With respect to the and benefits of this rule, HUD has prepared a Regulatory Impact Assessment (RIA). The RIA assesses the likely costs and benefits of the proposed rule. The purpose of Section 3 is to provide jobs, including apprenticeship opportunities, to public housing residents and other eligible low- and very low-income residents of a local area, and contracting opportunities for businesses that substantially employ these persons. However, the Section 3 requirement itself does not create additional jobs or contracts. Instead, Section 3 redirects local jobs and contracts created as a result of the expenditure of HUD funds to Section 3 residents and businesses residing and operating in the area in which the HUD funds are expended. A reasonable estimate of the impact would be an additional 1,400 jobs provided to Section 3 residents, annually, and more than $172 million in contracts to Section 3 businesses, as a result of increased oversight and clarification of program standards. In addition, with respect to incomes for tenants of public housing, the Federal rental subsidies provided to those tenants are expected to be reduced as a result of the creation of job opportunities resulting from the expenditure of Federal funds. Such a reduction of Federal subsidies could result in a reduction of $19 million, annually. If implemented as proposed, this proposed rule result in a reporting and recordkeeping burden of 226,640 hours or $7.3 million the first year and a reduction of administrative burden by hours or $320,000 in succeeding years. This rule will not have any impact on the level of funding for covered HUD programs. Funding is determined independently by congressional appropriations, and authorizing statutes that may impose such requirements as minimum or maximum grants. This proposed rule is not an economically significant rule as defined in Executive Order 12866 (Regulatory Planning and Review). I. Background - 10,000
Section 135.19 of the proposed rule contains provisions to be included in contracts with developers, contractors, and subcontractors and the Section 3 clause language that is currently found in § 135.38 of the existing regulations. Section 135.21 of the proposed rule addresses certifications of compliance. This section require a recipient to annually submit to HUD a certification documenting compliance with Section 3, including the compliance of any subrecipients, contractors, or subcontractors. This section provides that, where applicable, certifications may be submitted as part of a submission of annual strategic plans, consolidated plans, or public housing plans, or as part of a submission of an application for a competitively awarded grant, cooperative agreement, or other submissions. Sections 135.23 and 135.25 of the proposed rule contain reporting and recordkeeping requirements, now in § 135.90 and § 135.92 of the existing regulations. Section 135.23 continues to require the submission of Section 3 annual reports, and clarifies that, going forward, the time frame applicable for Section 3 reports should coincide with the recipient’s local program or fiscal year. If the recipient does not have a local program or fiscal year, the Section 3 report shall follow the federal fiscal year (i.e., October 1 through September 30). Since the timely submission of Section 3 reports continues to be an issue, the proposed rule would provide procedures for HUD to sanction recipients for delinquent or missing reports. Any sanction imposed would be in accordance with the requirements of the Section 3 regulations or a notice of funding availability (NOFA) governing the program under which the Section 3 covered financial assistance is provided. Section 135.23 of the proposed rule also specifically requires a State or county recipient to submit to HUD an annual report regarding compliance with Section 3 in its own operations and in those of its subrecipients, contractors, and subcontractors. Section 135.25 of the proposed rule contains the requirement in existing § 135.92 that HUD shall have access to
Section Reference in Proposed Rule Number of Parties Number of Responses Per Respondent Estimated Average Time for Requirement (in hours) Total Estimated Annual Burden One-Time Burden Not Reoccurring Annually (in hours) Incremental Burden One-Time Burden --Not Reoccurring Annually Section 3 resident and business verification (§ 135.15) 2,000 1 80 160,000 0 -80,000 0 Maintain lists of eligible Section 3 residents and businesses (§135.11) 2,000 2 40 160,000 0 -80,000 0 Notify Section 3 residents and businesses about the availability of economic opportunities (§135.11) 2,000 2 20 80,000 0 -20,000 0 Post signs or notices at job sites (§135.11) 2,000 10 1 20,000 0 0 0 Ensure that bid solicitations acknowledge Section 3 obligations (§135.11) 2,000 1 0.5 0 1,000 0 0 Monitor the payroll data of developers and contractors (§135.11) 2,000 1 40 N/A N/A 80,000 0
