Editorial: “More on Section 3” by Clem Richardson

It is arguably the most poorly enforced and yet potentially powerful federal statute, a twenty-five-year-old law that taps into billions of already allocated dollars to provide jobs and work skills training to thousands of our nation’s most vulnerable citizens.

Supporters say if used as intended when it was passed, Section 3 of the Housing and Urban Development Act of 1968 could be a game changer for low and very low-income people and neighborhoods around the country. Its use could transform the New York City Housing Authority, local advocates say, by providing public housing residents incomes that would not only help the agency reduce its staggering delinquent rent rolls but also give many life changing benefits like healthcare and payments into Social Security and retirement accounts.

Section 3’s superpower is that no new money need be delegated to the program - some $18 billion in annual HUD contracts fall under its authority nationally, billions of those dollars in New York state and New York City, administered here by NYCHA, which, as the largest public housing authority in the country, each year receives the largest allocation of federal housing dollars.

Even a small percentage of those billions can provide jobs and training for a significant number of people. A Section 3 designated percentage of the massive housing funds sent to the city each year could be the life breath not only for thousands of resident workers but also for small, minority and women owned businesses working as subcontractors on large NYCHA jobs.

If you have an eighty-million-dollar project, the Section 3 requirement is going to be a small percentage of that,” said former NYCHA Executive Vice President for Real Estate Takesia Whites, who holds a master’s degree in urban policy analysis from the New School and has worked in city government as a housing planner in the Bronx Borough President Fernado Ferrer’s office as well as for the non-profit New York City Housing Partnership and the Enterprise Foundation. “But even if you dedicate just five percent of that to Section 3, that’s still millions of dollars to spread around. You give a small contractor $200,000 to paint a building lobby, that is a significant investment in that business, if you can ensure that that local contractor gets the contract.”

“The way to make Section 3 successful is you have to have some sort of mandate in place, because if you don't make people do it, unfortunately, most people and I'm not gonna say all but most, don't do these things out of the goodness of their hearts. They do it for money,” Whites said.

“There's a lot of money now going into public housing for physical renovation, so there's an opportunity to use Section 3 in a way that there really wasn't when there were so many decades of disinvestment” in public housing, said New School University Professor Alex Swartz, who has studied ways NYCHA can improve training and business opportunities for its residents. Section 3 has broader implications.

It could potentially add untold numbers of skilled electricians, plumbers, carpenters, draftsmen, and other trades to a city’s worker ranks – an outcome anyone who has ever needed and been unable to locate such help would appreciate.

And by improving job skills among low and very low-income individuals it can reduce a city’s public assistance rolls and lift median income levels in whole communities.

“This is an area of public housing which has seen extraordinarily little attention over a very long period of time,” said Swartz. “It's there on the books, but I'm not aware that it's been taken seriously. There may be challenges getting residents, especially those who don't have a lot of work experience or face issues of discrimination, it's gonna be difficult for them to get jobs in the building trades. “But housing authorities could at least try.”

Like the civil rights act from which it was spawned, Section 3 has been under attack almost since it became law. Head-on opposition is hard to document. Rather, politicians have worked surreptitiously to reduce compliance requirements, contractors have skirted hiring rules and in New York City, NYCHA has allowed them to do so.

In 2020 the Trump administration changed the mandate so that HUD no longer requires that construction companies with Section 3 eligible contracts need not report the names of Section 3 hires, or the jobs performed, only the hours they collectively worked.

The change allows contractors more hazy reporting in showing they met Section 3 mandates.

Section 3 proponents say those changes have resulted in fewer hires, with many of those lucky enough to find a Section 3 job being relegated to low skill labor like moving traffic cones as construction materials and equipment are delivered to a project, not in real job training.

“With too many of these contractors the way the process is set up they’re not producing skilled craftsmen, they’re producing laborers,” Pearson said.

Smaller firms looking to subcontract Section 3 work with contractors working NYCHA jobs say the larger companies often either don’t return their calls or require the small company hold such costly certifications and insurance upfront that they can’t afford the work.

“You have to put in a whole bunch of money upfront before you can even think of getting one of these contracts,” said Shannon Bryant of Brooklyn based B & S Construction. “And you might not get the work anyway.”

Another Brooklyn minority contractor who asked not to be named said contractors did not return his calls even after he was awarded a Section 3 contract.

“I feel like I’m standing in line and when I get to the counter, I still can’t get something to eat,” he said.

That sentiment was reflected at a recent New York City Council hearing on Section 3, where a worker told Councilwoman Alexa Aviles, chairwoman of the council’s Committee on Public Housing, that Section 3 employees are “the last hired and first fired.”

Section 3 has enjoyed some success in other parts of the country, most notably in Chicago, where it has been credited with being the financial root of several successful start-ups and with creating jobs in underserved communities.

Supporters think it should do the same on every HUD financed project.

But like other groundbreaking legislation of that turbulent era – the Equal Employment Security Act, the Voter’s Rights Act, The Fair Housing Act – Section 3 has been under attack since it was enacted.

It’s an easy target. As noted in the 2008 study, “The Scope and Potential of Section 3 as Currently Implemented” by Deborah Austin and Michael Gerend for the Journal of Housing and Community Development Law, there is no wording in the statute that allows for punishing contractors who do not follow its mandate or under which workers or companies with a Section 3 related hiring grievance against a contractor can seek redress.

“The statute does not provide a private right for action or remedy, and the regulations offer limited viable enforcement tools,” the study said. That leaves Section 3 enforcement to NYCHA, with HUD oversight. Despite the staggering amounts of money involved that is not happening, as the New York City Council joint hearing on Section 3 laid bare.

In their 2008 paper, Gerend and Austin cited sixteen HUD funding streams applicable to Section 3 mandates, including the Public Housing Operating Fund, the Public Housing Capital Fund, the Native American Housing Block Grant, and the Housing Trust Fund.

The sixteen funding streams totaled $21.6 billion. Calculating at 22.5% (the median between Section 3’s 15 and 30 hiring percentages) of that money being spent on hires, Gerend and Austin estimated more than 112,000 new jobs could have been created if Section 3 mandates were “well implemented and enforced.”

HUD’s 2023 budget was $71.9 billion, with a proposed $177 billion 2024 budget - $100 million of which is earmarked for creating more affordable housing, the construction of which would presumably fall under Section 3 mandates. NYCHA proposed a $106 billion 2023 budget and expects to finish the year in a deficit because of falling rent receipts.

Yet at the May 19th hearing NYCHA officials said contractors reported fewer than three thousand Section 3 hires to the agency last year.

NYCHA officials at the hearing said one and half agency employees were tasked with monitoring 800 contracts involving Section 3 hires. Which is Section 3’s dubious distinction.

Even with a dizzying amount of money available and construction abounding in public housing projects across the five boroughs as the city implements the Obama era Rental Assistance Demonstration (RAD) program and court-ordered lead abatement mandates, contractors who do not want to anger unions labor they depend on to put together these very profitable projects avoid Section 3 hires and minority and women led business enterprises interested in a piece of that money. And nobody is making them do otherwise.

