Section 3

1. What is Section 3?

Section 3 is a provision of the Department of Housing and Urban Development (HUD) Act of 1968. The purpose of Section 3 is to ensure that preference for employment, training and contracting opportunities generated from the expenditure of certain HUD funds is directed to local low-and very low-income persons, particularly those who receive federal housing assistance, and businesses that are owned by or substantially employ such persons.

2. What does the term “Section 3 resident” mean?

A “Section 3 resident” is:

a) A public housing resident; or
b) A low-or very low-income person who lives in the metropolitan area or nonmetropolitan county where covered HUD funding is expended.

3. What does the term “Section 3 Business” mean?

Section 3 businesses are those that can provide evidence of meeting one of the following three criteria:

a. 51 percent or more owned by Section 3 residents; or
b. At least 30 percent of its full-time employees includes persons that are currently Section 3 residents, or were Section 3 residents within three years of first hire date; or
c. Provides evidence, as required, of a commitment to subcontract more than 25 percent of the dollar award of all subcontracts to businesses that meet the qualifications of a) or b) above.

4. How are the terms “low-income” and very low-income determined?

Low-and very-low-household income limits are determined annually by HUD. These limits are typically established at 80 percent and 50 percent of the median income for each locality by household size or the number of people residing in one house. HUD income limits may be obtained from: http://www.huduser.org/portal/datasets/il.html.

5. What is the Section 3 Business Registry?

The Section 3 Business Registry is a listing of businesses that have self-certified that they meet one of the eligibility criteria of a Section 3 business and have submitted publicly available information about their firm (i.e. business name, address, type of services provided, etc.) to be included onto HUD’s online database. Section 3 residents are also encouraged to use the registry to identify businesses that may have employment opportunities.

6. What documentation is required from businesses that meet the definition of a Section 3 Business?

For inclusion in the registry, businesses must submit the online application and are not initially required to submit any additional documentation to HUD. Additional documentation may be requested if HUD receives complaints alleging that any business in its registry has misrepresented their firm’s status to the Department. Businesses may also be required to submit supporting documentation as evidence of their eligibility to recipients prior to the award of a HUD-funded contract.

7. Where do I find the database of businesses that have self-certified that they meet the definition of a Section 3 Business?

To search the database for businesses please visit: www.hud.gov/Sec3Biz.

8. What if my firm listed on HUD/s Section 3 Business Registry and I need to change or update my contact information?

To change or update your contact information, submit a detailed request via email to: Sec3biz@hud.gov.

9. How can I find recipients or agencies that are required to provide preferences to Section 3 residents and businesses in my area?

To find local recipients of Section 3 covered funding, contact your local HUD office. To find your closest office, visit: www.hud.gov/localoffices.

10.Where can I find more information on the requirements of Section 3?
For more information on the requirements of Section 3, please visit www.hud.gov/Section3.