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Section 3 Updates 11/30/20

Today is November 30th and it is the official first day of the New Section 3 Final Rule. Here are a few things to remember to properly close-out all Part 135 reports and start your new Part 75 transition:

Old 24 CFR Part 135
Total all new hires for the recipient and all contractors (respectively), then breakout the actual number and percentage that were Section 3 New Hires. Next, total contracting dollars, determine the number of actual Section 3 businesses that were awarded contracts for both Construction and Non-Construction Year-to-Date in this fiscal year, then determine the percent of actual dollar values those contracts represent. That contract data will be used to populate part 2 of the SPEARS report while the new hires will be entered in part 1 of the report.

Once that data is corrected after double checking, you would move to entering the data into SPEARS so there is an actual correct record that you reported timely.

Keep a copy of all of the reports and supporting details like meeting minutes, sign-in sheets, training curriculum, trainees, pre-bid meetings, website screen shots and all of the current forms you utilized toward meeting compliance. Also, keep all Section 3 certification data for any residents and contractors as they completed it. I strongly recommend that you store it electronically for safe keeping.

As an important note, under part 135, HUD retains the right to review or audit that reported information at any time. We have experienced HUD going as far back as nine years requesting to review Section 3 data/reports. I am not suggesting that will happen, but you should anticipate it might and preserve everything that supports your efforts, activities, and numbers.

New 24 CFR Part 75
Remove all old Section 3 information, including all forms, information on your website, and data posted on any bulletin board or office windows. To leave that old Section 3 information up and in-place will give false information to the public on how Section 3 can be achieved.

Issue an addendum immediately on any of the solicitations you may have out with the New Part 75 Rule (I do not recommend including the Preamble). Where possible hold a conference call or web-meeting explaining the new rule related to “Hours Worked” only along with your expectations.

Keep an eye out for an email or emails from HUD either on the HUDListserve or as an official CPD or PIH notice with the ‘Post regulatory guidance’ HUD promised in the final rule. I have sent an email to the Field Policy and Management person for clarity as to exactly when that information, the new sample forms, and contract language will be received. As soon as I receive a response, I will send that to you all and post it on our website.

Train your staff on the new part 75 rule ASAP. If you need a tool, just log into our website and purchase the last webinar we conducted and show it to the staff so they are as up to speed as possible. Here is that link https://motivation-inc.com/events The cost is only $150.

Train your Residents and contractors ASAP as well. Though you are just entering the “transition” period, you must start moving on the new protocols now and leave all of the old stuff behind. The sooner your contractors start capturing hours and reporting them to you, the better off you will be when the transition period ends and actual reporting begins.

For PHA’s Only, you must also start capturing all hours worked by every staff person on payroll. Make certain to break out the hours for any Section 3 Workers and Targeted Section 3 Workers for accurate reporting. You all should also be re-qualifying all hires back to five years ago to see who meets the Section 3 definition today based on their individual income and residence in your service area. You are allowed to count those people for up to five years if they qualify. Please remember that HUD has stated it may require an annual recertification of all Section 3 workers to ensure they still meet the rule definitions.

For all recipients with any Project Labor Agreements or Collective Bargaining Agreements, you must update those documents immediately to reflect the New Part 75 Rule.

NOTE: Refer back to our last update where HUD confirmed that its expectations toward meeting the new Hours Worked requirements are that Recipient and Contractors are expected to remove/replace existing staff with Section 3 Workers to meet the benchmarks. I want to state again for the record, please defer to your Board of Commissioners and attorney for advice and direction on this very sensitive issue. There are too many variables in removing or replacing staff to be tackled alone as an HR director or CEO. Where there are agreements involving “Bumping Rights” you must consider those agreements as they pertain to state law.

Start your new process for tracking all hours worked accurately, qualifying all new staff under the individuals income only not household size. Determine if they are a Section 3 Worker or Targeted Worker and track all percentages toward the benchmarks monthly. My firm has chosen to track every contractor’s hours individually including those under Davis Bacon requirements. We track every payroll by number and dates for ease of researching or correcting hours if the contractor issues a revision to the payroll submitted. This is a best practice because it provides for a clear audit trail. If you need software, please let us know, we are offering some New Rule Special Pricing through January 15, 2021 with annual licenses starting as low as $3,000 for unlimited users and web-based training only $1,500 and on-site training only $2,500. Our system is cloud-based and can be accessed and managed on any web-enabled device.