“In regard to Section 3, it is astonishing how they have gotten away with this massive disinvestment of billions of dollars over the last ten years,” said Manuel Martinez, the South Jamaica Houses Tenant Association President who also sits on a NYCHA committee examining how Section 3 is used. “We’re not significantly impacting the population that can be affected by Section 3. “Section 3 could be to New York City what Ford was to Detroit.”

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America was burning, riots roiling in hundreds of cities following the April 4 assassination of Rev. Martin Luther King Jr., when President Lyndon Johnson signed the Housing and Urban Development Act of 1968 into law on August 11. The HUD act is usually overshadowed by the landmark Civil Rights Act of 1968 - Johnson signed into law on April 11 – which was cosponsored by New York Democratic Representative Emanuel Celler and Massachusetts Republican Senator Edward Brooke and extended the powers of the Civil Rights Act of 1964, itself a landmark bill that prohibits discrimination based on race, sex, color, religion, or national origin.

The 1968 Civil Rights Act expanded the ’64 bill by including enforcement tools in the legislation. It included the Fair Housing Act, the first time the nation federally prohibited discrimination in the sale, rental, or financing of housing. Brooke said the Act’s overall intent was to use dozens of government programs to provide “a decent home and a suitable living environment for every American family.” But it was the Housing and Urban Development Act, which Johnson at the signing described as “the most farsighted, the most comprehensive, the most massive housing program in American history” that included Section 3, an intuitively genius evolution in government programming because of its simplicity. In delegating that a portion of already awarded government funds were to be used to hire ‘low and very low income’ people, preferable from the community where the work was being done, Section 3 eliminated the need for yearly Congressional appropriations, expressly dodging annual partisan funding fights like those now crippling Congress.

At the time the HUD Act became law HUD was maintaining thousands of public housing units that millions of people across the country called home. In 1935 HUD built the first public housing in the country, Atlanta’s Techwood Homes project, as part of President Franklin Delano Roosevelt’s New Deal – and evicted five hundred indigent families living in a then shanty town to do it. Note that Techwood Homes, named for nearby Georgia Tech University, included 604 units, 129 of them with garages. Black people could not rent in the segregated complex.

Early public housing was a far different place than the imagined home of movie style violence people who don’t live there fear them to be today. Filmmaker Selena Blake’s “Queensbridge; The Other Side” documentary, available in more than fifty New York City public school libraries, tells how public housing residents were once offered training and educational programs like language arts skills that would help them get better jobs and eventually move out and buy homes. Many of those life and career enhancing services were curtailed as segregation ended and black and Hispanic residents moved in.

The heroin epidemics of the 1960s, President Richard Nixon and US Attorney General John Mitchell’s successful whisper campaign to unfairly tie Blacks with the drug trade and associated crime, and the influx of lower income, less upwardly mobile residents dubiously branded housing projects as criminal epicenters in their respective communities, a characterization that continues today.

Yet while its image may be less than savory, public housing has continued to be a much-sought commodity. Countless families have proudly called the projects home for generations, and many pay market rent.

As of September 2023, 250,000 people were on the NYCHA apartment waitlist, according to NYCHA Press Secretary Michael Horgan. In January 1973 Nixon placed a moratorium on almost all public housing programs but reinstituted many construction projects before his August,1974 forced resignation.

But in the early 1980s President Ronald Reagan began a downward shift in public housing construction that continues today. Chicago – where Section 3 has enjoyed remarkable success creating jobs and minority and women business enterprises (MWBE) – in 1996 demolished hundreds of public housing units, including the notorious Cabrini-Green projects. Dislocated families were given several options, including vouchers to purchase living space in adjoining towns. Yet the Chicago Housing Authority, under a 2013 HUD non-compliance order, did an about face and pushed Section 3 business creation for its residents, offering detailed instruction on how they can access Section 3 work or apply for contracts through its Workforce Opportunity Resource Center, which provided everything from direct job placement services to connecting contractors with Section 3 businesses.

In 2018 HUD waived the final year of a five-year Section 3 compliance agreement with the CHA, finding that the agency exceeded compliance goals. According to the Weekly Citizen newspaper group, CHA awarded 19 percent of more than $914 million in contracts let during that period to Section 3 businesses. Nationally, by 2019 HUD was still maintaining 1.1 million units of public housing, home to 2.2 million people in over 3,000 local public housing agencies across the country. The New York Housing Authority, with more than 500,000 residents in 335 developments across the five boroughs, is the largest agency in the country. (The 55,840-unit Puerto Rican Housing Administration is second, the 26,333-unit Chicago Housing Authority third, according to the Housing Futures blog.)

NYCHA administrators in March proposed a $106.7 billion 2023-2024 budget. It is difficult to discern how much of that figure would fall under Section 3 purview.

But that opacity is common when it comes to details about Section 3, as evidenced at the May 20 joint city council hearing on NYCHA hiring and Section 3 conducted by District 48 Councilwoman Alexa Aviles, chairwoman of the council Committee on Public Housing, and 10th District Councilwoman Carmen De La Rosa, chairwoman of the Civil Service and Labor committee.

More on that later.

HUD’s projected 2024 budget dedicates  $8.9 billion “for the operation, maintenance, and capital improvements to approximately 917,000 affordable public housing units…serving over 1.7 million residents in 860,000 households, over half of whom are extremely low-income,” according to HUD’s budget in brief website.

If only one HUD listed category, say the $3.4 billion capital improvements, was subject to Section 3 overview, $1 billion of those funds would be available nationally to hire and train low and very low-income people in a range of job skills or for contractors to hire subcontractors, a potentially vital lifeline for a small business.

NYCHA is currently under federal monitorship. The US Attorney for the Southern District sued the agency in 2019, finding “for years NYCHA had violated and was continuing to violate basic federal health and safety regulations, including regulations requiring NYCHA to protect children from lead paint and otherwise provide decent, safe, and sanitary housing,” and that “NYCHA repeatedly made false statements to HUD and the public regarding its lead paint compliance, and intentionally deceived HUD inspectors.” NYCHA, HUD found, needed to “fundamentally reform its operations and remedy living conditions for its residents, including lead paint hazards, mold growth, pest infestations, lack of heat, and inadequate elevator service.”

Under an accord with HUD the city agreed to spend $1.2 billion over five years (2019 – 2024) to correct the poor conditions and to add another $4 billion to the effort through 2027. That’s over $5 billion from the city alone to correct issues – lead paint removal, repainting, vermin eradication, plumbing and elevator repair – skills tailor made to be a Section 3 training and hiring windfall. But city money is not subject to Section 3 oversight, only federal funds administered by HUD - a significant wrinkle Section 3 supporters face in trying to get more people employed and trained under the mandate. But a significant amount of NYCHA’s $4.4 billion 2023 budget is Section 3 mandate eligible – even though the agency projects a $31 million deficit caused by falling rent receipts.

NYCHA is a city agency, but other than the desultory changing of the chairmanship when something goes wrong, - like in 2016 when HUD found that NYCHA claimed lead paint removal it never performed and HUD never inspected - NYCHA runs virtually independently of city administration, answering primarily to HUD, the agency holding the federal purse strings. It’s an often-convenient relationship for the city’s mayors, who come a fiscal crunch or publicly embarrassing crime with NYCHA connections can blame the poor conditions in housing projects across the city to a lack of federal dollars and oversight.

