More Information

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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 projects are those where HUD program assistance is used for housing rehabilitation, housing construction, and other public construction when the amount of the aid to the project exceeds $200,000 or when funding from HUD’s Lead Hazard Control and Healthy Homes programs exceeds $100,000.

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BENCHMARKS

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For the project to meet HUD’s safe harbor conditions the contractor will need to demonstrate both of the following:

• Prioritization - Certifying the prioritization of effort for the following:

  • ​Employment & Training

    • ​Section 3 Workers

    • YouthBuild participants

  • Contracting​

    • Section 3 Business Concerns

    • YouthBuild programs

• Labor Hours* - Meeting or exceeding Section 3 benchmarks for total number of labor hours worked by:

  • Section 3 Workers – 25% or more of the total number of labor hours worked by all workers on the project.

  • Targeted Section 3 Workers – 5% or more of the total number of labor hours worked by all workers on the project.

​*See Labor Hours Graphic linked at the bottom of page for more.

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KEY DEFINITIONS

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Section 3 Worker

• The worker’s income is below the income limit established by HUD; or

• The worker is employed by a Section 3 business concern; or

• The worker is a YouthBuild participant

 
Targeted Section 3 Worker

• A Section 3 Worker employed by a Section 3 business concern; or

• A Section 3 Worker who currently fits or when hired fits at least one of the following categories within the past 5 years;

  • ​Living within the service area or the neighborhood of the project and within an expandable circle centered around the worksite; or

  • A YouthBuild participant

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Section 3 Business Concern

• At least 51% owned by low/very low-income persons; or

• Over 75% of the labor hours performed for the business over the prior 3-month period from when the contract or subcontract was executed are performed by low/very low-income persons; or

• Business 51% owned by current public housing residents or residents living in Section 8 housing. 

 

Professional Services
Non-construction services that require an advanced degree or professional licensing, including but not limited to contracts for legal services, financial consulting, accounting services, environmental assessment, architectural services, and civil engineering services. Professional service hours worked are not required to be included in the reporting of labor hours worked.

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RECORD-KEEPING

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Section 3 Worker
For a worker to qualify as a Section 3 Worker one of the following must be maintained:

• A worker’s self-certification that their income is below the income limit for the prior calendar year.

• A worker’s self-certification of participation in a means-tested program such as public housing or Section 8-assisted housing.

• Certification from a PHA, the owner or property manager of project-based Section 8-assisted housing, or the administrator of tenant-based Section 8-assisted housing that the worker is a participant in one of their programs.

• An employer’s certification that the worker’s income from that employer is below the income limit when based on an employer’s calculation of what the worker’s wage rate would translate to if annualized on a full-time basis.

• An employer’s certification that the worker is employed by a Section 3 Business Concern.

 

Targeted Section 3 Worker
For a worker to qualify as a Targeted Section 3 Worker one of the following must be maintained:

• An employer’s confirmation that a worker’s residence is within a radius surrounding the worksite that is a minimum of one mile and a maximum of an area encompassing a population of 5,000 people according to the most recent U.S. Census. Visit the links under each Open Section project below for project-specific information.

• An employer’s certification that the worker is employed by a Section 3 Business Concern.

• A worker’s certification that the worker is a YouthBuild participant.

 

Qualitative Efforts to Attain Benchmarks
Contractors and subcontractors may be asked to demonstrate efforts to attain benchmarks that for example include but are not limited to the following:

• Engaged in outreach efforts to generate job applicants who are Targeted Section 3 workers.

• Provided training or apprenticeship opportunities.

• Provided technical assistance to help Section 3 workers compete for jobs (e.g., resume assistance, coaching).

• Provided or connected Section 3 workers with assistance in seeking employment including drafting resumes, preparing for interviews, finding job opportunities connecting residents to job placement services.

• Held one or more job fairs.

• Provided or referred Section 3 workers to services supporting work readiness and retention (e.g., work readiness activities, interview clothing, test fees, transportation, childcare).

• Provided assistance to apply for/or attend community college, a four-year educational institution, or vocational/technical training.

• Assisted Section 3 workers in obtaining financial literacy training and/or coaching.

• Engaged in outreach efforts to identify and secure bids from Section 3 business concerns.

• Provided technical assistance to help Section 3 business concerns understand and bid on contracts.

• Divided contracts into smaller jobs to facilitate participation by Section 3 business concerns.

• Provided bonding assistance, guarantees, or other efforts to support viable bids from Section 3 business concerns.

• Promoted use of business registries designed to create opportunities for disadvantaged and small businesses.

• Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.

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CONTRACT PROVISION

Recipients must include language applying Section 3 requirements in any sub-recipient agreement or contract for Section 3 project.