Incorporate Section 3 factors into contractor selection procedures (§135.11) 2,000 1 40 N/A N/A 0 80,000 Amend and renegotiate existing collective bargaining agreements, PLAs, etc., as appropriate (§135.11) 500 1 40 N/A N/A 0 20,000 Coordinate with DOL, Youth Build, etc. (§135.11) 1,000 1 40 N/A N/A 40,000 0 Draft written subrecipient agreements (§ 135.17) 1,110 1 24 N/A N/A 0 26,640 Include the Section 3 Clause in covered contracts (§135.19) 2,000 1 0.5 1,000 0 0 0 Develop official Section 3 policies and procedures (§ 135.9) 5,000 1 40 0 200,000 0 100,000 Annual Certifications of compliance (§135.21) 5,000 1 0.5 2,500 0 0 0
provide employment and training opportunities generated from the expenditure of Section 3 covered financial assistance to Section 3 residents in the following order of priority consideration: (1) Residents of the public housing project or projects where the Section 3 covered financial assistance is expended. (2) Residents of other public housing projects managed by the PHA that is spending Section 3 covered financial assistance. (3) Section 3 residents participating in DOL YouthBuild programs. (4) Other Section 3 residents in the Section 3 local area, including individuals and families receiving Section 8 housing choice vouchers. (c) Order of priority consideration for Section 3 businesses in contracting opportunities. A PHA, its subrecipients, contractors, and others shall direct their efforts to award contracting and subcontracting opportunities to Section 3 businesses in the following order of priority consideration: (1) Section 3 businesses that are 51 percent or more owned by residents of the public housing project(s) where the Section 3 covered financial assistance is expended; or whose permanent workforce is comprised of 30 percent or more of residents of the public housing project(s) where the Section 3 covered financial assistance is expended. (2) Section 3 businesses that are 51 percent or more owned by residents of any public housing projects administered by the PHA; or whose full-time, permanent, workforce is comprised of 30 percent or more of residents of any public housing projects managed by the PHA. (3) Grantees selected to carry out DOL YouthBuild programs. (4) Any other Section 3 business in the Section 3 local area.
or by a representative who is not a Section 3 resident but who represents one or more Section 3 residents; (2) Any Section 3 business on behalf of itself, or as a representative of other Section 3 businesses similarly situated, seeking contract opportunities generated from the expenditure of Section 3 covered financial assistance from a recipient, subrecipient, or contractor, or by an individual representative of Section 3 businesses. (3) The Assistant Secretary or designee shall hold in confidence the identity of any person submitting a complaint, unless the person submits written authorization otherwise, and except to the extent necessary to carry out the purposes of this part, including the conduct of any investigation, hearing, or proceeding under this part. (e) When to file. Complaints shall be filed within 180 days of the last occurrence of the alleged violation, unless the time for filing is extended by the Assistant Secretary for good cause shown. For purposes of determining when a complaint is filed under this paragraph (c) of this section, a complaint mailed to HUD shall be deemed filed on the date it is postmarked. Any other complaint shall be deemed filed on the date it is received by HUD. (f) Where to file a complaint. A complaint must be filed with the Office of Fair Housing and Equal Opportunity, U.S. Department of Housing and Urban Development, 451 7th Street, SW, Washington, DC, 20410, or any FHEO Regional or Field Office, as stipulated by HUD. (g) Contents of complaint. Each complaint must contain the complainant's name and address, the name and address of the recipient alleged to have violated this part, and a description of the recipient’s alleged violation in sufficient detail to inform HUD of the nature and date of the alleged violation of this part. HUD may provide assistance in drafting a complaint on information received.