Tips for Labor Compliance on HUD Projects: Part 3

Welcome to my final installment of HUD labor compliance tips. Part 1 provided an overview, and suggestions on complying with federal prevailing wages. Part 2 dealt with integration of requirements into contracts. Part 3 will focus on Equal Employment Opportunity and Section 3 requirements. Relevant regulations include Section 3 of the Housing and Urban Development of 1968, 24 CFR Part 135, Executive Orders 11246, 11375, 12086, and 41 CFR Part 60 1.4(b).

Equal Employment Opportunity (EEO) 
These requirements are often called MBE/WBE (Minority and Women Owned Business Enterprises). The purpose of these requirements is to involve minority and women owned businesses in contracts to the maximum extent possible. Grantees and general contractors must demonstrate that they have implemented policies and procedures to meet this goal. It isn't enough to say you tried. You must document efforts, and this post will help you understand how this can be done.

Section 3
These requirements generally apply to any contract funded by HUD that is $100,000 or greater. The purpose of these requirements is to involve local low-income persons in contracts to the maximum extent possible. Similar to EEO requirements, grantees and general contractors must demonstrate that they have taken steps to meet this goal.

EEO and Section 3 compliance has three elements: recruitment, documentation and contract management. Below is a summary of each.

Recruitment

• Prepare a EEO/Section 3 Plan and send it to the General Contractor. It should consist of hiring goals and resources, including contact info for: the local government, developer, and HUD labor representatives; local unions and trade associations; local community organizations and media for affirmative recruitment; and in-house or local apprenticeship and trainee programs for referral.
• Send letters to the local labor representative and local unions and trade associations requesting feedback on the EEO/Section 3 Plan.
• Post a project sign at the project site, place notices in community papers, and send letters to community organizations and businesses identified by local government with the following information: Section 3 regulations; contact information for employment opportunities; and the list of apprenticeship and training programs from the EEO/Section 3 Plan.

Documentation

• Maintain a file documenting all EEO/Section 3 implementation efforts.
• Maintain a list of all lower income residents, women and minority owned businesses that have applied for a job, and referral sources.
• Provide an annual report on EEO/Section 3 progress to the HUD Administrator.

Contract Management

• Notify potential subcontractors of EEO/Section 3 goals and requirements.
• Incorporate EEO/Section 3 requirements and goals into all subcontracts.

Be aware that some local or State governments will add their own requirements on top of the base federal requirements. Feel free to contact me if you need assistance with putting together plans and templates. 

So go out there and have a blast with HUD labor compliance.....which really isn't possible. But at least you can move forward with confidence and a plan.

Tips for Labor Compliance on HUD Projects: Part 2

Happy New Year! I took a long holiday break from the blog, but now I'm back at it. In my last post, I focused on wage compliance for HUD Projects. In this post, I will address contract conditions.

When it comes to "CYA" for labor requirements, documentation is your friend, particularly contractual documentation. Far too often, the project team catches up with the labor requirements after the contracts are already signed, or after construction has already begun. You can always add addenda, but contractors will have already initiated their hiring and subcontracts. At that point, it's always challenging to get everyone to understand their obligations and implement them into their work programs. It's much better to start on the right foot and on the same page.

In this regard, I have assisted a general contractor that does a lot of HUD work. I drafted form letters for their subcontractors that accompanies the contract for execution, and requires incorporation of the HUD-92554M form into the contract. The letter explains key labor conditions of HUD-92554M, as described below. In this way, the general contractor and the subcontractors have the same requirements incorporated into their contracts, and those requirements are brought to their attention.

• Davis-Bacon Wages: Inform contractor that they must pay Federal Prevailing Wages to all workers on the project, as determined by the U.S. Department of Labor (DOL). Refer to and attach the DOL Wage Determination to the contract. See my last blog post for more information about wage determinations.
• Apprenticeships: Describe the process for requesting approval to use an apprenticeship program that is not listed on the Office of Apprenticeship website.
• Copeland "Anti-Kickback" Act:  It is a federal crime for anyone to require any laborer to kickback (give up or pay back) any part of wages (29 CFR Part 3).
• Contract Work Hours and Safety Standards Act (CWHSSA):  Overtime must be paid at 150% of the basic pay rate for all hours worked over 40 hours in a week. Proper health and safety standards must be maintained on the job site.
• Equal Employment Opportunity and Section 3: Federal law requires that contractors implement a plan to affirmatively recruit low-income residents, minorities and women to work on the project. 

