I 
114TH CONGRESS 
1ST SESSION H. R. 3697 
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. 
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 oppor-
tunities for low-income persons under section 3 of the 
Housing and Urban Development Act of 1968, and for 
other purposes. 
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Section 3 Moderniza-
tion and Improvement Act of 2015’’. 
SEC. 2. CONGRESSIONAL FINDINGS. 
The Congress finds that— 
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(1) funds administered by the Department of 
Housing and Urban Development, particularly those 
intended for housing construction, rehabilitation, re-
pair, modernization, management, self-sufficiency, 
community development, and other public construc-
tion, provide State and local governments, housing 
providers, and other recipients of this Federal finan-
cial assistance with substantial funds for projects 
and activities that produce significant economic op-
portunities for the communities where the funds are 
expended; 
(2) low- and very low-income persons, especially 
recipients of government assistance for housing, 
often face barriers to access training, employment, 
and contracting opportunities resulting from the ex-
penditure of Federal funds in their communities; 
(3) training, employment, and contracting op-
portunities generated by projects and activities that 
receive assistance from the Department of Housing 
and Urban Development offer an effective means of 
empowering low- and very low-income persons and 
local businesses that provide training and job oppor-
tunities for such persons; 
(4) past Federal efforts to direct training, em-
ployment, and contracting opportunities generated 
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by programs administered by the Secretary of Hous-
ing and Urban Development to low- and very low-in-
come persons, and businesses that provide training 
and job opportunities for such persons, have not 
been fully effective and should be intensified; and 
(5) funding provided to other Federal agencies 
may also produce significant employment and con-
tracting opportunities for the communities where the 
funds are expended. 
SEC. 3. REPORTING; SANCTIONS FOR NONCOMPLIANCE. 
Section 3 of the Housing and Urban Development 
Act of 1968 (12 U.S.C. 1701u) is amended— 
(1) by redesignating subsection (g) as sub-
section (k); and 
(2) by inserting after subsection (f) the fol-
lowing new subsections: 
‘‘(g) REPORTS.— 
‘‘(1) RECIPIENT REPORTS TO HUD.— 
‘‘(A) REQUIREMENT.—Each recipient of 
assistance referred to in subsection (c) or (d) 
(in this section referred to as a ‘recipient’) shall 
report annually to the Secretary on their com-
pliance with the employment and contracting 
requirements and on their contractors and sub-
contractors performance. Recipients shall en-
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sure that their contractors and subcontractors 
provide them with any information necessary to 
make such reports. 
‘‘(B) INFORMATION REGARDING FAILURE 
TO MEET EMPLOYMENT AND CONTRACTING RE-
QUIREMENT.—For any period during which a 
recipient, or their contractor or subcontractor, 
did not meet their employment or contracting 
requirement under subsection (c) or (d), the re-
port shall describe actions that were taken to 
meet the requirement, including actions taken 
or that will be taken in future funding opportu-
nities to address the deficiencies in the actions 
that resulted in failure to meet employment and 
contracting requirements. 
‘‘(C) MONTHLY REPORTS BY SUBRECIPI-
ENTS.—Each recipient shall require any entity 
that is a subrecipient of such recipient for as-
sistance referred to in subsection (c) or (d) to 
submit a report to such recipient monthly con-
taining such information as the Secretary shall 
require to ensure that the recipient can comply 
with this paragraph. 
‘‘(D) PUBLIC AVAILABILITY.—Each report 
pursuant to this paragraph (including reports 
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under subparagraph (C)) shall be made publicly 
available, in its entirety, not later than 15 busi-
ness days after the end of the period covered by 
the report. Such availability shall include post-
ing reports on a publicly accessible website on 
the World Wide Web and making printed and 
electronic copies publicly available upon request 
at no charge. 
‘‘(2) ANNUAL HUD REPORTS TO CONGRESS.— 
‘‘(A) REQUIREMENT.—The Secretary shall 
submit a report annually to the Congress that 
provides a summary of the information con-
tained in the reports submitted pursuant to 
paragraph (1). Such annual report shall provide 
information on the total amount of Federal 
funds that are subject to this section, by pro-
gram area and geographical jurisdiction, and 
the outcomes produced, including specific infor-
mation on the amount of training, jobs, and 
contracting opportunities generated by such 
funds. 