If HUD does not release its sample forms very soon, I have developed a Resident and Contractor Certification form for temporary use only. If you need it, let me know and we will either publish them on our website or I will email them to you directly upon request. These forms will be FREE!

Lastly, for everyone, Document and Retain everything related to and involving the new rule implementation. You will need a new Section 3 Policy, procedures, and certification forms sooner than later, so start thinking that through as well. I believe the HUD Section 3 COVID 19 FAQ is still applicable so for now most of your efforts can be electronic in nature. Keep an attendance for every event you hold online.

Start thinking resident training for 2021 and beyond. There is no way of achieving the benchmarks without a trained resident base ready and willing to start work and retain employment. If you need some ideas, check out our website at https://motivation-inc.com/services

I hope this helps you all make a smooth transition to the 24 CFR Part 75 requirements. If you should need agency specific training, please let me know. I’m offering a four (4) hour Section 3 training on the new rule for only $2,000 via webinar or $3,000 onsite. If you want to do staff training, a contractor training for 90 minutes and resident training for one-hour all in the same day, the price would only be $3,700 including all training handouts. This is a limited time offer during the slower part of the year until January 15, 2021.

As always, do not hesitate to call or email your questions to
678-794-3066 or keiths@motivation-inc.com

J. Keith Swiney

J. Keith Swiney

J. KEITH SWINEY, PRESIDENT/CEO

Mr. Swiney initially launched his career in real estate in 1986 and has since gone on to diversify his real estate knowledge by strategically securing positions with industry leaders that kept him at the forefront of management and operations concepts. Mr. Swiney has managed properties utilizing a diverse representation of financing avenues for purchase, construction or rehabilitation that include: Community Block Grants, Conventional, Farmers Home and Federal (HUD) Loans, Section 8 Certificates and Vouchers, Section 202 (elderly housing), Section 235, Section 42 (tax credits) and Tax Exempt Bonds.

Today, Mr. Swiney is considered the nation’s leading authority on HUD Section 3 Compliance. Since 1997, he has trained 84% of the nations public housing and housing and community development associations, conducted hundreds of client specific technical assistance and regulatory trainings, over 100 resident employment soft, and hard skills trainings, and created and/or supported about 22 resident owned businesses nationally. Federally, Mr. Swiney has conducted Section 3 Regulatory Training at the Black Expo in Indianapolis, IN for HUD and for the Department of Interior (National Parks Service at Central High School in Little Rock, AR. Mr. Swiney set the industry standard for Section 3 policy/procedures/forms and implementation for all recipients, contractors and developers. He created the nation’s only Section 3 Compliance software database capable of managing national compliance for every HUD recipient, sub-recipient, contractor, and sub-contractor including all employment, hours works, gross pay, M/W/VBE percentages, and much more.

His experience includes the acquisition, lease-up, operations, repositioning and disposition of multiple classes of real estate from A++ conventional to public housing. He has structured and managed several properties from site selection through construction and full occupancy. Mr. Swiney’s diverse experience includes the management of 260,000 square feet of office, retail, industrial and warehouse space. He has overseen portfolios as large as 40 properties in five states and hundreds of employees. His construction experience includes identifying, contracting and supervising more than $14 million of renovation/rehabilitation projects and $40 million in new construction. In addition, he has created and operated three management and one full service corporate accommodation companies, including Millennium Management, Snyder Multi-family Management, Snyder Corporate Accommodations, Camden Housing Group, LLC and Motivation, Inc. He currently owns and operates two successful firms today from his Atlanta office.

Mr. Swiney understands the many needs of his owner clients, having worked with a variety of non-profit and for-profit owner entities from individual investors, community development corporations (CDCs), private corporations, REIT’s and partnerships to institutional owners such as insurance companies, pension funds and banks.

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