This is a summary of the major elements of the HUD-92554M form "Supplementary Conditions of the Contract for Construction". I recommend that you outline these clearly for your general contractor in a letter so that they understand the obligations they are taking on. In my next blog, I'll have more information about implementing Equal Employment Opportunity and Section 3 requirements.

Tips for Labor Compliance on HUD Projects

Any time you use HUD funds, you need to determine labor compliance requirements. This can be a complex and intimidating facet of working with HUD, and your path to compliance may appear a bit cloudy. However, asking the right questions will significantly clarify things. In the next few posts, I provide some key guideposts that will help you navigate labor law as it applies to HUD projects.

Below are the principal categories of labor law that must be addressed when undertaking a government-funded housing or community development project. In this post, I'm going to focus on wages. I will focus on the rest in the upcoming couple posts.

1. Wages
2. Contract Conditions
3. Apprenticeships
4. Copeland "Anti-Kickback" Act
5. Contract Work Hours and Safety Standards Act
6. Equal Employment Opportunity and Section 3

In certain situations, HUD requires that HUD-funded projects pay federal "Davis-Bacon" or "prevailing" wages. These are minimum hourly wage rates by job classification that the federal Department of Labor sets periodically for each geographic area in the country. The wage rates are posted on DOL's website. It is important to figure out whether these wage rates are required early in the development process so that you know how it will affect your budget. To do that, you need to identify the source and amount of your project funding. CDBG or HOME funds will trigger federal Davis-Bacon wages. For CDBG, the federal wage rates apply to contracts over $2,000. For HOME, the federal wage rates apply to a project with 12 or more HOME-assisted units.

Beyond finding out funding sources and amounts, you should ask the following questions.

Who administers your HUD funds? Some pass through entities (most often states, less often localities) may layer their own requirements or their own interpretations of the federal requirements on top of federal law. 

When do you plan to start construction? The effective date of the applicable Davis-Bacon wage rate schedule will be the most recent date that is prior to the construction contract execution date.

What is your building type? The Dept. of Labor (DOL) classifies wage rates by building type- Building, Heavy, Highway and Residential. DOL provides definitions of each on their website. Housing projects with up to four stories will be Residential. Nonresidential public improvements will generally be Highway if they involve streets, sidewalks or trails. If you are unsure of the building type, contact your local HUD Field Office for direction.

Will you use state or local funds that will trigger additional prevailing wages? Many states or localities require use of their own prevailing wage rates in addition to the federal prevailing wages. In these cases, you must use the higher prevailing wage rate for all job classifications. For example, in California, federally-funded public improvement contracts over $2,000 are considered "public works" that trigger state prevailing wages. However, federally-funded low-income affordable housing projects do not trigger state prevailing wages if they meet certain conditions.

If you determine that federal Davis-Bacon prevailing wage rates do apply to your project, go to the DOL website and select: 1) your region; 2) your building type; and 3) your applicable date based on your actual or projected construction contract execution date. Print out the applicable schedule. You will want to attach the schedule to your construction contract and reference it as a requirement, and require it to be attached and referenced in all of the general contractor's subcontracts as well.

On my next post I'll give some tips on contract conditions, including apprenticeships, the Copeland "Anti-Kickback" Act, and the Contract Work Hours and Safety Standards Act.

  

Place-based Community Development: How Is It Financed? A Small City Example

As I discussed in my September 2nd Blog Post, the Obama Administration and HUD have placed a heavy emphasis on "place-based" community planning and development as a way to improve low-income communities. This is a strategy to build the capacity of diverse and complimentary local institutions to affect change. The investment focus is on people and place, rather than programs and projects.

