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HUD Update: HUD Finalizes Revised Section 3 Rule and Provides Benchmarks

30 September 2020
 September 30, 2020
Category HUD News, News

The Department of Housing and Urban Development (HUD) announced the release of the final rule implementing the Section 3 statute that requires that recipients of certain HUD funds make economic opportunities available for low- and very low-income individuals. An interim rule has been in effect since 1994. This final rule updates HUD’s Section 3 regulations to create more effective incentives for employers to retain and invest in their low and very low-income workers, streamline reporting requirements by aligning them with typical business practices, provide for program-specific oversight, and clarify the obligations of entities that are covered by Section 3. Key changes in the rule and in HUD’s implementation include:

·         Focusing on key outcome metrics, such as the sustained employment of individuals in targeted populations.

·         Crediting retention of low- and very low-income employees and successful sustained employment in the reporting metrics.

·         Aligning Section 3 reporting with standard business practices and payroll tracking methods.

·         Allowing for tailored outcome benchmarks for different geographies and/or different projects.

·         Reducing reporting requirements for grantees who are meeting outcome benchmarks.

·         Integrating Section 3 oversight into the work of the program offices who are in regular contact with the grantees.

·         Promoting the newly created portal to connect low- and very low-income people, who need jobs most, with businesses who have Section 3 job opportunities in their area.

The final rule also includes a requirement that HUD set Section 3 benchmarks. If a recipient complies with the statutory priorities regarding effort and meets the outcome benchmarks, HUD will presume the recipient is following Section 3 requirements, absent evidence to the contrary. The final rule implementing the Section 3 statute will go into effect on November 30, 2020. 

Compliance Dates: Public housing financial assistance recipients must implement their Section 3 activities pursuant to these regulations and comply with the reporting requirements starting with the recipient’s first full fiscal year after July 1, 2021. These regulations are applicable to Section 3 projects for which assistance or funds are committed on or after July 1, 2021.

The Enhancing and Streamlining the Implementation of Section 3 Requirements for Creating Economic Opportunities for Low- and Very Low-Income Persons and Eligible Businesses Final Rule is here.

The Section 3 Benchmarks for Creating Economic Opportunities for Low- and Very Low-Income Persons and Eligible Businesses are available here.

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