Remarks of Clem Richardson, Journalist
”Empowering Public Housing Residents: Unlocking the Transformative Power of HUD Section 3”
Albany, New York || February 17, 2024
My name is Clem Richardson and I am a journalist with over four decades of experience in the newspaper industry. I have studied Section 3 of the HUD Act of 1968 for well over a year and what I have found has been both Illuminating and disconcerting.
I was initially skeptical when fellow panelist, South Jamaica Houses Resident Association President and Section 3 expert Manuel Martinez, told me in a 2023 interview that “Section 3 could be to New York what the Ford Motor Company was to Detroit.” The figures back him up, and lead to a damning conclusion: the New York City Housing Authority’s habitual refusal to make contractors abide by Section 3 mandates, applicable to billions - yes, billions of dollars in contracts the agency has let out over the last decade - is morally criminal.
It has cost the city millions of dollars in lost job training and paychecks for thousands of low and very low-income city residents and families. That denied job training, and the resulting loss of potential career skills and good salaries that would have come from it. It could have transformed the city by raising the economic status of thousands, if not hundreds of thousands of New Yorkers. Simply by following Section 3’s mandates and spending 15 to 30 percent of eligible Housing and Urban Development contracts on training and employment of some of our city’s low and very-low-income residents would have ensured that thousands of now unemployed or under employed New Yorkers would instead now have marketable skills which would have provided them with lifelong careers, health insurance and retirement benefits.
That money could have transformed entire communities. An idle boast? Hardly.
A 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, estimated that if the median (22.5 percent) of Section 3 mandated 15 to 30 percent applicability was applied to 16 categories in HUD’s then $21.5 billion budget, more than 112,000 jobs would have been created nationally. That’s 112,000 additional people who would have health benefits, who might have been able to move out of public housing, who could have raised the median income of an entire community.
A 2009 study, “Reforming HUD’s Section 3 Requirements Can Leverage Federal Investments in Housing to Expand Economic Opportunity” by Barbara Sard and Micah Kubic (done for the Center on Budget and Public Priorities) buttresses that conclusion. That study showed that low-income populations are located in urban centers while the jobs for which untrained labor is most needed have migrated to the suburbs.
“For decades, jobs have moved out of central-city neighborhoods and areas with high concentrations of low-income residents,” according to the study. “Seven recent studies by the Brookings Institution show this trend has continued unabated. In addition, jobs in sectors that are most hospitable to the skill profiles of low-income residents, such as the manufacturing and retail sectors, tend to be located farthest from city centers. This creates a “spatial mismatch” between where low-income people live and where job opportunities are.”
By training and employing low-income people living in homes that receive public assistance, the study said, “Section 3 thus can reduce the cost of federal housing assistance by increasing the incomes of assisted households.” Those savings could be substantial. The Sard and Kubic study estimates that every $1,000 in extra income residents earn would reduce federal costs by roughly $300. And since the HUD money used to pay and train residents was already allocated, the money would do “double duty” – “meeting the need for housing investments and reducing the costs of providing affordable housing to low-income Americans.”
Proper implementation of Section 3 would let residents learn and practice new job skills in their communities. Seeing the product of their work – repainted lobbies, refinished floors, landscaped grounds, modernized buildings – could also inspire residents to claim ownership of the property, increasing community wellbeing, the study noted. Section 3 eligible HUD money will be pouring into the city for years to come, making it paramount that Section 3 be reformed to ensure that more people benefit from its use than just contractors and the mostly union craftsmen who work for them. A September 2023 New York City Council Committee on Public Housing hearing noted that a recently completed NYCHA physical needs assessment, conducted every five years, indicated that the agency will need more than $78 billion over the next twenty years to keep they city’s public housing developments in good condition.
Capital improvement money is subject to Section 3 oversight. US Representative Nilda Velasquez has introduced several Section 3 enhancement bills in Congress over her legislative career, in part, she said, because her 7th Congressional district includes hundreds of public housing units whose residents would benefit from job training and placement. Getting public housing resident’s jobs would also help decrease NYCHA’s delinquent rent rolls, which as of January Authority officials were projecting would cause a deficit in the agency’s current annual budget.
In her 2008 “Earnings and Opportunities Act” and again in her “Section 3 Modernization and Improvement Act of 2015” Rep. Velasquez proposed that ALL HUD grants be subject to Section 3 requirements. That proposal was derailed by politics, but it would have grown Section 3 eligible funds by billions annually. But more money would mean nothing without oversight and enforcement to make sure contractors hire and train eligible public housing residents. And construction trade unions, which traditionally have been more concerned with getting members jobs, must start to see Section 3 as a cost-free way to grow union membership. Right now, oversight and enforcement of Section 3 is sorely lacking. This is something NYCHA and HUD must correct immediately. Administrative changes in 2020 have also made reporting and enforcement of Section 3 employment even more difficult. That is also something NYCHA and HUD must correct expeditiously.
Martinez, who sits on a NYCHA committee examining Section 3 use, has examined 800 contracts totaling over $3 billion in Section 3 eligible money NYCHA let over the last decade. Under the maximum calculation, that means a billion dollars of that was available to train and hire Section 3 workers for a variety of NYCHA capital construction projects, such as systemwide lead paint abatement efforts. How many people can one billion dollars ($1,000,000,000) employ? How many households would that money have removed from city welfare rolls. How many families would it have allowed to have private health insurance? How much of the financial strain being exerted on the city budget by the thousands of immigrants being bused to NYC and other jurisdictions would have been mitigated? How many of the 250,000 people on NYCHA’s housing waiting list as of September 2023 would already have a place to live because working residents moved out - and because Section 3 workers helped renovate some of the more than 7,000 NYCHA apartments that now lie vacant and in disrepair?
NYCHA is projecting a $34 million dollar deficit in its 2024 budget, largely because of $338 million in unpaid rent receipts. Making the Section 3 mandate work for its residents would go a long way toward erasing that deficit. HUD should create a working group to examine these issues with Public Housing Agencies and housing advocates around the country, and endeavor to resolve them before the end of this administration.
It is time to finally get this right. Thank you.