NYCHA meanwhile knows it need not sweat local political interference.

Jamaica House Residents Association President Martinez said a local politician once declined to join a campaign aimed at expanding Section 3 use in NYCHA projects because of anticipated backlash from local craft unions whose members now get those jobs.

“This would seem to be a very easy thing for congressmen or city councilmen to support, right especially folks who have a lot of projects in his or her district,” Martinez said. “They should get behind this because these are jobs for our people, and I can sell this when I go to campaign again.

“How come it's never risen to that point where people are actually giving a damn about it?” Section 3’s unmet potential was central to the discussion as Councilwomen Aviles and De La Rosa held their joint Section 3 hearing. They weren’t the first. New York Congresswoman Nilda Velasquez (D-7th District), a senior member of the House Services Committee which oversees HUD, has introduced several bills over the course of her 31-year legislative career aimed at tapping Section 3’s potential. Velasquez’s “Earnings and Opportunities Act of 2009,” tried to give the statue teeth by having worker complaints filed under the Administrative Procedures Act. This would have allowed court review of administrative rulings. The bill languished in the Republican dominated House.

Velasquez made another attempt with the “Section 3 Modernization and Improvement Act of 2015" but again was undone by political reality. “Federal housing funding is one of our most powerful tools for creating economic opportunity in traditionally underserved communities," Velázquez said in a press release announcing the 2015 bill. "We must ensure that we fully leverage these resources to maximize job creation for families living in New York public housing developments." But vicious partisan politics – and Republican majorities - that followed Donald Trump’s 2016 election meant the bill went nowhere, said Velazquez spokesman Michael McGinnis.

“Then when Democrats finally get back into the majority in 2019, there was initially this focus on capital improvements for public housing, especially in the wake of some of the issues that NYCHA was having around mold and things like that,” McGinnis said. “That was a big priority for her. And then, of course, right after that happened, we got COVID, which, on the housing front scrambled a lot of things. The focus immediately went to keeping people in their homes, providing rental assistance, and just generally supporting people through the pandemic.”

Politicians are not the only Section 3 advocates.

J. Keith Swiney, founder of the DC based Motivation Inc., Compliance and Training Company, offers clients, mostly housing authorities and government agencies, detailed plans on how to access Section 3 monies and comply with HUD’s evolving Section 3 guidelines.

Critics say Motivation’s course includes ways to avoid Section 3 compliance.

Raquel Williams-Jones is a former project resident and welfare recipient who as the “Welfare Escape Artist” offers a variety of trainings to housing authorities and residents on how to access programs leading to financial self-sufficiency, including a ‘Free Section 3’ seminar.

Williams-Jones once toured the country in a personalized bus with ‘Ask Me About Section 3’ painted on the exterior in big block letters.

Section 3 was groundbreaking in providing a self-funded, job training option for some of America’s most economically vulnerable.

But in limiting Section 3 oversight to HUD and omitting any viable means by which individuals and small companies can force developers and contractors to spend Section 3 bucks as the legislation intended it weakened the law in the contractor’s favor, lending itself to a host of flagrant methods contractors use to avoid employing the people it was intended to help.

The funds instead stay in contractor wallets or in those of the labor union members who work for them.

Section 3 “has been on the books for decades and I think it’s been honored in the breach almost from the get-go,” said New School University Professor Swartz. “I don’t think it ever has received much serious thought or policy response. There's very little written about Section 3, even though the idea of employing residents for capital improvements and so on is really important.”

In 2022 Swartz and several of his New School students conducted a Section 3 study for NYCHA on how the agency could create more job and business opportunities for residents by leveraging the billions of dollars the agency is receiving as part of the PACT (Permanent Affordability Commitment Together) program.

NYCHA’s PACT program spearheads the agency’s “comprehensive renovations, enhanced property management, and expanded on-site social services” at several projects. Last year, the PACT program “drove $2 billion in large-scale improvements for NYCHA residents in 8,531 apartments across 17 developments,” according to the agency produced NYCHA Journal.

While what ‘drove’ means in that context is uncertain, hundreds of millions of dollars are being spent to make essential repairs on thousands of NYCHA properties, work broadly classified by HUD as capital improvements.

Capital improvement funds are subject to Section 3 mandates. 

Yet recent calls to Section 3 contract eligible companies listed on NYCHA’s website show that few had found work under the law.

Several of the listed businesses cited a host of problems trying to secure Section 3 work, including not receiving promised callbacks from NYCHA as well as the often-prohibitive cost of acquiring equipment and labor certifications required to get subcontractor jobs with no guarantee that they will get the Section 3 work.

“I’ve done one job with NYCHA,” said one Bedford-Stuyvesant based small contractor who asked not to be named. “I got six different bids that they told us we won but we never heard back from them. Sometimes you call and you can’t get the right people, they send you all over the place.”

The contractor said the often-voluminous, time-consuming paperwork NYCHA required to submit a bid was another obstacle. Even though his company has lead and asbestos removal licenses and is a New York State certified minority and women business enterprise, he wondered “how come all of this construction is going on in my neighborhood and the people doing it say they can’t find anybody who has been approved to do the work?”

The businessman said he asked his community board, which must review construction projects approved for the area, why there are no programs to ensure minority businesses get a chunk of the work.

“Just like you looked me up online, it’s not hard for someone else to find me,” he said. “Why won’t they give me a job so I can hire people from the neighborhood when everybody I see working in the neighborhood is from Long Island or New Jersey?

“It’s the big contractors monopolizing the jobs,” he said. “They feel they don’t have to deal with anyone else other than the companies they already work with. Some of them even set aside the money to pay a fine for not meeting a requirement as part of their bid, so the fine is covered.

“How come the mayor or someone doesn’t do something about this?” he said. “I’m tired of standing in line. I feel like I did all the things to get to the counter and still can’t get served.”

Sonji, president of Brooklyn based BATS Inc. construction, said often the costs associated with taking on a subcontractor gig can be too much for a small firm like hers. While her company has gotten many requests from contractors doing NYCHA work, she said BATS has turned the work down because of the high startup costs.

“They might have a job like cleaning the oil out of equipment,” she said. “You have to get the guy who has the equipment, pay him, then have to wait to get paid after the job is complete. You have to put in a whole bunch of money upfront before you can even think of getting paid. Not a lot of small companies have that kind of money.

“And you might not get the work anyway.”

Labor law – and more importantly labor unions - can also be a bar to small contractors and non-union workers seeking Section 3 contracts.

All construction work is temporary; the day after the job is completed everyone on it is looking for work. Under New York State law, anyone in business for themselves is considered an independent contractor, a term which covers most construction workers who are not employed by a particular company.

Contractors sign a project labor agreement (PLA) governing each site that spells out the employment terms and conditions for that site. The PLA also covers the terms for employment of union members. Like most organizations, unions are primarily concerned with keeping union members employed. It is unclear if employment of Section 3 workers is necessarily covered in each PLA.