As we know, it takes money to make anything like place-based community development happen. So how does that work? My involvement with the North Valley Housing Trust (NVHT) has provided me with a window into the financing aspect. NVHT is based in the City of Chico, California (population 90,000) with a service area of Butte County, California (population 230,000), located about 65 miles north of Sacramento. As such, this effort demonstrates some of the challenges and constraints of financing place-based community development in a small city that is not within a major metro.

Here's some background. Community development financing in California suffered a major blow two years ago when redevelopment agencies were eliminated to address State budget deficits. It could be argued that RDAs took more of a project-oriented approach, rather than place-based. Nonetheless, the impacts on communities across the state have been and will be devastating, especially with regard to the provision of affordable housing. Many cities, such as Chico, relied heavily on RDA funds. At the same time, federal and state housing and community development programs have been severely cut.

NVHT is a local housing trust fund that is attempting to address some of the impacts of recent federal and state budget cuts, while at the same time taking more of a place-based approach. About three years ago, a workgroup composed of representatives from local governments and nonprofits began meeting to develop NVHT's mission, goals and growth strategy. NVHT's purpose is to build a sustainable, locally-controlled fund that is adequately flexible to address the community's greatest housing needs. The workgroup determined that the fund's initial focus should be homelessness.

Three key partnerships provided a solid foundation upon which NVHT could grow: the City of Chico, 3CORE (a local CDFI), and the North Valley Community Foundation (NVCF). The City provided staffing and guidance to get the effort off the ground, as well as a place to convene stakeholders. As a certified Community Development Financial Institution (CDFI), 3CORE leveraged bank relationships and programs such as the State of California COIN network, which offers state tax credits to CDFI investors. As a successful and respected local foundation, NVCF has played the important role of 501c3 fiduciary and grant applicant, and has provided an exposure platform to donors.

Working together, the City, 3CORE and NVCF, along with a broad network of nonprofits, were able to raise $650,000 in COIN investments, and about $20,000 in other contributions. Many of the initial contributions came from participating Workgroup members, since the trust was just establishing itself. Not only were these initial contributions important to get things started, they had the added benefit of deepening Workgroup members' commitment. The COIN Investments and locally-raised funds positioned NVHT to apply for a $500,000 Local Housing Trust Fund Program matching grant from the State of California. On October 28th, NVHT was awarded this grant. NVHT is now moving forward with a strategic outreach plan, and will begin convening its permanent board at the beginning of next year.

The local housing trust fund is truly a place-based initiative. It is only possible through the commitment of local expertise, experience, partnerships and capital. At the same time, it cannot truly thrive without federal, state and/or regional investment. State programs (COIN and the Local Housing Trust Fund Program) were essential to making it happen, and the federal CDFI program may play a role in the future. This is especially the case for smaller cities and rural areas that attract less attention from CRA lenders and large foundations. Funds raised to date are a drop in the bucket compared to the need, but we have demonstrated that local institutions can step up to the plate and deliver, and that they need more tools in order to have greater impact.

Our next step is to more fully involve local businesses, particularly the health care sector, and the community at large. We plan to use the State grant to produce 4-5 units that will help individuals transition out of homelessness. This will be supplemented by supportive services funded through donations. We will also be working with the local housing authority to potentially provide some targeted rental assistance. Our goal is to demonstrate early success in order to earn greater trust from current and future contributors.

This is a fledgling real-world example of how place-based community development can work in a small city. If you want to see examples of implementing a more expansive vision for place-based community development financing, check out the HUD Secretary's Awards for Public-Philanthropic Partnerships. The website shows how some foundations, businesses and financial institutions are stepping up to play a major role in reshaping neighborhoods. Also see this PD&R Edge article for additional background.

Tips for working with HUD's new consolidated plan format

For HUD entitlement grantees submitting a consolidated plan ("ConPlan") this year or later, HUD has implemented a new format and process, called the "eCon Planning Suite". Gone are the long narratives with redundant section headings, and the incomprehensible CHAS tables. ConPlans can now be created and submitted within IDIS online, on forms with specific questions and prompts. Here are some tips on efficiently completing your ConPlan in the eCon Planning Suite and meeting HUD requirements.

