other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

OCTOBER 7, 2015 

Ms. VELA ́ZQUEZ introduced the following bill; which was referred to the 

Committee on Financial Services 

A BILL 

To modernize and improve the program for economic opportunities for low-income persons under section 3 of the 

Housing and Urban Development Act of 1968, and for 

other purposes. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Section 3 Moderniza5 tion and Improvement Act of 2015’’. 

6 SEC. 2. CONGRESSIONAL FINDINGS. 

7 The Congress finds that— 


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1 (1) funds administered by the Department of 

2 Housing and Urban Development, particularly those 

3 intended for housing construction, rehabilitation, re4 pair, modernization, management, self-sufficiency, 

5 community development, and other public construc6 tion, provide State and local governments, housing 

7 providers, and other recipients of this Federal finan8 cial assistance with substantial funds for projects 

9 and activities that produce significant economic op10 portunities for the communities where the funds are 

11 expended; 

12 (2) low- and very low-income persons, especially 

13 recipients of government assistance for housing, 

14 often face barriers to access training, employment, 

15 and contracting opportunities resulting from the ex16 penditure of Federal funds in their communities; 

17 (3) training, employment, and contracting op18 portunities generated by projects and activities that 

19 receive assistance from the Department of Housing 

20 and Urban Development offer an effective means of 

21 empowering low- and very low-income persons and 

22 local businesses that provide training and job oppor23 tunities for such persons; 

24 (4) past Federal efforts to direct training, em25 ployment, and contracting opportunities generated 


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1 by programs administered by the Secretary of Hous2 ing and Urban Development to low- and very low-in3 come persons, and businesses that provide training 

4 and job opportunities for such persons, have not 

5 been fully effective and should be intensified; and 

6 (5) funding provided to other Federal agencies 

7 may also produce significant employment and con8 tracting opportunities for the communities where the 

9 funds are expended. 

10 SEC. 3. REPORTING; SANCTIONS FOR NONCOMPLIANCE. 

11 Section 3 of the Housing and Urban Development 

12 Act of 1968 (12 U.S.C. 1701u) is amended— 

13 (1) by redesignating subsection (g) as sub14 section (k); and 

15 (2) by inserting after subsection (f) the fol16 lowing new subsections: 

17 ‘‘(g) REPORTS.— 

18 ‘‘(1) RECIPIENT REPORTS TO HUD.— 

19 ‘‘(A) REQUIREMENT.—Each recipient of 

20 assistance referred to in subsection (c) or (d) 

21 (in this section referred to as a ‘recipient’) shall 

22 report annually to the Secretary on their com23 pliance with the employment and contracting 

24 requirements and on their contractors and sub25 contractors performance. Recipients shall enVerDate Sep 11 2014 06:21 Oct 09, 2015 Jkt 059200 PO 00000 Frm 00003 Fmt 6652 Sfmt 6201 E:\BILLS\H3697.IH H3697

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1 sure that their contractors and subcontractors 

2 provide them with any information necessary to 

3 make such reports. 

4 ‘‘(B) INFORMATION REGARDING FAILURE

5 TO MEET EMPLOYMENT AND CONTRACTING RE6 QUIREMENT.—For any period during which a 

7 recipient, or their contractor or subcontractor, 

8 did not meet their employment or contracting 

9 requirement under subsection (c) or (d), the re10 port shall describe actions that were taken to 

11 meet the requirement, including actions taken 

12 or that will be taken in future funding opportu13 nities to address the deficiencies in the actions 

14 that resulted in failure to meet employment and 

15 contracting requirements. 

16 ‘‘(C) MONTHLY REPORTS BY SUBRECIPI17 ENTS.—Each recipient shall require any entity 

18 that is a subrecipient of such recipient for as19 sistance referred to in subsection (c) or (d) to 

20 submit a report to such recipient monthly con21 taining such information as the Secretary shall 

22 require to ensure that the recipient can comply 

23 with this paragraph. 

24 ‘‘(D) PUBLIC AVAILABILITY.—Each report 

25 pursuant to this paragraph (including reports 


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1 under subparagraph (C)) shall be made publicly 

2 available, in its entirety, not later than 15 busi3 ness days after the end of the period covered by 

4 the report. Such availability shall include post5 ing reports on a publicly accessible website on 

6 the World Wide Web and making printed and 

7 electronic copies publicly available upon request 

8 at no charge. 

9 ‘‘(2) ANNUAL HUD REPORTS TO CONGRESS.— 

10 ‘‘(A) REQUIREMENT.—The Secretary shall 

11 submit a report annually to the Congress that 

12 provides a summary of the information con13 tained in the reports submitted pursuant to 

14 paragraph (1). Such annual report shall provide 

15 information on the total amount of Federal 

16 funds that are subject to this section, by pro17 gram area and geographical jurisdiction, and 

18 the outcomes produced, including specific infor19 mation on the amount of training, jobs, and 

20 contracting opportunities generated by such 

21 funds. 