But under the Employee Retirement Income Security Act (ERISA), any employe who works one thousand hours on a job in a year is entitled to the same retirement benefits offered to other company employees.

Many Section 3 workers are shown the door before reaching those hours.

“The construction trades are notoriously exclusionary,” said New School Professor Swartz. “They have really bad history in terms of hiring women (and) people of color in skilled trades. And a lot of this (Section 3) work is in construction.

“So there's an issue about how do you set up apprenticeships and other kinds of programs to try to get residents in these areas?”

The easiest way to ensure contractors fulfill Section 3 mandates would be to hire someone like her to oversee the process, said Shelevya Pearson, president of Better NYC Broker, which pairs workers with contractors.

“The contract manager and the general contractor have to comply with the project labor agreement,” she said. “It is the contract manager that has the issue with putting the team together in the first place, because he has a lot of rules to abide by. How did you make that work as the person that's in the management position?

“Many of these companies aren’t equipped to create an entire program which would be beneficiary to everyone,” she said. “I mean, yes, I have a personal agenda, but I still feel like everybody can come out on top. You just need to have a level of transparency and you need to do what is best for people and the company.”

“The project labor agreement isn't the problem,” Matinez said, since it gives a union forty-eight hours to supply a qualified person on a job, which after that consideration can be a Section 3 hire. The PLA also allows the contractor to hire non-union workers if a qualified union member can’t be found.

“The project labor agreement is a contract, so if that contract is violated or obstructed someone’s access to the law that contract would be void,” Martinez said. “NYCHA likes to say the project labor agreement is a problem because they know when they say that most people will drop the discussion.”

The larger problem is racism, Martinez said.

“We’re so scared in New York City to say racism, because we want to believe the illusion so much that we discount what we see happening around us,” he said. “Racism is not about sharing the opportunity. It's about actively imposing a certain kind of lifestyle on a certain amount of people.”

Noting a 2021 Civil Rights Project report that found New York City has the most racially segregated school system in the country, Martinez said that attitude extends throughout city and government agencies, and labor unions.

“Ninety percent of NYCHA employees who deal with the public are people of color, but ninety percent of the people who make the decisions are white,” he said.

Unions have the same issues, he said.

With so few public schools teaching building trade skills nowadays those skills are learned on the job, mainly passed on generationally in families and communities. “Remember at one point you were able to come out of high school with the ability to be a carpenter or painter,” Martinez said. “They took that away from us.

“When you look at the history of unions and people of color, that’s never been a good relationship, especially in the trades,” he said. “They’re obstructing Section 3 workers because they’re not a part of the union.”

Some contractors have even instituted a “pre-apprenticeship” program potential workers must complete before they can work apprenticeship jobs that can lead to union membership.

Gary LaBarbera, President of the Building and Construction Trades Council of Greater New York, which represents local affiliates of 15 national and international unions, endorsed pre-apprenticeships in a statement for this article.

“It is a key function of the unionized construction industry to provide a pathway towards the middle class and real economic stimulus,” LaBarbera said. “We firmly believe that the creation of good paying career opportunities for low income and working-class New Yorkers is absolutely crucial and must be at the core of any housing development plan, but especially for projects within these communities. This is why we partnered with the City of New York in our most recent project labor agreement to prioritize opportunities for residents of zip codes where 50 percent of the population is below the federal poverty line.

“Additionally, BCTC makes a meaningful effort to make our world class pre-apprentice and apprentice programs accessible in these communities,” the statement continued. “They help individuals learn a craft, earn a living, and prepare for a career in a unionized trade so that they can capitalize on the opportunities being created by these projects. We are currently working towards a project labor agreement with NYCHA to help provide increased training and employment opportunities for Section 3 workers. Some of our affiliates also work with NYCHA beyond our project labor agreement to provide Section 3 workers even more opportunities.”

Pre-apprenticeship programs are bogus, Pearson said.

“What in the world is a pre-apprentice?” she said. “You’re in a program and you're not even an apprentice? The person is really interning, but they call them pre-apprentices. That gives a business like a general contractor or a union permission to pay you a much lower rate.”

Ideally a contractor would want to hire a Section 3 worker with a union card, Pearson said. Though City Councilwomen Aviles and De La Rosa said Section 3 workers complained of being “last hired and the first fired,” Pearson knew at least one reason why this happens – ERISA and the benefits that come with it.

Yet rather than being seen as a threat to unions, Section 3 workers could expand available trade skills in a community and would also help unions grow their memberships, Pearson said.

“We need to invest in people's education,” she said. “Schools are not teaching trade skills anymore. You used to be able to take shop in high school. (Now) it's very limited. There's a lot of different schools that are focused on (construction) trades, none in these type of low-income neighborhoods. That doesn't exist.

“Others are being prepared from the beginning, but our children are not being prepared,” she said. “They're telling you to go get a college degree that's going to be meaningless.”

Martinez said he suspects consultant fees paid on various projects may also claim some Section 3 eligible funds. He said selling public housing residents on taking Section 3 jobs is also difficult because a documented raise in household income triggers a NYCHA rent increase for that household.

But since construction jobs are all temporary, residents fear being stuck with higher rent even though the job has ended and no money is coming in.

While serving on NYCHA’s Section 3 committee Martinez said he used the agency’s transparency initiative to examine over $12 billion in contracts signed from 2011 to 2022. He said he found over 700 sealed bids, most for Section 3 eligible capital construction projects, worth over $6 billion over the eleven-year span. Sealed bids are used to prevent collusion between bidders.

“The research I’m really interested in is how much of that money is going to consultants,” Martinez said. “How much of this money is going to organizations that have no impact on the job at hand.

“We only see five cents of every dollar that comes into our community because they’re splitting it up.”

 

The conundrum that is Section 3 as practiced in New York City – the overwhelming need and lifechanging potential, the mountains of money involved and NYCHA’s desultory oversight of how the windfall is spent – ran rife through testimony at the May 20 City Council joint committee hearing.

It was the first city council discussion of Section 3 in four years, and long overdue, said Fraynette Familia, De La Rosa’s communication director.

“Section three is unique in that it ties in a couple of the crises that we see in the city,” Familia said. “There is a compounded housing crisis that includes homelessness, the asylum crisis, the shelter system, the city, feds, NYCHA, vacancies, etc. Section three is an interesting communion of these major issues that we've had a lot of conversations about.”

The four-hour long hearing was the first on Section 3 since 2009, Aviles said. That year NYCHA held that 5,700 people had been helped through the Section 3 program.

But Aviles said recent reports to HUD showed that despite the millions of dollars NYCHA has received subject to Section 3 mandates the agency not only failed to meet Section 3 hiring quotas for years, workers also often found themselves to be the “last hired, first fired,” and complained they were given the “lowest wage jobs, no managerial opportunities and (had) very shady contractor experiences.”

Aviles said she hoped “to learn how many residents NYCHA’s Section 3 programs are helping and how many actual residents and businesses are being given contracts.”

In her opening remarks committee co-chairwoman De la Rosa cited a 2021 Community Service Society report that estimated 22-percent of public housing residents were unemployed. De La Rosa also noted that as of December 2022 NYCHA reported that nearly half of its residents were behind on rent payments.

