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Section 3 Updates

HUD released a notice to all Public Housing Leaders on (December 1, 2020) that has caused some massive confusion. That notice was not pertinent to Community Development funded projects at all. That notice made clear that the old rule at 24 CFR Part 135 has been replaced by Part 75 as of November 30, 2020. However, the notice failed to provide any guidance on the PIH projects funded in part with Community Development or Disaster Recovery funds.

The notice does allow PHA’s to continue to track their existing projects under part 135, but failed to tell the PHA’s that there is currently no requirement to report that data, so their efforts are in vain. If you have a mixed funded project involving a PHA and Community Development funds like HOME, CDBG, 108 Loans or others, please contact the funding entity to confirm what their requirements are the project s you don’t end up doing the wrong thing.

I recognize there was a loud minority of PHA’s that were quite bent out of shape about the transition to Hours Worked in the midst of an existing project, and that lobby persuaded HUD to release this ill conceived and incomplete notice. However, please keep in mind that the HUD Form 60002 Report also known as SPEARS expired November 30, 2018 and HUD never renewed that report.

Thus there is NO OBLIGATION by any HUD Section 3 funded recipient to legally report any Section 3 data under the old part 135 rule despite what the notice states. Moreover, because there is no requirement to collect that data, HUD is sending those PHA’s that chose to waste their time on the old rule falling fast down a rabbit hole with no bottom.

Rather than continue to worry about the old requirements that very few PHA’s every met, PHA’s should be spending their time during this transition period focusing on the new Hours Worked Benchmarks. Those projects that are currently working will provide amazing data for the recipient agency as to what is possible, impossible, and what changes in protocols need to be made to comply.

HUD staled very clearly in the final rule that it will be relying on the data from the first three years to decide what if any changes need to be made to the Benchmarks. If recipients are waiting valuable time worrying about data to no-where, rather than collecting valuable information about the challenges they face in meeting what all have stated will be very difficult Benchmarks, than they are skewing the data badly to HUD’s favor. Meeting the 25% and 5% of hours worked will prove messy and challenging for all, so the more data you all have to substantiate your case the better.

This is just my advice, but I strongly recommend the PHA’s that think chasing an old, outdated, and clearly failed Section 3 regulation should rethink their efforts and use of resources to convert as HUD state in the notice, by altering the agreements toward the new rule.

By the way, HUD also failed to convey where that data will be reported if at all. That concerns me and should you as well. Don’t just read what HUD’s legal team wrote and accept it for what it says without asking about what it doesn’t. This is not a one-size fits all opportunity, so proceed with caution. Use the transition period wisely. It will NOT cause your agency or project any harm, so why not be productive instead of afraid.

FREE SECTION 3 Q & A SESSIONS

Realizing that there are far more questions than answers right now about the new rule and what to expect, I will be hosting two open Q & A sessions this month for anyone interested in doing a deeper dive into the transition to Hours Worked and how it will affect the recipients, contractors, and the true beneficiaries, Section 3 residents. In order to allow a reasonable communication stream, the sessions will be limited to the first 50 people registered.

For simplicity, if you want to participate in one of the sessions, you must send an email directly to me at keiths@motivation-inc.com. I will manage the list personally and provide the dial-in-number for the session you request to participate. There is no fee, however, I do ask that only one person per agency/city/county/state/company or office register so as many different groups can be represented. If there is a true need, I can add a session based on my schedule and demand.

Section 3 Q & A Session #1
December 9, 2020 2:00PM – 4:00PM Eastern

Section 3 Q & A Session #2
December 10, 2020 2:45PM – 4:45PM Eastern

If there is a cancellation, I will allow someone to fill that spot based on the date and time of the email requesting participation.

This will NOT be a webinar event so you can call from wherever you are to participate. After all it is the holiday season and someone has to do the shopping.

Be Well and Informed

As always, I’m happy to answer your questions by reaching out to me directly at 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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