• The IDIS form has numerous screens, so it is easy to get disoriented. You can export the entire application to Word (button at the top of the main menu). That way you will have everything in one document. You can write your narratives in Word, proof-read and spellcheck, and then paste them back into IDIS. It's also a good idea to have the Word doc as a backup in case there are website problems. You can also use Word to copy and paste questions for consultation with others, as described below.
• The IDIS form includes a section where you describe your process of consulting with others on the ConPlan (government agencies, nonprofits, etc.). In addition, you are required to get input on a number of sections. I recommend you copy and paste these questions from your Word version into emails and send to those you want to consult with early in the process. A list:
• NA-10- Organizations serving victims of domestic violence, and serving low-income families with children
• NA-40, MA-30- local Continuum of Care, shelters
• NA-45- Organization serving persons with HIV/AIDS
• NA-50- Public Works Dept.- need for public facilities, services and improvements
• MA-25- Housing Authority- public housing units
• MA-35- Organizations serving persons with special needs, mental disabilities
• MA-45- Economic development organizations, CDFIs, community colleges- economic impacts, workforce needs and training
• HUD has saved you a lot of time by pre-populating most of the tables with data from the Census, Labor Dept., and other sources. However, be aware, the data is old- 2011 old. Most communities have changed quite a bit since the low-point of the recession, so you need to make readers aware that this is not realtime information. It is a point-in-time snapshot. You might want to explain this in the introduction staff reports, and describe some ways that the community has changed in the last three years. You can add 2012 Census information, but it is still old. I will save time by using what is provided and providing a narrative in the introduction.
• HUD has launched a companion mapping tool called CPD Maps to help you research demographic, economic and housing data. You can then easily upload thematic maps and spreadsheets to the IDIS ConPlan form as attachments. A feature that I am using compares your local geographic area to larger geographic areas, such as a city to the county, state and nation. To do this, click on "Data Toolkit" on the menu bar, then enter the geographies into the popup window. After you download the spreadsheet, first select your target jurisdiction on the Control Panel tab (cell shaded green). Then on each of the other tabs, you can select the geographies to compare to your jurisdiction among the pull down list in each column header. The HUD Exchange website has posted guidance on using CPD Maps.  
• Community outreach is an essential part of the ConPlan, and HUD has emphasized the importance of reaching out to low-income, special needs and racial minority groups in its guidance. They have warned that if this is not done adequately, you may be required to go back and redo that section. There are a number of questions about outreach in the new IDIS form. Some recommendations:
• Translate fliers into 2-3 of the other non-English languages in your area and distribute them to local housing and service providers, local government offices and libraries. Electronic media will not reach many low-income, homeless and/or non-English speakers. Use trusted communication channels for the groups you are trying to reach.
• Plan at least a couple workshops targeted to low-income groups and hold them where they live. For example, I will have a workshop at a transitional housing complex for formerly homeless families, and a workshop at an SRO, where many of the residents have disabilities. In the past, we have also done workshops at the emergency shelter and affordable housing complexes. 
• In addition to the focused workshops, hold at least a couple general community meetings.
• Develop an email address list and send out regular e-newsletters to update on progress and remind about upcoming meetings. I have found that direct emails are much more effective than Facebook or Twitter for temporary outreach campaigns like ConPlans or Housing Elements.
• Document everything for HUD- fliers, emails, ads, sign-in sheets, agendas and notes.
• Remember that your first year's Annual Plan is included in the ConPlan. This is section "AP" in the IDIS main index. HUD hasn't issued 2015 allocations yet, so you will need to use your best projection for the budget. See the CPD Notice 14-015 for more information about the allocation and Annual Plan schedule.

Find additional guidance on using the new eCon Planning Suite here. Good luck with it! I think you'll find it much less cumbersome than the old ConPlan format.

The Latest HUD Developments for Continuums of Care

Just last month, HUD issued their 2014 Continuum of Care (CoC) Notice of Funding Availability (NOFA), making available $1.83 billion nationwide to fight homelessness. CoCs have to act quickly to secure these funds, as applications are due October 30th. In addition, CoCs are required to implement new 2014 HUD Data Standards for their Homeless Management Information Systems (HMIS) this month.