“As the City recovers from the economic devastation of the pandemic, Section 3 should be utilized as a tool to aid public housing residents in need”, De la Rosa said. “Section 3 hiring is urgently needed to help residents find work and expand their career paths.”

De la Rosa added that she was “deeply disappointed that the numbers posted on NYCHA’s website and the documents NYCHA submitted to HUD show that the agency has failed to meet their Section 3 goals in both hiring and contracting.”

There was glowing testimony on how Section 3 changes lives.

Van Dyke Houses resident Niani Taylor credited Section 3 and NYCHA’s Business Pathways program with helping her launch a successful catering business that has included jobs on Governor’s Island.

“Even now after all these years post-graduation the NYCHA teams continue to provide me with business resources and market access opportunities that help me grow my business,” Taylor said. She urged lawmakers to get the city to pay vendors more quickly.

Cornell Robinson, a resident of the Forest Houses in the Bronx, credited NYCHA’s Resident Training Academy with helping him launch his catering business, including “paying for my business registration,

providing food business classes, business coaching, and food industry resources.”

His business is listed as a Section 3 business concern on the agency’s supply vendor portal.

Ingersoll Houses resident Robert Wells spoke of the difficulty he has had finding Section 3 work, especially after he was hurt on the job.

 “Just to be able to apply for a contract is not enough,” Wells said.

Joining them in testifying to Section 3 benefits and the successful work of NYCHA’s Office of Resident Economic Empowerment & Sustainability (REES), which helps residents increase their ‘income and assets,’ were Queensbridge Houses resident Infinite George, Arlene Sano Henry and Jasmine Byrd, both of the Grant Houses, and Justice Favors, Director of Strategic Partnership at the Construction & General Building Laborers Local 79, where several of the speakers were members.

George said his REES training and union membership was his “path to the middle class.” Byrd told how union membership helped her afford her diabetes medicines.

NYCHA’s fielded top representatives for the hearing: Vice President for Design and Construction Matthew Charney, Senior Director for Resident Initiatives Shanna Castillo, Chief Procurement Officer Sergio Paneque, and Chief Asset and Capital Management Officer Shaan Mavani, with others waiting in the wings.

“Connecting residents to high-quality job training and employment opportunities is an integral part of NYCHA’s mission to strengthen communities across the city,” Castillo said in opening remarks, noting that the agency’s REES program “helps residents increase their income and assets through programs, policies, and collaborations in the areas of employment and career advancement, adult education and vocational training, financial empowerment, and business development in all five boroughs.”

NYCHA’a Resident Training Academy has “provided residents with employment-linked training in maintenance, painters' apprenticeship, construction, janitorial services, and pest control, equipping residents with the knowledge, skills, and industry certifications they need to succeed,” Castillo said. “Since its creation in 2010, 3,486 residents have graduated from the NRTA, 89 percent of whom have gained employment at NYCHA or with NYCHA vendors or employers.”

Castillo also announced the creation of the NYCHA Clean Energy Academy, a partnership with the nonprofit Fund for Public Housing, that will train 100 residents for “cutting-edge clean energy careers.”

Each NYCHA contractor is required to do individual Section 3 hires, and NYCHA residents can also apply to have their skills assessed by the REES program before being assigned to a contractor, Castillo said.

Since 2020, when the Trump Section 3 revisions were instituted, Castillo said NYCHA requires that 25 percent of all labor hours on applicable projects be worked by Section 3 hires, and five percent of all labor hours be worked by “targeted Section 3 workers.” Targeted Section 3 workers include low-income residents and those receiving Section 8 federal rent subsidies.

NYCHA has also undertaken several ‘internal enhancements’ to improve Section 3 implementation, including ‘centralizing Section 3 compliance tracking under the Procurement Department, launching new technology to improve Authority-wide visibility of contractor commitment and performance, and diversifying employment offerings by extending resident hiring requirements to building management.”

NYCHA requires contractors paying the prevailing wage to submit certified payroll data online to verify Section 3 employees on the job. And in 2020 the agency created the internal Section 3 and MWBE First policy to “give first preference to Section 3 Business Concerns (S3BC’s, businesses majority-owned or operated by Section 3 residents,) and then to Minority and Women-Owned Business Enterprises (MWBE), for all procurements up to $250,000,” Castillo said.

In addition, in February NYCHA hosted a Section 3 and MWBE ‘speed networking’ event at Manhattan Community College to drum up Section 3 eligible businesses to contract with the agency. 

Between 2019 and 2022 over 3,000 purchases worth more than $80 million were awarded to Section 3 businesses, according to NYCHA hearing testimony.

That 80 million in contracts produced about 1570 jobs.

From the hearing transcript:

 “In 2021, 314 hires or 20 percent of hires under NYCHA’s completed capital projects and operations contracts subject to the old HUD rule were Section 3 hires, an increase over 13 percent in 2019 and 14 percent in 2020 but falling short of the 30 percent benchmark for these contracts.

However, through 2022, all PACT projects subject to the old Section 3 rule where construction is complete exceeded the required benchmark of 30 percent, with 356 hires or 58 percent qualifying as Section 3 hires in total across five completed projects.”

“Hiring residents is not just a mandate but is integral to the culture of our organization. Residents make up about 20 percent of NYCHA’s workforce,” Castillo said.

But when Aviles wanted to get specific, the answers were less direct. The following exchanges are taken from the hearing transcript, which is available on the City Council website.

Aviles: “So who within NYCHA is responsible for overseeing Section 3 hiring?

Castillo: “Section 3 is a multi-department approach at NYCHA as stated in the testimony.”

Aviles: “So when you say administering departments, what-“

“Departments that administer contracts,” Castillo said before yielding the microphone to Paneque, who explained that when NYCHA issues contracts, “those goals are set forth for the vendors to meet those requirements under HUD, and then as-- and those vendors are required to meet those responsibilities and those outreach and whatnot. And when they issue invoices back into NYCHA for payment, they’re required to present hiring or labor summaries in support of their work to those goals and efforts.”

Aviles asks for details: “Who is in charge of these hiring metrics? Where does it move? Residents don’t have any idea how to track any of this. So could you help us walk through?”

Paneque replies that “from a reporting and compliance standpoint, Procurement is responsible for reporting all vendor-related hires.”

Aviles asked how Trump administration changes have affected NYCHA’s hiring under Section 3.

Paneque said the change means no reporting of new hires but of “hours recorded, the actual labor-related to the work requiring performance.”

“How does NYCHA track?” Aviles asked. “Is it-- is there a projected hour stipulation at the front end when the contracts are awarded? Does it modify during the life of the contract? How do you know you’re meeting that?”

Paneque said once onboard vendors provide “an REO plan, Resident Engagement Opportunity plan. (Castillo corrects him that it is the Resident Economic Opportunity plan) which is configured according to “either the hiring plan under the old goals or the labor hours under the new goals.” Once the project is completed and invoices for payment are presented the vendor “is required to submit a summary of those outcomes to the programs who review those invoices and then provide them to Procurement for reporting purposes.”