‘‘(B) ASSESSMENT OF NONCOMPLIANCE.— 
Each report under this paragraph shall in-
clude— 
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‘‘(i) an assessment of any noncompli-
ance by any recipients with the require-
ments of this section, by State; 
‘‘(ii) specific recommendations regard-
ing actions to reduce and eliminate such 
noncompliance; and 
‘‘(iii) any sanctions imposed pursuant 
to subsection (h) for such noncompliance. 
‘‘(C) REVIEW OF EFFECTIVENESS.—Each 
report under this paragraph shall include a re-
view of the effectiveness of the program under 
this section in providing jobs for low- and very 
low-income persons, meeting unmet training 
and job readiness needs in the community, ena-
bling low- and very low-income persons to hold 
a steady job, providing contracting opportuni-
ties for businesses that qualify for priority 
under paragraphs (1)(B) and (2)(B) of sub-
section (d), and any recommendations the Sec-
retary determines appropriate regarding the 
program under this section. 
‘‘(3) GAO REPORT.—Not later than the expira-
tion of the two-year period beginning on the date of 
the enactment of the Section 3 Modernization and 
Improvement Act of 2015, the Comptroller General 
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of the United States shall submit a report to the 
Congress regarding the implementation of this sec-
tion (as amended by such Act), that— 
‘‘(A) specifically describes the extent of 
compliance with this section, the amount of 
funds awarded that were covered by this sec-
tion, and outcomes; and 
‘‘(B) makes recommendations to improve 
the effectiveness of this section and for when a 
subsequent such report should be required. 
‘‘(h) NONCOMPLIANCE.— 
‘‘(1) INVESTIGATION AND DETERMINATION.—In 
carrying out this section, the Secretary shall develop 
and implement procedures to assess compliance with 
the requirements of this section, to review com-
plaints alleging noncompliance by any recipient or 
contractor with the requirements of this section, to 
make determinations as to whether such noncompli-
ance has occurred, and to take such actions as pro-
vided in this subsection as the Secretary determines 
appropriate to ensure compliance and prevent future 
noncompliance. 
‘‘(2) TIMELY
ASSESSMENT.—The procedures 
required under paragraph (1) shall include measures 
that ensure that recipients and contractors are in 
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compliance with the requirements of this section 
during the use of assistance referred to in subsection 
(c) or (d), including a requirement to report to the 
Secretary regarding compliance on a monthly basis 
and a requirement that the Secretary assess compli-
ance by each recipient and contractor not less fre-
quently than once every 3 months. 
‘‘(3) SANCTIONS.— 
‘‘(A) 
ESTABLISHMENT.—The 
Secretary 
shall develop and implement policies and proce-
dures for imposition of a series of administra-
tive sanctions, graduated in severity, which 
shall be applied to recipients and their contrac-
tors and subcontractors that are determined do 
not comply with this section or the require-
ments established under the program under this 
section. 
‘‘(B) AUTOMATIC SANCTIONS.—Such sanc-
tions shall include certain measures, or a series 
of measures, that are applied in all instances of 
a determination of a failure to comply with cer-
tain requirements of this section or with certain 
requirements established under this program 
under this section, and shall not be subject to 
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any discretion on the part of the Secretary as 
to whether to apply such measure or measures. 
‘‘(C) ACTIONS.—Such sanctions shall in-
clude— 
‘‘(i) requiring a recipient to enter into 
a compliance agreement with the Secretary 
is specifically designed to bring the recipi-
ent into compliance and provide for the 
creation of additional employment opportu-
nities and, if such recipient refuses to 
enter into such agreement, recapture by 
the Secretary, from amounts provided to 
the recipient that were subject to this sec-
tion, of an amount equal to the amount 
that was required under this section to be 
used to give low- and very low-income per-
sons training and employment opportuni-
ties or economic opportunities but was not 
so used; 
‘‘(ii) reduction of future funds from 
the Department, including any discre-
tionary funds available under the Choice 
Neighborhoods Initiative under section 24 
of the United States Housing Act of 1937 
(42 U.S.C. 1437v) and the rental assist-
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ance demonstration program (as such term 
is defined in subsection (e) of this section); 
‘‘(iii) debarment and suspension from, 
and limited denial of participation in pro-
grams of the Department; and 
‘‘(iv) such other sanctions as the Sec-
retary determines appropriate to discour-
age noncompliance.’’. 