Here's the skinny on this year's CoC NOFA:

• The Collaborative Application (former Exhibit 1) is not required, as this is covered by the 2013 Application for fiscal years 2013 and 2014.
• The Project Applications (new and renewal) and related attachments are required.
• The Priority Listing and related attachments is required. As was the case for the 2013 Application, CoCs must rank their project applications and group them in Tiers 1 and 2. Find your Annual Renewal Demand and Tier 1 Allocation (ARD minus 2%) here. The full ARDs are anticipated to be funded, but HUD is requiring the Priority Listing just in case they need to make cuts. 
• Project Applicants must be informed of their Priority Listing rank at least 10 days prior to the application due date of October 30th.
• Don't forget that you need to make the public aware of the opportunity to submit project applications by posting a newspaper or website notice.

More information and resources on the 2013 and 2014 NOFAs can be found here.

You can find information on the 2014 HUD Data Standards here. 

Is your community prepared to receive federal funds to fight homelessness?

One of the few positive trends in affordable housing over the last five years is the reduction in chronic homelessness nationwide. The U.S. Department of Housing and Urban Development's (HUD) definition of chronic homelessness is individuals that have been homeless for more than one year or that have had four or more episodes of homelessness in the past three years. In addition, HUD recently reported a decrease in homelessness among veterans since 2010.

How did this happen? Starting about 10 years ago, a consensus began building among the White House, Congress, and state and local governments, that ending chronic homelessness should be prioritized. As more programs began to demonstrate success in reversing the trend of growing chronic homelessness, more decision-makers got on-board (i.e. the Housing First model). Now there is general agreement among a majority of lawmakers, administrators and activists that homelessness is not good for the economy, it wastes public resources, and that there are proven models to reduce it.

This does not mean that general homelessness has been reduced in every community, and many communities are seeing more of it now than ever before. While federal funding for fighting homelessness has been steady over the last five years, it has not increased adequately to address the impacts of the recession and growing inequity on those living near the edge of homelessness. However, recent progress does show what can happen when all levels of government, local nonprofits and citizens get on the same page to support strategies that work.

So you may ask yourself whether your community is positioned to take advantage of the recent federal interest in ending homelessness. To do so, one must understand where the federal priorities are currently and anticipate where they will be over the next few years.

The principal federal funding program to address homelessness is HUD's Continuum of Care Program. In 2009, the HEARTH Act was passed to consolidate the former McKinney-Vento programs and prioritize funding to communities that coordinate resources for maximum efficiency and efficacy. The organizations that coordinate services and apply for funds are called Continuums of Care (CoCs). Their memberships consist of all entities that collaborate within a local geography (usually a County) to combat homelessness: government agencies, nonprofits, civic groups, etc.

The CoC Interim Rule (24 CFR Part 578; Vol. 77, No. 147) laid out HEARTH Act requirements for CoCs. These requirements include: establishment of a board or governing body, Lead Agency, and a Collaborative Applicant that submits the application to HUD on behalf of the COC; conducting a homelesess census every two years; and implementation of a Homeless Management Information System (HMIS). The HMIS provides a method to consistently measure the characteristics of the homeless population, available services, and progress toward goals.

The following are areas where CoCs should prepare to meet potential future HUD regulations and guidelines.

1.  Become familiar with Proposed HMIS Rule (24 CFR Parts 91, 576, 580 and 583; Vol. 76; No. 237).  It includes specific guidance on operating HMIS, including administration and development of data quality, security and privacy plans. Develop policies and procedures that adhere to the Proposed HMIS Rule, and the 2014 HMIS Data and Technical Standards.

2.  Establish a Governance Charter for the CoC that lays out the roles and responsibilities of the governing body (or board), committees, the Lead Agency, the Collaborative Applicant and the HMIS Lead Agency.

3.  Plan for a Coordinated Assessment System. This is a method of organizing the intake and assessment of homeless individuals across the CoC to maximize efficiency of services. The idea is to eliminate duplicative intake processes and better serve individuals through coordination.

Communities that undertake these steps will enhance their competitiveness to receive federal funds in the coming years. Feel free to let me know if you have specific questions about undertaking these steps.