HUD Section 3 Program

HUD Section 3 requirements may apply to HUD-funded housing development.

Please note, this section is being updated due to the newly implemented HUD Section 3 rule.

Program overview

Section 3 is part of the Housing and Urban Development (HUD) Act of 1968. It promotes local economic development and individual self-sufficiency. The Section 3 program is race and gender neutral. Qualification for Section 3 is based solely on the following: 
  • income; and
  • residency in the Twin Cities metro area which includes the counties of: Anoka, Carver, Chisago, Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne, Washington, and Wright counties in Minnesota; and Pierce and St. Croix counties in Wisconsin.

Requirements

This program applies only to construction projects that receive certain HUD financial assistance.

Recipients of Section 3 funding must provide job training, employment, and contracting opportunities to qualifying residents for projects and activities in their neighborhoods.

The HUD Section 3 program has two goals - 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. If this goal is not met, the prime contractor must document all efforts to meet this requirement.

There are three ways to qualify as a Section 3 Business (must meet one of the following criteria):

  1. at least 51% of the business is owned by a Section 3 Resident(s)
  2. at least 30% of the business's full-time employees include people who are current Section 3 Residents or were Section 3 Residents within three years of being hired
  3. the business makes a commitment to subcontract more than 25% of the dollar award of all subcontracts to businesses that meet one of the first two qualifications

Section 3 Resident new hire goal

Thirty percent of all new hires on a project must be Section 3 Residents. If this goal is not met, the prime contractor must document all efforts to meet this requirement.

Definition of a Section 3 Resident (must meet one of the following criteria):
  • a public housing resident
  • a participant in a HUD Youthbuild program
  • a homeless person living in the metropolitan statistical area where the HUD-assisted project is located
  • a low or very low-income person living in the metropolitan statistical area where the HUD-assisted project is located

Definition of a Section 3 New Hire:

  • a full-time employee hired for a permanent, temporary, or seasonal position that’s created as a direct result of a HUD-funded project; or
  • a worker who was laid-off and is re-hired as a result of a HUD-funded project

Job categories that count toward the Section 3 Resident New Hire Goal include:

  • all employment opportunities related to housing rehabilitation (including reduction and abatement of lead-based paint hazards)
  • housing construction
  • other public construction (management and administrative jobs, technical, professional, building trades, and non-construction jobs)

How to get certified as a business or resident

The Contract Compliance Division certifies businesses and residents for Section 3 status. 

Download Business Application for Section 3

Download Resident Application for Section 3

Covid Related information

The Office of Fair Housing and Equal Opportunity (FHEO) is providing this Frequently Asked Questions (FAQ) notice to address questions and concerns that recipients of Section 3 covered assistance may have regarding compliance requirements under Section 3 during the global pandemic resulting from COVID-19 (Coronavirus). For more information visit the HUD website.

Frequently Asked Questions about COVID-19 for Section 3 Covered Recipients

Contact us

Contract Compliance Division

Brian Walsh

Director

Phone

612-673-3012

Address

City Hall
350 Fifth St. S., Room 239
Minneapolis, MN 55415

Office hours
8:30 a.m. – 4:30 p.m.
Monday – Friday

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