The agency’s new data management system, scheduled to go online in 2024, will make it easier for NYCHA to monitor contractors’ compliance with Section 3 rules, Paneque said.

Aviles again pressed for specifics: What is the total reach of Section 3 hires? How many were made in Fiscal 22 and Fiscal 23 year-to-date? And how does that compare against HUD goals for Section 3?

Section 3 reporting for those years is “challenged” as NYCHA transitions from a paper to electronic filing system, Paneque said.

“The current data is not reliable to present to the committee at this time” but should be available by the end of the quarter, he said.

Aviles: “So, from a compliance perspective you’re not able to report on actual hires. However, how are you vetting contracts?”

The new system is still being put in place, so contracts continue to be evaluated by the old criteria, Paneque said.

Aviles asked how many contracts are under each evaluation process. Paneque said he will have to get back to the committee with that since the lag time between contract signing and the work being completed can be year to year.

Aviles asks if NYCHA is using any new metrics to track contracts. Paneque said the agency still relies on “the old paper, email submissions to Procurement put into what’s called our CTS system, Contract Tracking System.”

“What is the budget for Section 3 outreach and operations?” Aviles asked.

Paneque said “we have one and a half FTEs (full time employees) in combined support of Section 3 and Minority and Women Business Enterprises (MWBE).”

Note that NYCHA has over 11,000 full time employees.

Aviles asks if the one and a half employes overseeing contracts are also charged with assuring compliance and Paneque notes that there is also “compliance within procurement” and defers to Castillo, who notes that “from a programmatic perspective for resident outreach and supports including job training supports, REES has about 55 staff.”

Mavani noted that NYCHA “does outreach work and events and various programs” on the issue of compliance.

“I’m actually quite surprised that you only have one and a half fulltime persons for compliance,” Aviles said.

“It’s a challenge,” Paneque said, adding that coupled with staff reductions it shows the importance of bringing the computerized e-comply system online.

Aviles asked how many contracts “this one and a half FTE would actually oversee?”

Paneque: “Eight hundred contracts subject to Section 3 goals.”

As Paneque is explaining the volume of paperwork potentially associated with each contract Aviles cuts him off to ask for a rough estimate of how much money is covered by those eight hundred contracts.

Paneque pledges to get back to the committee with the answer.

“Probably billions of dollars,” Aviles observes. “One person and a half is overseeing eight hundred contracts, potentially billions of dollars.”

Paneque cautioned that “again, this is from a reporting standpoint. There’s still a significant amount of work programmatically throughout the agency.”
Mavani interjects that many Section 3 contracts are for capital work and another seventy to eighty NYCHA workers are involved in the review of those documents.

Aviles: “So when your team has a problem with a contract, how does it interface with (the) 1.5 and the other team?”

Mavani said when there is “repeated non-performance” the NYCHA team might “share (a) formal kind of non-compliance letter” with vendors who are not meeting Section 3 requirements.

Aviles was not impressed.

“I have a vision of a football schematic with like X’s and O’s and squiggly lines, and no one knows where to go for what,” she said. “I’m going to trust that you have a better system than what I’m understanding.”

“Given that skilled trades work is desperately needed on NYCHA campuses where residents live, what Section 3 pathways are focused on the skilled trades?” Aviles asks.

Mavani said NYCHA had janitorial and skilled labor training partnerships with a variety of groups that help NYCHA residents apply for union apprenticeships after the training is completed.

Aviles asks if NYCHA tracks unemployment in its projects (Mavani says yes) and asked if those numbers play any part in where HUD money is spent.

Castillo asked if Aviles means where HUD money is spent for training programs, and Aviles said yes.

“We do connect with our performance and tracking analytics department to understand where we’re at in terms of NYCHA residents and the amount that, for example, are not reporting income from work, but are non-disabled and within the general working ages of 18 to 61 years old,” Castillo said. “In order to acquire HUD funding for a job training or similar related initiatives, we must apply for competitive grants.”

Co-chair De la Rosa asks how PACT and RAD conversions impacted Section 3 resident hiring.

Charney said “To date for the five completed PACT projects, we’ve made 36 Section 3 hires out of a total 68 hires on the projects, or 58 percent, and 500 hires on projects administered under the old Section 3 rules.”

Charney adds that 72 additional hires were made under NYCHA guidelines and the new rule of tracking labor hours for compliance.

And there it was. Out of more than 800 contracts, most of them multimillion dollar expenditures with between 15 and 30 percent of the funding subject to Section 3 use, NYCHA could document just 608 Section 3 hires.

De la Rosa asks how Section 3 hiring is coordinated with unions.

Mavani said since Section 3 requirements are part of vendor contracts, “they’re legally required, as you heard earlier, to make their best efforts and to work with us on meeting those specific targets whether they’re under the old rule or under the new rule.”

He said under the project labor agreements NYCHA uses vendors/contractors can meet Section 3 requirements in several ways, including using Section 3 workers who are also union members or use non-union Section 3 workers on a project.

“There are specific clauses within the PLA that allow both MWBE and non-MWBE vendors to bring a portion of employees from outside the union system,” Mavani said. “They can utilize those spots to meet Section 3 requirements. The PLA also ensures that if a local union has not provided enough female or minority applicants equal to our workforce participation goals in our contracts with our vendors, then the vendor can look outside the union referrals to look for those candidates including
Section 3 hires. One of the clauses in most of the PLA’s in the city is what’s called the 48-hour rule. If a local cannot provide qualified candidates within 48 hours of a vendor’s request, they can also hire outside the referral system, and again, we ask them to prioritize Section 3 candidates under that pathway.”

Mavani explained that “then there are certain types of work under capital contracts that are excluded from the PLA, typically called excluded employees. So things like superintendents, engineers, guards, technicians, and a range of other roles that are not covered under..”

De La Rosa cuts him off.

“How does NYCHA determine whether a job is appropriate for a Section 3 hire or the unionized worker?” she asked.

Mavani says the vendor determines whether to use a Section 3 or union worker since they know what level of skill or type of worker is needed.

De la Rosa asks what interventions NYCHA has if they find a contractor is not meeting Section 3 goals.

Mavani said since contracts typically are multi-year NYCHA would have verbal and then written conversations with the company about any non-compliance.

 “Currently, our contractual terms and conditions do not lend themselves to kind of, I think what you’re alluding to, to financial consequences or-- you know, we do not under current policy stop a construction job because we’re not certain if they’re going to be able to meet the goals or not by the end of the contract” Mavani said.

De La Rosa asks if REES promotes union apprenticeship programs to residents.

Mavani said notifications primarily are announced in a bi-weekly email newsletter that reaches 50,000 residents – less than ten percent of NYCHA’s 528,106 population.

De La Rosa asks if NYCHA works with city unions to help residents to find training and employment opportunities.

Castillo said that happens through the NYCHA Resident Training Academy and work with the IBW Local Three Electricians NRTA program, and that REES helps familiarize residents with the trade union exam requirements. Mavani added that NYCHA’s Sandy recovery program, which included several billion in FEMA funds, was also required to offer Section 3 jobs even though it was not HUD money and exempt from those requirements.