SEC. 4. COVERAGE OF RENTAL ASSISTANCE DEMONSTRA-
TION PROPERTIES. 
(a) EMPLOYMENT.—Subsection (c) of section 3 of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 
1701u(c)) is amended— 
(1) in paragraph (2), by inserting before the 
first comma the following: ‘‘(not including the rental 
assistance demonstration program)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) RENTAL
ASSISTANCE
DEMONSTRATION 
PROGRAM.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
require that public housing agencies and owners 
of multifamily properties assisted under the 
rental assistance demonstration program, and 
their contractors and subcontractors, make 
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their best efforts, consistent with existing Fed-
eral, State, and local laws and regulations, to 
give to low- and very low-income persons all the 
training and employment opportunities gen-
erated by or in such properties, including such 
opportunities not involving property construc-
tion or rehabilitation (which shall include op-
portunities involving administration, manage-
ment, service, and maintenance) and including 
such opportunities generated by assistance pro-
vided under the rental assistance demonstration 
program. 
‘‘(B) PRIORITY.—The efforts required 
under subparagraph (A) shall be directed in the 
following order of priority: 
‘‘(i) To residents of the housing devel-
opments for which the assistance is ex-
pended. 
‘‘(ii) To residents of other develop-
ments managed by the public housing 
agency, if applicable, that is expending the 
assistance. 
‘‘(iii) To participants in YouthBuild 
programs receiving assistance under sec-
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tion 171 of the Workforce Innovation and 
Opportunity Act. 
‘‘(iv) To other low- and very low-in-
come persons residing within the metro-
politan area (or nonmetropolitan county) 
in which the assistance is expended.’’. 
(b) CONTRACTING.—Subsection (d) of section 3 of 
the Housing and Urban Development Act of 1968 (12 
U.S.C. 1701u(d)) is amended— 
(1) in paragraph (2), by inserting before the 
first comma the following: ‘‘(not including the rental 
assistance demonstration program)’’; and 
(2) by adding at the end the following new 
paragraph: 
‘‘(3) RENTAL
ASSISTANCE
DEMONSTRATION 
PROGRAM.— 
‘‘(A) IN
GENERAL.—The Secretary shall 
require that public housing agencies and owners 
of multifamily properties assisted under the 
rental assistance demonstration program, and 
their contractors and subcontractors, make 
their best efforts, consistent with existing Fed-
eral, State, and local laws and regulations, to 
award contracts for work to be performed in 
connection with such properties, including work 
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that does not involve property construction or 
rehabilitation (which shall include administra-
tion, management, service, and maintenance 
work) and including work in connection assist-
ance provided under the rental assistance dem-
onstration program, to business concerns that 
provide economic opportunities for low- and 
very low-income persons. 
‘‘(B) PRIORITY.—The efforts required 
under subparagraph (A) shall be directed in the 
following order of priority: 
‘‘(i) To business concerns that provide 
economic opportunities for residents of the 
housing development for which the assist-
ance is provided. 
‘‘(ii) To business concerns that pro-
vide economic opportunities for residents of 
other housing developments operated by 
the public housing agency, if applicable, 
that is providing the assistance. 
‘‘(iii) To YouthBuild programs receiv-
ing assistance under section 171 of the 
Workforce Innovation and Opportunity 
Act. 
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‘‘(iv) To business concerns that pro-
vide economic opportunities for low- and 
very low-income persons residing within 
the metropolitan area (or nonmetropolitan 
county) in which the assistance is pro-
vided.’’. 
(c) DEFINITION.—Subsection (e) of section 3 of the 
Housing and Urban Development Act of 1968 (12 U.S.C. 
1701u(e)) is amended by adding at the end the following 
new paragraph: 
‘‘(3) RENTAL
ASSISTANCE
DEMONSTRATION 
PROGRAM.—The term ‘rental assistance demonstra-
tion program’ means the demonstration program of 
the Secretary of Housing and Urban Development 
conducted pursuant to the heading ‘Rental Assist-
ance Demonstration’ in title II of the Transpor-
tation, Housing and Urban Development, and Re-
lated Agencies Appropriations Act, 2012 (division C 
of Public Law 112–55; 125 Stat. 673), as amend-
ed.’’. 
Æ 
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