Over the next four years, the City of St. Paul will direct $1 million to building the capacity of low-income people and small, disadvantaged businesses as a means of increasing their participation on housing construction projects. The fund is part of a Voluntary Compliance Agreement (VCA) the City is entering into with the U.S. Department of Housing and Urban Development (HUD).
However, some community activists who have been working for years on the issue – which they’re characterizing also as a racial justice matter because of the number of low-income minorities living in the area – want the City to do more to make up for lost time. They’re lobbying for a restitution plan, but the likelihood of that happening is unclear at this point.
The 28-page VCA follows HUD’s August 2009 determination that the City violated Section 3 of the Housing and Urban Development Act of 1968, which requires HUD grantees to provide job training, employment and contract opportunities to low-income residents for projects and activities in their neighborhoods “to the greatest extent feasible,” as it reads on the HUD website.
Specifically, 10 percent of contracting dollars are supposed to go to low-income people and businesses, while 30 percent of new hires should be low-income residents.
Over the years, Section 3 enforcement has been relaxed, but lately HUD has tried to change that. As a first step, last fall it notified each of the cities and public housing authorities it contracts with, including St. Paul, about reporting annually on Section 3 compliance.
Maurice McGough, director of the Chicago HUD Office of Fair Housing and Equal Opportunity, attributed HUD’s renewed interest in Section 3 to the federal stimulus package, which is investing huge sums into local economies. “It makes Section 3 even more important to ensure that there are local benefits,” he said.
Until the agreement was reached recently in St. Paul, HUD went so far as to withhold from the City $18 million in Neighborhood Stabilization (NSP) housing funds, which were competitively awarded to cities. NSP is a program to combat the foreclosure crisis.
“I don’t know of any other city that was awarded NSP money but had open findings of noncompliance [with Section 3] other than St. Paul,” McGough said.
When asked about the possibility of restitution, McGough responded, “The purpose of the VCA isn’t to address past noncompliance, but to be a blueprint to ensure future compliance. Restitution isn’t something that we seek in our compliance activities. We try to make sure a city or public housing authority is compliant going forward.”
Right now it’s tough for a lot of small contractors to compete with larger, more established companies. “There are programs built into the VCA to assist in providing access so that those smaller businesses are in a position to get the dollars that are being pumped into the local economy,” McGough explained.
The VCA has provisions for monitoring and enforcement of the program, he said. For instance, it calls for HUD and the City to meet semi-annually to evaluate progress. The VCA can be modified if something isn’t working for the City, or HUD can impose administrative sanctions and terminate future funding, he explained.
Coming into compliance
The agreement between the City and HUD cites the efforts of Fredrick Newell, a St. Paul resident who filed complaints with HUD in 2008 against the City, alleging that it failed to comply with Section 3. In 2007, he brought a lawsuit against the City, which was dismissed because the court determined that Section 3 doesn’t afford a right of private action, according to the VCA.
Newell’s complaints, along with the research he had gathered, triggered HUD’s review of St. Paul’s Section 3 activities over the course of a three-year period. It turned out that the City, which hadn’t reported on it in several years, had no Section 3 plan. Additionally, the City lacked the ability to meet goals, reach out to contractors, and more, HUD found.
Cecile Bedor, who helms the City’s Department of Planning and Economic Development, commented about the VCA: “The compliance agreement says that we’ll do what we always agreed to do and what we thought we were already doing.”
Further, the City had requested a draft agreement with HUD in the fall. When it finally came in January, “We immediately took action,” she said, adding that the $1 million Section 3 Implementation Fund represents “an effort that will continue forever.”
Bedor explained that the City plans to train staff and developers while Section 3 businesses will be recruited. A Section 3 point-person has already been picked out, which was another part of the agreement. The City has done outreach to over 600 businesses, encouraging them to register as Section 3 companies.
On some recent projects, the City has exceeded goals for inclusiveness, she said. As for the VCA, “We were able to do it because it embodies the values of the city,” she said, stressing that Section 3 is race and gender-neutral.
Some local faith leaders from the interfaith activist group ISAIAH and the Black Ministerial Alliance, who have been meeting with Mayor Chris Coleman and other City officials, issued a written statement on the issue: “It’s a good step that we’re finally moving to enforce this law … We hope St. Paul moves to become a model city for living out this program with the job training and small business development mentioned in the compliance agreement.”
However, they also say that the VCA isn’t enough. They claim that for the past four years, at least $4 million should have gone to the low-income community in contracting, and possibly a lot more as many projects were at least partially funded with Section 3 funds. The faith leaders are calling for that money to be restored in the form of job training and small business development.
A debt owed to the community
Lonnie Ellis, an ISAIAH member who serves as the minister of social justice at St. Thomas More Catholic Church in St. Paul, said they feel that a debt is owed to the community. To make amends, he said, the group is advocating for the City to allocate $3.2 million to small business development, ensuring that 3,000 work hours are given to low-income people. Some precedence has been set elsewhere, he said, such as in Long Beach, California, which was also found to be noncompliant.
According to a document for Section 3 advocates, the Legal Aid Foundation of Los Angeles (LAFLA) had filed a complaint concerning the City’s spending of HUD dollars in 1995. HUD checked it out and determined that the City fell short.
Long Beach, HUD, and the complainants were able to come to an agreement, which Ellis and other advocates modeled theirs after, for the City to implement a $3.2 million small business incentive program. HUD spokesperson McGough pointed out that the Long Beach restitution plan is the only one that he is aware.
Jonathan Zielske, an ISAIAH member and pastor of Hope Lutheran Church in St. Paul, commented that he and other advocates had thought the VCA was going to be developed more collaboratively between the City and community. “We thought we would be able to weigh in,” he said.
“The impression that we got from a January 12 community meeting with the mayor and other City officials was, ‘We’ll listen, but we already know what we’re going to do.’ We look at this as something they’re doing to look good.
“We don’t want to assume that the outcomes are going to happen. We’re going to keep an eye on it,” Zielske said, adding, “We’ve had a good relationship with the City in the past, and we want it to continue. We think this is a win-win to make the community more livable.”
On this issue, he and other advocates reference a passage of scripture, Isaiah 58:12, which calls on believers to be the “repairers of the breached, restorers of streets to dwell in.” He added, “We feel that [not fulfilling Section 3 requirements] is a breach. It’s like the City has taken care of some but not others for too long.”
It’s that breach that Zielske and others hope to repair in the future.
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