HUD Section 3 Program
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 is race and gender neutral. Qualification for Section 3 is based solely on income and residency in the metropolitan statistical area*.
This program applies only to construction projects that contain certain HUD financial assistance. Recipients of applicable funding shall 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.
The Section 3 Program has two different goals that are fixed by HUD, one for Business Subcontracting and one for Resident New Hires.
Section 3 Business Subcontracting Goal
Prime contractors must subcontract 10% of the project total to Section 3 Businesses. To the greatest extent feasible, every effort must be made to comply with the requirement. If goals are not met, the prime contractor must adequately document all efforts taken to comply with the requirement.
There are three ways to qualify for Section 3 Business status:
1. A business that is 51% or more owned by Section 3 residents, OR
2. At least 30% of a business's full time employees include persons that are currently Section 3 residents or were Section 3 residents within three years of the date of first hire, OR
3. A business that makes a commitment to subcontract in excess of 25% of the dollar award of all subcontracts to business concerns that meet one of the first two qualifications above.
Section 3 Resident New Hire Goal
30% of all of new hires must be Section 3 employees. To the greatest extent feasible, every effort must be made to comply with the requirement. If goals are not met, the prime contractor must adequately document all efforts taken to comply with the requirement.
A Section 3 Resident is:
1. A public housing resident, OR
2. Participant in a HUD Youthbuild program, OR
3. Homeless persons residing in the metropolitan statistical area* where the HUD assisted project is located, OR
4. A low- or very low-income person residing in the metropolitan statistical area* where the HUD assisted project is located.
A Section 3 New Hire is:
· A full-time employee for a new permanent, temporary, or seasonal position that is created as a direct result of the HUD-funded project.
· Laid-off workers that are re-hired as a result of a HUD-funded project can be considered new hires.
Job categories that count towards New Hire Goals include: all employment opportunities arising in connection with housing rehabilitation (including reduction and abatement of lead-based paint hazards); housing construction; or other public construction, including management and administrative jobs, technical, professional, building trades and non-construction jobs, at all levels.
How to Become a Certified Section 3 Business or Resident
The Contract Compliance Division certifies businesses and residents for Section 3 status for all City of Minneapolis projects.
Last updated Nov 15, 2016