HUD Section 3

Section 3 of the Housing & Urban Development Act of 1968 recognizes that HUD funding typically results in projects/activities that generate new employment, training, and contracting opportunities. When these opportunities are created, Section 3 requires that preference is provided to the low- and very low-income residents of the local community (regardless of race & gender), and the businesses that substantially employ them, for new employment, training, and contracting opportunities resulting from the HUD-funded project.

Section 3 Triggers:

  • Dollar Thresholds: contracts over $100,000 are required to comply with Section 3 requirements
  • Section 3 regulations do not require hiring or subcontracting unless it is necessary to the project
  • Section 3 is triggered when covered projects require “new hires” or subcontracting
  • Section 3 is not an entitlement, it is an opportunity for employment, training and contracting opportunities

Goals and Certification Download

Section 3 Resident – A public housing resident or an individual who resides in the metropolitan area or non-metropolitan county in which Section 3 covered assistance is expended and who is considered to be a low- (80% of AMI) to very low-income (50% AMI) person. Persons must be certified as Section 3 Residents to count toward the goals listed above. Certification lasts for a period of 3 years.

Section 3 Business Concern

  • Fifty-one percent or more of the business is owned by Section 3 Residents; or
  • Thirty percent of the business’s permanent, full-time employees are certified Section 3 Residents; or
  • The Business provides evidence that it will subcontract 25 percent of the dollars awarded to certify Section 3 Business Concerns.
  • Businesses must be certified as a Section 3 Business Concern to count towards the goals listed above.

Compliance Requirements
Each entity undertaking work under a contract that is $100,000 or more must submit a Section 3 Plan. This plan must include, at a minimum, the General Statement, the Current Workforce Profile and Hiring Plan, Permanent Employee Listing, and Quarterly Reporting of Section 3 initiatives.