22 ‘‘(B) ASSESSMENT OF NONCOMPLIANCE.— 

23 Each report under this paragraph shall in24 clude— 


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1 ‘‘(i) an assessment of any noncompli2 ance by any recipients with the require3 ments of this section, by State; 

4 ‘‘(ii) specific recommendations regard5 ing actions to reduce and eliminate such 

6 noncompliance; and 

7 ‘‘(iii) any sanctions imposed pursuant 

8 to subsection (h) for such noncompliance. 

9 ‘‘(C) REVIEW OF EFFECTIVENESS.—Each 

10 report under this paragraph shall include a re11 view of the effectiveness of the program under 

12 this section in providing jobs for low- and very 

13 low-income persons, meeting unmet training 

14 and job readiness needs in the community, ena15 bling low- and very low-income persons to hold 

16 a steady job, providing contracting opportuni17 ties for businesses that qualify for priority 

18 under paragraphs (1)(B) and (2)(B) of sub19 section (d), and any recommendations the Sec20 retary determines appropriate regarding the 

21 program under this section. 

22 ‘‘(3) GAO REPORT.—Not later than the expira23 tion of the two-year period beginning on the date of 

24 the enactment of the Section 3 Modernization and 

25 Improvement Act of 2015, the Comptroller General 


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1 of the United States shall submit a report to the 

2 Congress regarding the implementation of this sec3 tion (as amended by such Act), that— 

4 ‘‘(A) specifically describes the extent of 

5 compliance with this section, the amount of 

6 funds awarded that were covered by this sec7 tion, and outcomes; and 

8 ‘‘(B) makes recommendations to improve 

9 the effectiveness of this section and for when a 

10 subsequent such report should be required. 

11 ‘‘(h) NONCOMPLIANCE.— 

12 ‘‘(1) INVESTIGATION AND DETERMINATION.—In 

13 carrying out this section, the Secretary shall develop 

14 and implement procedures to assess compliance with 

15 the requirements of this section, to review com16 plaints alleging noncompliance by any recipient or 

17 contractor with the requirements of this section, to 

18 make determinations as to whether such noncompli19 ance has occurred, and to take such actions as pro20 vided in this subsection as the Secretary determines 

21 appropriate to ensure compliance and prevent future 

22 noncompliance. 

23 ‘‘(2) TIMELY ASSESSMENT.—The procedures 

24 required under paragraph (1) shall include measures 

25 that ensure that recipients and contractors are in 


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1 compliance with the requirements of this section 

2 during the use of assistance referred to in subsection 

3 (c) or (d), including a requirement to report to the 

4 Secretary regarding compliance on a monthly basis 

5 and a requirement that the Secretary assess compli6 ance by each recipient and contractor not less fre7 quently than once every 3 months. 

8 ‘‘(3) SANCTIONS.— 

9 ‘‘(A) ESTABLISHMENT.—The Secretary 

10 shall develop and implement policies and proce11 dures for imposition of a series of administra12 tive sanctions, graduated in severity, which 

13 shall be applied to recipients and their contrac14 tors and subcontractors that are determined do 

15 not comply with this section or the require16 ments established under the program under this 

17 section. 

18 ‘‘(B) AUTOMATIC SANCTIONS.—Such sanc19 tions shall include certain measures, or a series 

20 of measures, that are applied in all instances of 

21 a determination of a failure to comply with cer22 tain requirements of this section or with certain 

23 requirements established under this program 

24 under this section, and shall not be subject to 


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1 any discretion on the part of the Secretary as 

2 to whether to apply such measure or measures. 

3 ‘‘(C) ACTIONS.—Such sanctions shall in4 clude— 

5 ‘‘(i) requiring a recipient to enter into 

6 a compliance agreement with the Secretary 

7 is specifically designed to bring the recipi8 ent into compliance and provide for the 

9 creation of additional employment opportu10 nities and, if such recipient refuses to 

11 enter into such agreement, recapture by 

12 the Secretary, from amounts provided to 

13 the recipient that were subject to this sec14 tion, of an amount equal to the amount 

15 that was required under this section to be 

16 used to give low- and very low-income per17 sons training and employment opportuni18 ties or economic opportunities but was not 

19 so used; 

20 ‘‘(ii) reduction of future funds from 

21 the Department, including any discre22 tionary funds available under the Choice 

23 Neighborhoods Initiative under section 24 

24 of the United States Housing Act of 1937 

25 (42 U.S.C. 1437v) and the rental assistVerDate Sep 11 2014 06:21 Oct 09, 2015 Jkt 059200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H3697.IH H3697

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1 ance demonstration program (as such term 

2 is defined in subsection (e) of this section); 

3 ‘‘(iii) debarment and suspension from, 

4 and limited denial of participation in pro5 grams of the Department; and 

6 ‘‘(iv) such other sanctions as the Sec7 retary determines appropriate to discour8 age noncompliance.’’. 

