What Is Section 3?
Section 3 of the Housing and 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 low- and very low-income residents of the local community (regardless of race and 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.
Section 3 Goals
For all contracts over $100,000 (this includes developer, contractor, and subcontractor contracts):
- Thirty percent (30%) of the aggregate number of new hires shall be Section 3 Residents;
- Ten percent (10%) of all covered construction contracts shall be awarded to Section 3 Business Concerns.
- Three percent (3%) of all covered non-construction contracts shall be awarded to Section 3 Business Concerns.
Efforts to meet these goals must be made to the greatest extent feasible and all efforts taken must be documented accordingly.
Section 3 Resident
A public housing resident or an individual who resides in the metropolitan area or non-metropolitan county in which the Section 3 covered assistance is expended and who is considered to be a low- (80% of AMI) to very low-income (50% of 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 (51%) or more of the business is owned by Section 3 Residents; or
- Thirty percent (30%) of the business’s permanent, full-time employees are certified Section 3 Residents; or
- The Business provides evidence that it will subcontract 25 percent (25%) 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.
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.
For information regarding Resident or Business Concern certification or Section 3 procedures, please contact Shannon Johnson, 513-352-6146 or firstname.lastname@example.org.