I 114th CONGRESS 1st Session H. R. 3697 IN THE HOUSE OF REPRESENTATIVES October 7, 2015 Ms. Velázquez 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. Short title This Act may be cited as the Section 3 Modernization and Improvement Act of 2015 . 2. Congressional findings The Congress finds that— (1) funds administered by the Department of Housing and Urban Development, particularly those intended for housing construction, rehabilitation, repair, modernization, management, self-sufficiency, community development, and other public construction, provide State and local governments, housing providers, and other recipients of this Federal financial assistance with substantial funds for projects and activities that produce significant economic opportunities 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 expenditure of Federal funds in their communities; (3) training, employment, and contracting opportunities 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 opportunities for such persons; (4) past Federal efforts to direct training, employment, and contracting opportunities generated by programs administered by the Secretary of Housing and Urban Development to low- and very low-income 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 contracting opportunities for the communities where the funds are expended. 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 subsection (k); and (2) by inserting after subsection (f) the following 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 compliance with the employment and contracting requirements and on their contractors and subcontractors performance. Recipients shall ensure that their contractors and subcontractors provide them with any information necessary to make such reports. (B) Information regarding failure to meet employment and contracting requirement 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 report shall describe actions that were taken to meet the requirement, including actions taken or that will be taken in future funding opportunities to address the deficiencies in the actions that resulted in failure to meet employment and contracting requirements. (C) Monthly reports by subrecipients Each recipient shall require any entity that is a subrecipient of such recipient for assistance referred to in subsection (c) or (d) to submit a report to such recipient monthly containing 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 under subparagraph (C)) shall be made publicly available, in its entirety, not later than 15 business days after the end of the period covered by the report. Such availability shall include posting 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 contained 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 program area and geographical jurisdiction, and the outcomes produced, including specific information on the amount of training, jobs, and contracting opportunities generated by such funds. (B) Assessment of noncompliance Each report under this paragraph shall include— (i) an assessment of any noncompliance by any recipients with the requirements of this section, by State; (ii) specific recommendations regarding 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 review 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, enabling low- and very low-income persons to hold a steady job, providing contracting opportunities for businesses that qualify for priority under paragraphs (1)(B) and (2)(B) of subsection (d), and any recommendations the Secretary determines appropriate regarding the program under this section. (3) GAO report Not later than the expiration 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 of the United States shall submit a report to the Congress regarding the implementation of this section (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 section, 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 complaints alleging noncompliance by any recipient or contractor with the requirements of this section, to make determinations as to whether such noncompliance has occurred, and to take such actions as provided 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 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 compliance by each recipient and contractor not less frequently than once every 3 months. (3) Sanctions (A) Establishment The Secretary shall develop and implement policies and procedures for imposition of a series of administrative sanctions, graduated in severity, which shall be applied to recipients and their contractors and subcontractors that are determined do not comply with this section or the requirements established under the program under this section. (B) Automatic sanctions Such sanctions shall include certain measures, or a series of measures, that are applied in all instances of a determination of a failure to comply with certain requirements of this section or with certain requirements established under this program under this section, and shall not be subject to any discretion on the part of the Secretary as to whether to apply such measure or measures. (C) Actions Such sanctions shall include— (i) requiring a recipient to enter into a compliance agreement with the Secretary is specifically designed to bring the recipient into compliance and provide for the creation of additional employment opportunities 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 section, of an amount equal to the amount that was required under this section to be used to give low- and very low-income persons training and employment opportunities or economic opportunities but was not so used; (ii) reduction of future funds from the Department, including any discretionary 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 assistance demonstration program (as such term is defined in subsection (e) of this section); (iii) debarment and suspension from, and limited denial of participation in programs of the Department; and (iv) such other sanctions as the Secretary determines appropriate to discourage noncompliance. . 4. Coverage of Rental Assistance Demonstration 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 their best efforts, consistent with existing Federal, State, and local laws and regulations, to give to low- and very low-income persons all the training and employment opportunities generated by or in such properties, including such opportunities not involving property construction or rehabilitation (which shall include opportunities involving administration, management, service, and maintenance) and including such opportunities generated by assistance provided 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 developments for which the assistance is expended. (ii) To residents of other developments managed by the public housing agency, if applicable, that is expending the assistance. (iii) To participants in YouthBuild programs receiving assistance under section 171 of the Workforce Innovation and Opportunity Act. (iv) To other low- and very low-income persons residing within the metropolitan 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 Federal, State, and local laws and regulations, to award contracts for work to be performed in connection with such properties, including work that does not involve property construction or rehabilitation (which shall include administration, management, service, and maintenance work) and including work in connection assistance provided under the rental assistance demonstration 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 assistance is provided. (ii) To business concerns that provide 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 receiving assistance under section 171 of the Workforce Innovation and Opportunity Act. (iv) To business concerns that provide economic opportunities for low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is provided. . (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 demonstration program means the demonstration program of the Secretary of Housing and Urban Development conducted pursuant to the heading Rental Assistance Demonstration in title II of the Transportation, Housing and Urban Development, and Related Agencies Appropriations Act, 2012 (division C of Public Law 112–55 ; 125 Stat. 673), as amended. .