Fair Housing and Equal
Opportunity
SECTION 3
Economic Opportunities for Low Income Persons
Section 3
WHAT IS SECTION 3
Section 3 of the Housing and Development Act of 1968, is a
statutory provision which requires that to the greatest extent
feasible, opportunities for training, employment, contracting and
other economic opportunities be given to low and very-low income
residents that reside in the project area where HUD funds are
expended.
Race and Gender
Neutrality

Section 3 of the HUD act is race and gender neutral.

A minority business or women-owned business
enterprise shall be required to present Section 3
certification to receive preference.

The preference provided by this federal act is based on
income and location.
Triggering The Regulation

Section 3 regulations do not require hiring or subcontracting
unless it is necessary to complete the project.

Section 3 is triggered when covered projects require “new”
hires or sub-contracting.

Section 3 is not an entitlement, it is an opportunity.
Employment and
Contracting
WHO IS ELIGIBLE FOR EMPLOYMENT AND
CONTRACTING?

Section 3 Residents

Section 3 Business Concerns
Section 3
Residents

Residents that live in public housing or receiving public
assistance.

Live in proximity to where funds are expended.

Those that meet the income level set by HUD.

A Section 3 resident must meet the qualifications of the
position to be filled.
Section 3
Business Concerns

Businesses that are 51 percent or more owned by Section 3
residents;

Businesses whose permanent, full-time employees include persons,
at least 30 percent of whom are currently Section 3 residents, or
within three years of the date of first employment with the firm
were Section 3 residents; or

Businesses that provide evidence of a commitment to subcontract in
excess of 25 percent of the dollar amount of all subcontracts to be
awarded to businesses that meet the qualifications described above.

A Section 3 business concern must have the ability and capacity to
perform.
Section 3
Numerical Goals

30% of all employment and training opportunities to be awarded to
Section 3 residents.

10% of all construction contracting opportunities to be awarded to
Section 3 businesses.

3% of all non-construction contracting opportunities to be
awarded to Section 3 businesses.
Section 3
Compliance

Sub-Recipients that fail to meet the minimum numerical goals
bear the burden of demonstrating why it was not possible to
do so.

Failure to comply with the requirements of Section 3 may
result in a monitoring finding or sanctions that may include:
debarment, suspension of funds, or limited denial of
participation in CSD programs pursuant to 24 CFR Part 24.
Section 3
Compliance

Direct Recipients of HUD covered funds are ultimately
responsible for program implementation and reporting
responsibilities.

Notify Section 3 residents and business concerns about
economic opportunities.

Notify covered contractors and incorporate the Section 3
clause into contracts.

Facilitate training and employment of residents.

Award contracts to Section 3 Businesses.
Section 3
Compliance
•
Meet annual numerical goals.
•
Facilitate compliance among contractors.
•
Document other actions taken to achieve compliance.
•
Submit annual HUD report to MDA.
Section 3
Compliance

MDA will monitor all Sub-recipients for Section 3 compliance.

MDA will provide Section 3 technical assistance and guidance
to Sub-recipients.

MDA will comply with the Section 3 reporting requirements
and submit to HUD a comprehensive report annually, as part
of the Consolidated Annual Performance and Evaluation
Report (CAPER).
THE END