Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 (12 U.S.C. 1701u). The purpose of Section 3 is to ensure that, to the greatest extent feasible, employment and other economic opportunities generated by HUD financial assistance for housing and community development programs are directed toward low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons.
All subrecipients, developers, contractors, and subcontractors (including professional service vendors) on Section 3 projects must demonstrate good faith efforts to comply with the Section 3 regulations, found at 24 CFR Part 75, and the City of New Orleans Section 3 Policy and Procedures.
Section 3 requires that employment and training opportunities shall be provided to Section 3 workers, and contracting opportunities shall be provided to Section 3 businesses that provide economic opportunities to Section 3 workers.
Subrecipients and contractors must make best efforts to follow the order of prioritization below:
Employment and Training
Where feasible, priority for opportunities and training should be given to:
- Section 3 workers residing within the service area or neighborhood of the project, and
- Participants in YouthBuild programs.
Where feasible, priority for contracting opportunities should be given to:
- Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or neighborhood of the project, and
- YouthBuild programs.
Compliance with Section 3 is measured by the percentage of total labor hours worked on the project by Section 3 workers and Targeted Section 3 workers, as follows:
- 25% or more of the total number of labor hours worked by all workers on a project shall be performed by Section 3 workers.
- 5% or more of the total number of labor hours worked by all workers shall be performed by Targeted Section 3 workers.
A Section 3 worker is any worker who currently fits or when hired within the past five years fit at least one of the following categories:
- The worker's income for the previous or annualized calendar years is below the income limit established by HUD.
- The worker is employed by a Section 3 business concern.
- The worker is a YouthBuild participant.
A Targeted Section 3 worker is a Section 3 worker who is:
- A worker employed by a Section 3 business concern; or
- A worker who currently fits or when hired within the past five years fit at least one of the following categories:
- Living within the service area or neighborhood of the project; or
- A YouthBuild participant.
A Section 3 business concern is a business that satisfies at least one of the following criteria, as documented within the last six-month period:
- The business is at least 51% owned and controlled by low- or very low-income persons;
- The business is at least 51% owned and controlled by residents who currently live in public housing or Section 8-assisted housing; or
- Over 75% of the labor hours performed for the business over the prior three-month period were performed by Section 3 workers.
The Service area or neighborhood of the project is an area within one mile of the Section 3 project.
2022 HUD Income Limits
Low-income (80% AMI) - $43,900
Very low-income (50% AMI) - $27,450