Remarks of Manuel Martinez, Resident Council President and District Chair
“Empowering Public Housing Residents: Unlocking the Transformative Power of HUD Section 3”
Albany, New York || February 17th, 2024
My name is Manuel "Manny" Martinez. I am the Resident Council President for the South Jamaica Houses and the District Chair for the Queens South CCOP District. Section 3 billions is not an exaggeration. Section 3 is shorthand for Section 3 of the HUD Act of 1968. This federal civil rights era legislation aims to redistribute federal dollars into low-income HUD subsidized communities through training, employment, and contracting. Although it presents public housing residents with significant potential opportunities, it is dismally implemented.
The ability for Section 3 to have a major impact is dependent on several factors. One is the size of the housing authority and the capital required to sustain operations and capital improvements. Another is that qualifying Section 3 work may need to take place where there is a concentrated population of Section 3 residents. For example, scenarios where Section 3 may have a significant impact are in cities that have what has been described as “jumbo housing authorities” such as in New York, Puerto Rico and Chicago. Another aspect to consider regarding the success of Section 3, or the lack thereof, is why so many Section 3 residents are not aware that this even program exists. In locations that have an abundance of Section 3 opportunities, an important discussion needs to take place on how to best maximize Section 3 benefits for these intended communities.
If someone had told me several years back that there were billions of Federal dollars required to go to training, jobs, and contracting opportunities specifically for our public housing families, I would not have believed them. Now that I know it is true, the people that I tell don’t believe me! As a resident council recognized by NYCHA and HUD, we represent over 1,000 NYCHA households on matters of operations, collaboration, and quality of life issues. As one of ten district chairs of a jurisdiction-wide resident council, we collectively represent over 150,000 NYCHA households on matters of housing policy. Section 3 is a critical policy we have been actively discussing.
NYCHA has approximately $5 billion in currently active contracts that trigger Section 3 mandates. With a singular contract with a value within the low tens of thousands, upward to the tens of millions of dollars, and a few totaling in the $100 million range, it's deeply concerning how little of an impact Section 3 is having in New York City and in other public housing communities across the country. Another challenge to the success of Section 3’s legislative intent, both in word and spirit, are recent regulatory dilutions. The current and newly implemented regulations found under 24 C.F.R. Part 75 significantly changed the measurement of quotas all around. The regulation prior to Part 75 was Part 135. In Part 135, the employment quota was 30% of newly generated hires. The quota under Part 75 is 25% of labor hours. Of the 25% required labor hours, a mere 5% of labor hours are designated “targeted labor hours,” which are specifically for public housing residents. Yet, public housing residents are both the first and second Section 3 priority hires. Another major change which is problematic was the complete removal of a subcontracting mandate for Section 3 business concerns. Part 135 mandated that 10% of the contract value “must go to Section 3 Business Concerns”. However, under Part 75 a Section 3 business concern is to be contracted under the illusive term “to the greatest extent feasible.”
The term “to the greatest extent feasible” persists as the cornerstone of the compliance issues that Section 3 has been plagued with. “To the greatest extent feasible” was first used in the initially ratified language of the HUD Act of 1968, under Public Law 90-448, as a directive to the secretary of HUD. It instructs the HUD secretary to consult with both the Secretary of Labor and the Administrator of the Small Business Administration to ensure that Section 3 goals were successfully met “to the greatest extent feasible.” Section 3 goals are to achieve the fulfillment of stronger employment, training, and contracting rates amongst low and very low-income communities. The codification of the Section 3 policy under 12 U.S.C. §1701u reduced the term “to the greatest extent feasible,” as a directive for the HUD secretary to provide to public and Indian housing agencies and other recipients. Under Part 75, the term “to the greatest extent feasible” is mentioned only twice in reference to Housing and Community Development Assistance. The term “to the greatest extent feasible,” has been reduced to a requirement for public and Indian housing agencies and other recipients, to “make their best effort.” Through the codification of policy and the provision of regulatory specificity intended to guide the success of Section 3 goals, the term “to the greatest extent feasible” devolved from instructions specific to the HUD secretary to a trite phrase that allows for finger pointing and the absence of responsibility from every entity involved as Section 3 becomes an agency burden and yet another broken promise to the public. Like in a game of telephone, the initial term of “to the greatest extent feasible,” as a practical matter resulted in a kicking of the can down the road.
The following measures may be considered to ensure the success of Section 3 residents: a ratio between funding allotted to a recipient and how many actual business concerns are contracted with and how many Section 3 residents become employed. Another strategy to ensure that Section 3 is successful is for housing authorities, resident councils, and other relevant entities to educate the population. This can be done with letters sent with the rent statement. The letters can explain best practices to seek, apply, and retain employment. Contracting should also have their own outreach literature. At Housing Authorities with publications like NYCHA’s Journal an article on Section 3 could be used to educate public housing residents. Housing authorities must communicate to their contractors what the expectations are and how to meet Section 3 requirements. There is a need for a much stronger focus on training. Currently, training is not considered a requirement as per NYCHA’s law department. Training is the key to long term employment and career success.
Earlier this week on February 14th the White House hosted the 2024 White House Convening on Equity to commemorate the one-year anniversary of the signing of President Biden’s second equity Executive Order. Executive Order 13985: Advancing Racial Equity and Support for Underserved Communities Through the Federal Government (EO 13985) directs agencies like HUD to conduct equity assessments of select programs to determine whether underserved communities face systemic barriers in accessing benefits and opportunities. An examination into the flaws of the implementation and monitoring of Section 3 would go a long way towards correcting this seemingly insurmountable barrier.
I urge Secretary Fudge to focus HUD’s attention on fixing what is a very fixable problem. Correct the flaws of implementation, share best practices with all of the Housing Authorities across the nation, broadly disseminate information on Section 3, and make the registration process easy and accessible for both public housing residents and Section 3 business concerns. These simple measures would go a long way towards fulfilling President Biden’s goal of advancing racial equity and support for underserved communities.
Thank you.
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