“We set up a dedicated pre-apprenticeship program where we were able to allocate $1.4 million dollars of disaster recovery funding, and through that program over five years we had taken 250 residents: 226 graduates and 138 were successfully placed into union roles,” he said.

Mavani said NYCHA planned to institute a similar pre-apprenticeship program through its comprehensive modernization program, where about “a billion dollars of funding” was available across several projects.

De La Rosa, noting the thousands of NYCHA residents behind in their rent, asked if there was any effort to match unemployed and/or behind in rent residents with Section 3 jobs.

Castillo said employment information was typically given to NYCHA residents taking part in the Emergency Rental Assistance Program, but she would check to see if Section 3 was addressed.

De La Rosa asked if NYCHA checked with residents who had bad experiences with Section 3 work to get them to give the program another chance, referencing an earlier hearing witness who said he had been terminated after three months as a Section 3 worker.

Castillo said NYCHA is generally in touch with people it has previously employed or referred to employment.

Councilman Ari Kagan, whose South Brooklyn 47th District includes the Marlboro Houses and Coney Island, asked the NYCHA executives what they were doing to let residents know about Section 3 employment opportunities. “And not just maintenance workers, not just cleaning up stuff, but even other professions and carpenters, electricians, maybe engineers,” he said.

“Communication and outreach is incredibly important and vital and we can never do enough of it,” Castillo said, but oftentimes residents “will need to see or hear a piece of information multiple times, and sometimes, they miss it.”

Kagen said in 2022 he secured $8 million in City Council funding for renovations to the Marlboro Houses community center, but the work had yet to begin.

“The work has not even started, but my point is, if it started for renovations and repairs, I would like more Marlboro residents to have an opportunity to participate in making their own community center better,” he said.

Castillo said NYCHA would appreciate working with council members offices to get Section 3 information to residents. Mavani said Section 3 gives preference to local residents and promised to see if that could be done on the Marlboro Houses community center work.

Aviles asked Castillo if she could send the Council a list of “all the management level job training that is offered through Section 3,” clarifying that the list should show “what kinds of management job opportunities were available” and “where you have been able to see success in the placement of a Section 3 candidate in a managerial position.

“What we’ve heard anecdotally from residents is those are very far and few in between,” Aviles said.

Castillo promised to supply the information but noted that “we are seeing that Section 3 job opportunities tend to be entry to mid-level, many of them blue collar labor jobs but also outreach workers, resident associates, administrative titles, security, and surveyors.”

Councilman Eric Bottcher, whose District 3 extends from Chelsea to the Upper West Side, said one tenant association president complained to him that he was unable to get tenants hired to install security cameras in their development.

Mavani said while tenant leaders were consulted on security camera placement, the work may have been coordinated by NYCHA’s Safety and Security office and not subject to Section 3 requirements.

That prompted Aviles to ask the size of the NYCHA team doing tenant outreach.

“I’m trying to understand more specifically the size of the team that is responsible for all this outreach and communication with residents where we have so much challenge, because residents often claim they don’t hear,” she said. “The mailing list is teeny tiny.”

Castillo said there were 55 staff members in the Resident Services Partnership and Initiative office that handles that outreach.

De la Rosa said in 2017 the City Council funded a NYCHA Painting Apprenticeship Program that trained over 100 NYCHA residents and that the council’s 2024 preliminary budget asked for $8.5 million to restart the painting program.

 “Do we know how many of those painting apprenticeships are now master painters or continue to work in the trade?” she asked.

Brian Honan, NYCHA’s Senior Vice President for Intergovernmental Relations, said he thought over 90 percent of the 100 trainees in the first class “made it through the entire class” but he did not have a figure of how many were still working or where they are now.

“What was good about it is there were a lot of residents who had interest,” he said, and even though the program was “rigorous,” it came with a cash stipend.

“Residents were getting paid while they were learning, and it led not only to automatic union placement but job placement as well,” Honan said.

Aviles posed a lawyerly string of questions in succession.

Did NYCHA plan to make its Section 3 data public? No answer.

Was NYCHA in compliance with Section 3’s 25 percent hiring or contracting benchmark in 2022? That information was unavailable.

Did NYCHA have “a sense” of how many Section 3 complaints of any type had been filed? Mavani said most Section 3 related complaints were about prevailing wages, and between five and ten complaints a year were filed over the last four years.

“In terms of labor complaints, has (a) contract ever been terminated because they violated an agreement in terms of prevailing wage or anything of that nature?” Aviles asked.

Mavani said that information was unavailable.

Aviles asked why NYCHA reported almost all repair workers hired in 2016/2017 were Section 3 qualified but from 2018 to 2020 that declined to just 16 percent of hires.

“We have to get back to you,” Castillo said.

Has an analysis been done to show if Section 3 hires turn into long term employment, Aviles asks?

Castillo said NYCHA’s analysis focuses on job placement and not long-term employment, but anecdotal evidence suggests some workers have made careers.

When Aviles said workers tell her they’re only getting temporary jobs under Section 3, Castillo replied that, like most construction gigs, Section 3 jobs are contract to contract but NYCHA’s REES program supports jobs with longer term employment.

Aviles asked if the 2020 employee tracking rule changes how many Section 3 hires are public housing residents. Castillo says 25 percent of labor hours should go to Section 3 workers and five percent to “targeted’ Section 3 workers, with NYCHA residents and those who received Section 8 rent subsidies among that five percent.

Aviles: “Do contractors receive any benefits or incentives for hiring Section 3 workers?

Paneque said contractors receive no particular incentives for hiring Section 3 workers, though as a way to help MWBE contractors will be required to end a project with the same number of Section3 hires as it began.

Charney clarifies that the billions of dollars funding NYCHA’s Rental Assistance Demonstration (RAD), program, an Obama era effort to bring delipidated public housing blocks up to code, are by special arrangement subject to Section 3 requirements.

What are the Section 3 record-keeping requirements for contractors and subcontractors? Aviles asked.

Paneque said vendors are required to invoice those numbers at a frequency listed in the contract, adding that the new e-comply system would allow for greater accuracy in monitoring compliance.

Aviles asks how often contracts are evaluated.

Greenburg said NYCHA’s Transaction Monitor Unit routinely tries to pull “a couple of capital contracts, a couple of operations contracts” and speak to contractors, operating staff, and capital staff to see if people are ‘going through the process.” But Greenburg admits the evaluation “is less about hitting the numbers and more about making sure we see what each person’s business process is in different units around Section 3.”

Aviles asks if that process is “statistically significant” enough to find discrepancies.

Greenburg said the goal is more to see if the business process is working.

Asked again how many current NYCHA contracts fall under the Section 3 guidelines, Paneque repeats that around 800, but adds that all NYCHA contracts are Section 3 eligible, but only those worth over $250,000 require Section 3 documentation.

He later clarifies that materials contracts and some non-professional services contracts are not Section 3 eligible.

Asked by Committee co-chair Aviles how many of the 800 contracts “have been touched by some sort of audit,” Greenburg said several NYCHA entities could audit a contract and promised to get back to the committees with those figures.

