Section 3


What is Section 3?

It is a means by which HUD fosters local economic development, neighborhood economic improvement, and individual self-sufficiency. Section 3 is the legal basis for providing jobs for residents and awarding contracts to businesses in areas receiving certain types of HUD financial assistance.

Under Section 3 of the HUD Act of 1968, wherever HUD financial assistance is expended for housing or community development, to the greatest extent feasible, economic opportunities will be given to Section 3 residents and businesses in that area.

When is Section 3 Required?

Section 3 requires compliance whenever contracts exceed $100,000. Hiring or contracting is not required unless they are necessary to the project or when a project requires subcontractors or new hires.

Requirements to Maintain Compliance

In the instance that a contract exceeds $100,000 a Section 3 plan must be submitted. Minimum requirements for this submission include, but are not limited to, the Quarterly Reporting of Section 3 Initiatives, Permanent Employee Listings, the General Statement and the Current Workforce Profile and Hiring Plan.

What is a Section 3 business & what types of economic opportunities are available under Section 3?

A business:

  • That is at least 51 percent or more owned by Section 3 residents,
  • Whose permanent, full-time employees include persons, at least 30 percent of whom are currently Section 3 residents, or within three years of the date of first employment with the business concern were Section 3 residents, or
  • That provides evidence of a commitment to subcontract in excess of 25 percent of the dollar award of all subcontracts to be awarded to a Section 3 business concern.

Types of Opportunities:

  • Job training
  • Employment
  • Contracts

Examples include:


Accounting, Payroll, Research, Bookkeeping, Purchasing, Word Processing


Appliance Repair, Florists, Marketing, Carpet Installation, Janitorial, Photography, Catering, Landscaping, Printing, Computer/Information, Manufacturing, Transportation


Architecture, Bricklaying, Carpentry, Cement/Masonry, Demolition, Drywall, Electrical, Elevator Construction, Engineering, Fencing, Heating, Iron Works, Machine Operation, Painting, Plastering, Plumbing, Surveying, Tile Setting

Who will award the economic opportunities?

Recipients of HUD financial assistance and their contractors and subcontractors are required to provide economic opportunities, to the greatest extent possible, consistent with existing Federal, State, and local laws and regulations.

For more information

For more information in regards to Resident or Business Section 3 procedures please contact Sandy Paben at