Sec. 3 Grantees to Face Greater HUD Scrutiny

The Housing and Urban Development Dept. releases a proposed rule to revise its Sec. 3 regulations. Programs guided by the Sec. 3 regulations are, to the greatest extent possible, to provide job training, employment and contract opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

Comment Deadline: May 26.

Public housing authorities must meet the Sec. 3 regulations, as well as the following programs:

Community Development Block Grant; HOME Investment Partnership Neighborhood Stabilization Program Grants; Economic Development Initiative Brownfield Economic Development Initiative; Grants Housing Opportunities for Persons with AIDS or HOPWA Homeless Assistance Grants; University Partnership Grants; and Lead Hazard Control Grants.

The Sec. 3 regulations haven’t been updated since 1994. The agency has tried to ensure compliance through requiring significant reporting of these grantees over the past two decades. Noncompliance has become a major issue over the past decade, thus the agency is in the process of revising the regulations. The proposed rule would make 11 significant changes, including the requirements that Sec. 3 grantees implement procedures and create regulations to ensure compliance with the regulations.

A significant change is the revised “new hire” definition. The previous Section 3 regulations established a goal for 30% of new hires to be Sec. 3 residents, regardless of the length of time that the resident is employed. As a result, the Sec. 3 regulations created a loophole, by allowing contractors to hire Sec. 3 residents for relatively short periods of time and this short-term employment met the new hire requirement.

This proposed new definition would close this loophole by redefining a Sec. 3 new hire for contractors or subcontractors as a person who works a minimum of 50% of the average staff hours worked for the job category for which the person was hired throughout the duration of time that the work is performed on the covered project.

Contact: Staci Gilliam, 202/402-3468

About Frank Klimko

Frank Klimko is a nationally known journalist, grants expert and speech writer/speaker. He has years of experience helping nonprofits devise lists of the right funding opportunities and secure funding from these foundations and corporate entities. Clients have focused on an array of areas including child care, homeless, hunger and K-12 education. Additionally, he is a Freedom of Information Act expert, who has helped numerous clients with securing proprietary information from the federal government. Currently, Frank Klimko writes the Children & Youth Funding Report and Private Grants Alert, which are Washington DC-based publications. CYF is a daily publication covering Congress, the Education Dept. and the various federal regulatory agencies. PGA, another daily publication, covers the world of private philanthropy.
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