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Homes and Community Renewal

Section 3 Compliance

Processing Overview

Monitoring and compliance is critical to ensure high levels of accountability and transparency in HCR's Section 3 program. FEHO staff will assist and provide ongoing technical assistance to recipients of Section 3 covered funding to help them meet the Section 3 goals and objectives. Our Section 3 compliance process will seek to improve overall monitoring, reporting, and tracking of Section 3 activity across all of HCR's Section 3 covered funding programs. Timeliness of reporting, accuracy of results, and continuous improvement toward connecting Section 3 residents to community and economic development, employment and contracting opportunities are paramount to HCR's success.

How Does Section 3 Affect Grant Recipients

The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent possible, provide job training, employment, and contract opportunities for low or very low-income residents in connection with projects and activities in their neighborhoods. Each recipient has the responsibility to comply with Section 3 in its own operations, and ensure compliance in the operations of its contractors and subcontractors.

HCR programs covered by Section 3 are HUD-funded programs that provide housing and community development assistance for housing rehabilitation, demolition, housing construction and other public construction projects such as roads, sewers, community centers, etc. All recipients of housing and community development assistance that invest in excess of $200,000 into projects or activities involving housing construction, rehabilitation, or other public construction must comply with Section 3. The requirements of Section 3 only apply to the portion(s) of covered funding that was used for project/activities involving housing construction, rehabilitation, demolition, or other public construction. However, Section 3 applies to the entire covered project or activity regardless of whether the activity was fully or partially funded with covered assistance.

For those recipients of non-construction housing and community development assistance, including down payment assistance, closing cost assistance, etc., New York State Homes and Community Renewal program staff will review on a case-by-case basis for the determination of Section 3 applicability.

How Does Section 3 Affect Sub-contractors

All contractors (or subcontractors) that receive covered funds in excess of $100,000 to complete projects involving housing construction, rehabilitation, or other public construction are required to comply with the requirements of Section 3.

Reporting Requirements

Annually, in accordance with 24 CFR Part 135.9, HCR is required to submit form HUD-60002 to HUD’s Economic Opportunity Division in Washington, DC. The Section 3 Summary Report shall follow the same program, fiscal, or calendar year as HCR’s annual performance report and will correspond to the covered projects and activities that were administered during the reporting period.

HCR’s Section 3 Annual Summary Report is intended to measure its efforts to comply with the statutory and regulatory requirements of Section 3 in its own operations AND those of covered Awardees, Contractors and Subcontractors.

HCR requires its covered Awardees, Contractors and Subcontractors to also submit its Section 3 performance using the HUD 60002 form to HCR’s Fair and Equitable Housing Office.
The Section 3 performance report is due to HCR FEHO quarterly on the 15th of the month following the end of the quarter throughout the program period for all recipients of Section 3 covered funding. 

All recipients are required:

  • To file regular quarterly reports on their Section 3 covered projects performance;
  • To file or compile their utilization reports to HCR FEHO to assist in compilation of the HUD Annual 60002 report.

How The Agency Can Help

HCR monitors its funding recipients for compliance with Section 3 requirements. HCR provides training and ongoing technical assistance for all its recipients, This includes, but is not limited to:

  • Templates, samples and other examples of program documents such as Section 3 Participation Plans, Utilization Reports, HUD 60002 Form, Section 3 Resident Certification, Section 3 Business Certification;
  • Podcasts of Section 3 training sessions, which include presentations targeted for contractors/developers, The Units of General Local Government, and residents; and
  • HCR Section 3 Policies and Procedures to help recipients understand their responsibilities under the HCR Section 3 Program.