What is Section 3?

Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 that helps foster local economic development, neighborhood economic improvement, and individual self-sufficiency.  The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent feasible, provide job training, employment, and contracting opportunities for low- or very-low income residents in connection with projects and activities in their neighborhoods.

What is a Section 3 business concern?

A business that:

• Is 51 percent or more owned by Section 3 residents;

• Employs Section 3 residents for at least 30 percent of its full-time, permanent staff; or

• Provides evidence of a commitment to subcontract to Section 3 business concerns, 25 percent or more of the dollar amount of the awarded contract.

Who are Section 3 residents?

Section 3 residents are:

• Public housing residents or

• Persons who live in the area where a HUD-assisted project is located and who have a household income that falls below HUD’s income limits.

What programs are covered?

Section 3 applies to HUD-funded Public and Indian Housing assistance for development, operating, and modernization expenditures.  Section 3 also applies to certain HUD-funded Housing and Community Development projects that complete housing rehabilitation, housing construction, and other public construction.

What types of economic opportunities are available under Section 3?

• Job training

• Employment

• Contracts

Who will award the economic opportunities?

Recipients of HUD financial assistance will award the economic opportunities.  They and their contractors and subcontractors are required to provide, to the greatest extent feasible, economic opportunities consistent with existing Federal, State, and local laws and regulations.

Who receives priority under Section 3 for contracting?

Businesses that meet the definition of a Section 3 business concern

How can businesses find Section 3 residents to work for them?

Businesses can recruit Section 3 residents in public housing developments and in the neighborhoods where the HUD assistance is being spent.  Effective ways of informing residents about available training and job opportunities are:

• Contacting resident organizations, local community development and employment agencies

• Distributing flyers

• Posting signs

• Placing ads in local newspapers

Are recipients, contractors, and subcontractors required to provide longterm employment opportunities, not simply seasonal or temporary employment?

Recipients are required, to the greatest extent feasible, to provide all types of employment opportunities to low and very low-income persons, including permanent employment and long-term jobs.  Recipients and contractors are encouraged to have Section 3 residents make up at least 30 percent of their permanent, full-time staff.  A Section 3 resident who has been employed for 3 years may no longer be counted towards meeting the 30 percent requirement.  This encourages recipients to continue hiring Section 3 residents when employment opportunities are available.

Am I a Section 3 business?

To check if you are a Section 3 business, please go to HUD's Section 3 Registry and complete the short form.  If you are a Section 3 business you will also be able to register your business and be placed on HUD's Section 3 Business Registry.  The Section 3 Business Registry is a listing of firms that have self-certified that they meet one of the regulatory definitions of a Section 3 business and are included in a searchable online database that can be used by agencies that receive HUD funds, developers, contractors, and others to facilitate the award of certain HUD-funded contracts.  The database can also be used by Section 3 residents to identify businesses that may have HUD-funded employment opportunities.

It is important to note that Section 3 businesses are not entitled to receive contracts simply by being listed in HUD's Section 3 Business Registry database.  Eligible businesses may need to demonstrate that they are responsible and have the ability to perform successfully under the terms and conditions of proposed contracts.  Section 3 requirements at 24 CFR 135, then provides preference for contracts and subcontracts to these firms-but not a guarantee.