Rule Proposed to Make Section 3 More Efficient and Effective

April 11, 2019

Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 that helps foster local economic development, neighborhood economic improvement, and individual self-sufficiency. The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent feasible, provide job training, employment, and contracting opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 that helps foster local economic development, neighborhood economic improvement, and individual self-sufficiency. The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent feasible, provide job training, employment, and contracting opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

HUD recently published a proposed rule to improve the efficiency and effectiveness of Section 3 within the HUD Act of 1968. The proposed rule can be found at https://www.hud.gov/sites/dfiles/Main/documents/FR-6085-P-01.pdf.

The changes in the proposed rule are intended to improve the effectiveness of Section 3, streamline some processes that don’t yield significant benefits, and encourage PHAs and HUD grantees to focus on career ladders for low-income people, all with the aim of increasing the long-term earnings of HUD-assisted households. The changes in the proposed rule seek to improve effectiveness by:

  • Focusing on key outcome metrics, such as the sustained employment of targeted populations;
  • Crediting retention of low-income employees and successful sustained employment in the reporting metrics;
  • Aligning Section 3 reporting with standard business practices and payroll tracking;
  • Allowing for tailored outcome benchmarks for different geographies and/or different activities;
  • Reducing reporting requirements for grantees who are meeting outcome benchmarks; and
  • Integrating Section 3 into the program offices that are in regular contact with the grantees.

The proposed rule is a result of a taskforce and feedback received from listening sessions held with small and large PHAs, grantees, multifamily property owners, and other entities involved with Section 3. Interested members of the public are encouraged to submit comments on the HUD proposed rule by June 2, 2019. Comments can be submitted at www.regulations.gov.

Topics