Aviles: “Have you ever chosen not to hire a contractor due to non-compliance with Section 3 requirements on the front end in terms of denying them a potential bid?”
Paneque: “Not that I’m aware of in my time at NYCHA,” adding that a vendor’s noncompliance may impact any subsequent bid on NYCHA work. The agency was also revising its contractor disqualification procedures, he said.

Greenburg said non-compliant contractors may settle liabilities by paying money to be used in the REEs Green Energy Academy training program, which he said was partially established with a Section 3 contractor fine.

“So you have used the teeth?” Aviles asks before adding “because quite frankly we haven’t seen a lot of that or seen much evidence of it, particularly because it’s public dollars and the impact on the residents is quite profound.”

De La Rosa asked what does NYCHA consider to be quality jobs?

Castillo “In this case for the training academy, employment at NYCHA we view as a quality job.”

NYCHA execs list entry level jobs like caretakers and exterminators typically available to Section 3 residents. De La Rosa asks the salary range.

Kerri Jew, NYCHA’s Chief Administrative Officer and a former tenant, said salaries are governed by civil law.

De La Rosa asked if there is a breakdown of jobs that shows how long workers were employed. There was not.

 Aviles said since Section 3 jobs generally involve the male dominated construction industry, what is NYCHA doing to attract more women to Section 3 work?

Castillo says 39 women are taking part in NYCHA’s Resident Training Academy’s construction training cohort, noting that most NYCHA households are female headed.

Aviles asks if Section 3 job trainings are held at different developments so “residents get equal access across the city.”

Castillo said training is held at the NYCHA Resident Training Academy in downtown Brooklyn and is privately funded by the non-profit Robin Hood Foundation.

Mavani replied that NYCHA was “making enhancements around resident engagement for capital work so that concerns can be addressed in real time rather than after work is completed.”

Greenburg says Manny Martinez (who would also testify in the joint hearing) was a resident engaged with NYCHA as it developed its contract compliance protocol. Honan said NYCHA was including more residents on its selection and quality assurance committees, where they “can call out a contractor for not meeting Section 3 targets.”

“Shouldn’t that be happening already?” Aviles asks.

Honan says residents will be involved in the selection committee and quality assurance committee and can call out a contractor for not meeting Section 3 targets.

AVILES: Shouldn’t that be happening already?”

Mavani says no, the arrangement is a recent development.

After the NYCHA executive testimony, Stephanie Klocke, Career Services Director for Green City Force said that, working through RTA, the program has trained more than 600 NYCHA residents over the last thirteen years in a variety of green economy jobs.

According to NYCHA’s website, the agency will award energy-efficiency and renewable energy contracts worth more than $500 million through 2026.

Martinez in his testimony addressed many Section 3 ills.

He said Section 3 funds have no economic threshold so almost all NYCHA contracts should be governed by the mandate. Martinez said while working with NYCHA’s Section 3 working group he found that as of May 2022 some 75,000-working-age, non-disabled NYCHA residents were not reporting employment income. Yet as of July 2022, REES, which helps NYCHA residents increase their income, had 209 residents enrolled.

“We’re not significantly impacted the population that can be affected by Section 3,” Martinez said.

Martinez said NYCHA’s REES office oversees Section 3 hiring but “does not have the capacity nor the responsibility to make sure Section 3 work is done.”

Martinez outlined how contractors avoid hiring Section 3 workers, and how NYCHA’s Section 3 business concerns list had grown from six pages in 2017 to 62 pages yet none of the companies listed were getting subcontracting work. He said that’s relevant because the listed companies tend to be from the community and understand the community culture.

“We see a lot of contractors who come into our communities with a lot of members who do not look like us, nor do they respect us, and they are literally walking around with our jobs,” Martinez said.

As the hearing concluded, an Aviles comment during testimony summed up the proceedings and the state of Section 3 in New York City.

“I would love to follow up because there are many gaps still,” she said. “We need to pursue and uncover what is happening, because clearly the reporting and the reality are still too far apart, right?

“And that’s what we’re trying to bring together.”

--

The reporting and the reality are still too far apart.

New York City’s Section 3 reality is that a sizable portion of the billions of dollars that have been and will be spent to upgrade thousands of public housing units in the city, money that could mean life and community changing job skills for some of the most vulnerable citizens and a financial windfall in rent for the New York Housing Authority, is not being spent as intended. This is happening while thousands of NYCHA residents are behind on their rent, the reason the agency has already announced it expects to end the 2023-2024 fiscal year millions of dollars in arrears.

As South Jamaica Houses Resident Association President Manny Martinez asserts, if used as intended to provide jobs and skill training to our nation’s most vulnerable citizens, Section 3 of the HUD Act of 1968 could be to New York City what the Ford Automobile company was the Detroit, bringing money and the lifestyle that comes with a steady income to people and families now living without that economic security.

Change people and they change communities. Changed communities change cities.

“The reality of New York having the largest public housing entity in the country means that New York also has the ability to use the massive buying power of NYCHA to take advantage of the skills and talents of NYCHA residents and other low-income New Yorkers,” Councilwoman Aviles observed during the joint city council hearing.

Yet as the hearing testimony demonstrated, the potential economic lifeline for residents and the agency itself that is Section 3 is either being misused or largely ignored. Developers and contractors who will reap billions of taxpayer dollars eligible to be used in the program are hiring far fewer low and very low income people than their contracts would demand, and NYCHA, charged with administering the mountain of money, is not ensuring Section 3 eligible funds are being spent to hire and train the thousands of residents who could benefit from the program.

Not only are NYCHA’s Section 3 hiring statistics abysmal, the agency’s oversite of the tax dollars involved is ridiculously casual – dedicating two people to oversee billions of dollars in contracts yearly shows compliance and accountability are not an agency concern. So NYCHA residents who could be learning trade skills remain untrained. Small businesses are denied the work and money they need to grow. Wages that would benefit a community never make it to residents’ pockets. Nothing changes because there is no commitment to change. City Council testimony by residents hired and trained under Section 3 affirmed the difference Section 3 work made in their lives and can make for their NYCHA neighbors. Jasmine Byrd testified to how her Section 3 job, followed by the benefits that come with union membership, helped her afford her diabetes medication.

Infinite George testified that his Section 3 training and resulting union membership were “his path to the middle class.” It’s a path thousands of NYCHA residents can follow. NYCHA must be compelled to make Section 3 jobs and training more easily accessible to the city’s low and very income people. Contractors working NYCHA projects must be contractually compelled to hire and train project residents so they can acquire the skills by which they can make economically productive lives for themselves and their families. NYCHA rental agreements must be adjusted so that Section 3 workers aren’t immediately hit with rent increases because they’re working, especially since construction jobs are temporary.

NYCHA must use its new E-Comply accounting system to ensure contractors hire the maximum number of Section 3 workers on each contract, and that those workers are trained so they can find work or open companies themselves after the training ends. Most importantly, NYCHA must keep better track of the billions of HUD dollars it is receiving.

Imagine the stink shareholders would make if a corporation had as cloudy an accounting of how it spent billions of dollars as NYCHA executives demonstrated at the city council committee hearing.

Well, those are your tax dollars.

You’re that shareholder.

Where’s your stink?

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