HUD Section 3 program

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

New HUD Section 3 rules

Read the details related to the new HUD Section 3 rules.

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 service area or the neighborhood of the construction project.

Requirements

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

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

Section 3 businesses

There are no longer Section 3 business contracting goals or requirements. However, HUD and the City of Minneapolis encourage recipients of Section 3 funding to solicit and provide contracting opportunities to certified Section 3 Business Concerns.

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

  1. It is at least 51% owned and controlled by low- or very low-income persons. 
  2. Over 75% of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers. 
  3. It is a business at least 51% owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing. 

Section 3 Worker labor goal

25% of all labor hours are to be performed by Section 3 Workers and 5% of all labor hours are to be performed by Section 3 Targeted Workers. The 5% goal will count towards the overall 25% Section 3 Worker goal. 
 
Definition of a "Section 3 Worker" (must meet at least one of the following criteria): 
  1. The worker's gross income for the previous or annualized calendar year is below the income limit established by HUD. 2021 HUD Income Standards for the area of Mpls/St. Paul/Bloomington are: Very Low Income (50% area median income or 'AMI') is $36,750 or less; and Low Income (80% area median income or 'AMI') is $55,950 or less. 
  2. The worker is employed by a Section 3 business concern. 
  3. The worker is a YouthBuild participant. 

Definition of a "Targeted Section 3 Worker" (must meet at least one of the following criteria): 

  1. The worker is employed by a Section 3 business concern. 
  2. The worker is a YouthBuild participant. 
  3. The worker is a resident in public housing, Section 8-assisted housing, and/or a resident of other public housing projects or Section 8-assisted housing managed by the Public Housing Agency that is providing the assistance (applies only to Public Housing Assistance Projects).
  4. The worker lives within the service area or the neighborhood of the project. 

Additional details

Additional details regarding the HUD Section 3 rules are on our HUD Section 3 details webpage. 

HUD Section 3 Details

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). 

Visit the HUD website for more information

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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