9 SEC. 4. COVERAGE OF RENTAL ASSISTANCE DEMONSTRA10 TION PROPERTIES. 

11 (a) EMPLOYMENT.—Subsection (c) of section 3 of the 

12 Housing and Urban Development Act of 1968 (12 U.S.C. 

13 1701u(c)) is amended— 

14 (1) in paragraph (2), by inserting before the 

15 first comma the following: ‘‘(not including the rental 

16 assistance demonstration program)’’; and 

17 (2) by adding at the end the following new 

18 paragraph: 

19 ‘‘(3) RENTAL ASSISTANCE DEMONSTRATION

20 PROGRAM.— 

21 ‘‘(A) IN GENERAL.—The Secretary shall 

22 require that public housing agencies and owners 

23 of multifamily properties assisted under the 

24 rental assistance demonstration program, and 

25 their contractors and subcontractors, make 


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1 their best efforts, consistent with existing Fed2 eral, State, and local laws and regulations, to 

3 give to low- and very low-income persons all the 

4 training and employment opportunities gen5 erated by or in such properties, including such 

6 opportunities not involving property construc7 tion or rehabilitation (which shall include op8 portunities involving administration, manage9 ment, service, and maintenance) and including 

10 such opportunities generated by assistance pro11 vided under the rental assistance demonstration 

12 program. 

13 ‘‘(B) PRIORITY.—The efforts required 

14 under subparagraph (A) shall be directed in the 

15 following order of priority: 

16 ‘‘(i) To residents of the housing devel17 opments for which the assistance is ex18 pended. 

19 ‘‘(ii) To residents of other develop20 ments managed by the public housing 

21 agency, if applicable, that is expending the 

22 assistance. 

23 ‘‘(iii) To participants in YouthBuild 

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1 tion 171 of the Workforce Innovation and 

2 Opportunity Act. 

3 ‘‘(iv) To other low- and very low-in4 come persons residing within the metro5 politan area (or nonmetropolitan county) 

6 in which the assistance is expended.’’. 

7 (b) CONTRACTING.—Subsection (d) of section 3 of 

8 the Housing and Urban Development Act of 1968 (12 

9 U.S.C. 1701u(d)) is amended— 

10 (1) in paragraph (2), by inserting before the 

11 first comma the following: ‘‘(not including the rental 

12 assistance demonstration program)’’; and 

13 (2) by adding at the end the following new 

14 paragraph: 

15 ‘‘(3) RENTAL ASSISTANCE DEMONSTRATION

16 PROGRAM.— 

17 ‘‘(A) IN GENERAL.—The Secretary shall 

18 require that public housing agencies and owners 

19 of multifamily properties assisted under the 

20 rental assistance demonstration program, and 

21 their contractors and subcontractors, make 

22 their best efforts, consistent with existing Fed23 eral, State, and local laws and regulations, to 

24 award contracts for work to be performed in 

25 connection with such properties, including work 


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1 that does not involve property construction or 

2 rehabilitation (which shall include administra3 tion, management, service, and maintenance 

4 work) and including work in connection assist5 ance provided under the rental assistance dem6 onstration program, to business concerns that 

7 provide economic opportunities for low- and 

8 very low-income persons. 

9 ‘‘(B) PRIORITY.—The efforts required 

10 under subparagraph (A) shall be directed in the 

11 following order of priority: 

12 ‘‘(i) To business concerns that provide 

13 economic opportunities for residents of the 

14 housing development for which the assist15 ance is provided. 

16 ‘‘(ii) To business concerns that pro17 vide economic opportunities for residents of 

18 other housing developments operated by 

19 the public housing agency, if applicable, 

20 that is providing the assistance. 

21 ‘‘(iii) To YouthBuild programs receiv22 ing assistance under section 171 of the 

23 Workforce Innovation and Opportunity 

24 Act. 


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1 ‘‘(iv) To business concerns that pro2 vide economic opportunities for low- and 

3 very low-income persons residing within 

4 the metropolitan area (or nonmetropolitan 

5 county) in which the assistance is pro6 vided.’’. 

7 (c) DEFINITION.—Subsection (e) of section 3 of the 

8 Housing and Urban Development Act of 1968 (12 U.S.C. 

9 1701u(e)) is amended by adding at the end the following 

10 new paragraph: 

11 ‘‘(3) RENTAL ASSISTANCE DEMONSTRATION

12 PROGRAM.—The term ‘rental assistance demonstra13 tion program’ means the demonstration program of 

14 the Secretary of Housing and Urban Development 

15 conducted pursuant to the heading ‘Rental Assist16 ance Demonstration’ in title II of the Transpor17 tation, Housing and Urban Development, and Re18 lated Agencies Appropriations Act, 2012 (division C 

19 of Public Law 112–55; 125 Stat. 673), as amend20 ed.’’. 

Æ 


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