June 23, 2016

Fulfilling HUD’s Commitment to Creating Economic Opportunities

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Photo: Man at a construction site.

A few years ago in New Orleans, Dwayne Shelley, a former resident of the Housing Authority of New Orleans (HANO), recalled how he systemically watched as HUD rehabilitated and rebuilt homes in his development after Hurricane Katrina. He complained that he and his neighbors were relegated to watching the progress while others came in and did the work.

Today, Mr. Shelley has a different story to tell. Thanks to construction skills he developed while working as part of a Section 3 program contract, Mr. Shelley had the opportunity to help create a new future for HANO.

That’s why Section 3 of the HUD Act of 1968 is such an important program. The Section 3 program requires that recipients of HUD funds, such as housing authorities receiving Community Development Block Grant funds – to the greatest extent possible – use a portion of those funds to provide job training, employment, and contract opportunities to local low-income residents, public housing residents and to the companies that significantly hire them.

HUD invests billions of dollars each year in economic development projects and opportunities for communities, so this program has the potential to be a big factor in the lives of the families who need it most.

Less tangible but just as important, Section 3 helps to foster neighborhood improvement and increase individual self-sufficiency.

The Section 3 program has always been a key component of HUD’s efforts to increase economic opportunities in neighborhoods, but in the past few years we have put new energy behind the program and taken more aggressive steps to provide low-income individuals with the training and jobs they need to lead productive lives.

Between 2012 and 2015, Section 3-applicable HUD funding generated more than 110,000 new Section 3 employees and trainees. Further, that funding was responsible for $4.8 billion in contracts being awarded to more than 26,000 Section 3 businesses. Read HUD’s new report on the impact of the Section 3 program here.

We also made significant progress in meeting, and recently exceeded, the program’s statutory requirement that 30 percent of all new jobs resulting from Section 3-applicable HUD funding be directed to local low-income persons. In 2015, low-income residents represented a record high, 53 percent, of new Section 3 hires.

During the same period of time, we expanded the Section 3 business registry, our online system that allows businesses to self-certify that they meet HUD’s definition of a Section 3 business. The registry began as a pilot in five metropolitan areas, but it is now a national resource that is connecting local businesses with HUD contracting opportunities. As of mid-April, about 2,100 businesses had indicated their eligibility to be considered for HUD-funded contracts.

And because we know that the success of any program hinges on the ease with which it can be accessed, we designated Section 3 points-of-contact in each of HUD’s 10 regions. In addition to fielding questions about Section 3, they reach out to resident boards, low-income community organizations, businesses, and jobs skills trainers to collaborate on the program.

But Section 3 is about more than just numbers. It’s also about the positive impact the program is having in the lives of low-income individuals trying to build a better future.

Take Mark Rogers. A five-year resident of the Cincinnati Metropolitan Housing Authority (CMHA), Mr. Rogers was making $10 an hour as a maintenance worker before a remodeling company with a CMHA Section 3 covered contract hired him. The father of two is now making twice as much, lives in a market rate apartment, and recently completed a homeowner’s class.

His story is just one example of the difference we make when our investments go directly to the individuals and families that call our nation home and are not limited to buildings and infrastructure.

In the coming months we will continue to work with cities and housing authorities to help them comply with the requirements of the program, push for additional Section 3 authority, and finalize a Section 3 rule that will clarify provisions of the program that are left to interpretation and formalize “best practices” utilized by high-performing housing authorities and entitlement grant jurisdictions.

We still have much to do, but we are proud of our Section 3 efforts and look forward to using this vital program to create the employment and contracting opportunities low-income individuals need the most.

Gustavo Velasquez is the Assistant Secretary for the Office of Fair Housing and Equal Opportunity.

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