Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 to ensure that employment and economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to the business concerns which provide economic opportunities to these persons.
Section 3 projects are housing rehabilitation, housing construction, and other public construction projects assisted by HUD programs that provide housing and community development financial assistance when the total amount of assistance to the project exceeds $200,000. Some of these HUD programs include, but are not limited to:
• Community Development Block Grant (CDBG)
• HOME Investment Partnership Program
• Neighborhood Stabilization Program Grants (NSP)
• Housing Opportunities for Persons with AIDS (HOPWA)
• Emergency Solutions Grants (ESG)
The Section 3 requirements apply to the entire project, regardless of whether the project is fully or partially assisted by the HUD program providing the financial assistance.
On August 24, 2021, HUD published a Final Section 3 Rule (Notice CPD 2021-09) which can be found at https://www.hud.gov/sites/dfiles/OCHCO/documents/2021-09cpdn.pdf.
- In that rule, HUD defines a Section 3 business concern as a business concern that meets one of the following requirements:
- It is at least 51 percent owned by low- or very low-income persons;
- Over 75 percent of the labor hours performed for the business are performed by low- or very low-income persons; or
- It is a business at least 51 percent owned by current public housing residents or residents who currently live in Section 8-assisted housing.
- HUD defines a Section 3 worker for both public housing financial assistance and Section 3 projects as a worker that meets one of the following requirements:
- The worker's income is below the income limit established by HUD.
- The worker is employed by a Section 3 business concern.
- The worker is a YouthBuild participant.
- HUD defines a Targeted Section 3 worker differently for public housing financial assistance and Section 3 projects. A Targeted Section 3 worker includes any worker who is employed by a Section 3 business concern or is a:
- Resident of public housing or Section 8-assisted housing;
- Resident of another project managed by the PHA that is expending assistance; or