What is Section 3?
Section 3 is a provision of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u) that is regulated by the provisions of 24 CFR 75. Section 3 regulations ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to 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.
Click here access the HUD Section 3 Opportunity Portal
Who receives Economic Opportunities under Section 3?
For Training and Employment
Under Spartanburg Housing's Section 3 Program, contractors and subcontractors should make best efforts to provide employment and training opportunities to Section 3 workers in the priority order listed below:
(Public housing financial assistance)
- To residents of the public housing projects for which the public housing financial assistance is expended;
- To residents of other public housing projects managed by the PHA that is providing the assistance or for residents of Section 8-assisted housing managed by the PHA;
- To participants in YouthBuild programs; and
- To low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended.
(Housing and community development financial assistance)
Provide employment and training opportunities to Section 3 workers within the metropolitan area (or nonmetropolitan county) in which the project is located in the priority order listed below:
- Section 3 workers residing within the service area or the neighborhood of the project; and
- Participants in YouthBuild programs.
Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning work and after work is completed.
For Contracting
Under Spartanburg Housing's Section 3 Program, contractors and subcontractors must make their best efforts to award contracts and subcontracts to business concerns that provide economic opportunities to Section 3 workers in the following order or priority:
(Public housing financial assistance)
- Section 3 business concerns that provide economic opportunities for residents of public housing projects for which the assistance is provided;
- Section 3 business concerns that provide economic opportunities for residents of other public housing projects or Section-8 assisted housing managed by the PHA that is providing assistance;
- YouthBuild programs; and
- Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the assistance is provided.
(Housing and community development financial assistance)
- Business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which assistance is located in the following order of priority (where feasible):
- Section 3 business concerns that provide economic opportunities to Section 3 workers residing within the service area or the neighborhood of the project; and
- YouthBuild programs.
Contractors and subcontractors will be required to certify that they will and have made best efforts to follow the prioritization of effort requirements prior to the beginning work and after work is completed.
Business Concern
Spartanburg Housing encourages contractors and subcontractors to make best efforts to award contracts and subcontracts to Section 3 business concerns.
Businesses that believe they meet the Section 3 Business requirements can may self-register in the HUD Business registry, here: http://www.hud.gov/Sec3Biz. Businesses may seek Section 3 Business Concern preference by demonstrating that it meets one or more of the following criteria:
- At least 51 percent of the business is owned and controlled by low- or very low-income persons; or
- At least 51 percent of the business is owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing; or
- Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers.
Businesses that seek Section 3 preference shall certify, or demonstrate to Spartanburg Housing, contractors or subcontractors, that they meet the definitions provided in the above. Businesses may demonstrate eligibility by submitting the Section 3 Business Concern Certification Form.
Section 3 Business Concern Certification Forms must be submitted at the time of bid/proposal. If Spartanburg Housing previously approved the business concern to be Section 3 certified, then the certification can be submitted along with the bid, as long as the form is submitted within the prescribed expiration date. The Section 3 Business Concern Certification Form will expire after 36 months. Establishing a 36 month certification of eligibility period allows the [recipient/grantee] the ability to assess contractor performance to ensure the business is striving to meet the required goals.
Safe Harbor Benchmarks
Spartanburg Housing has established employment and training goals that subrecipients, contractors, and subcontractors should meet in order to comply with Section 3 requirements outlined in [ 24 CFR Part 75.9 - for public housing financial assistance] or [24 CFR Part 75.19 - for housing and community development financial assistance]. The safe harbor benchmark goals are as follows:
(Public housing financial assistance)
- 25% or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the PHA's fiscal year are Section 3 workers;
Section 3 Labor Hours/Total Labor Hours = 25%
And
- 5% or more of the total number of labor hours worked by all workers employed with public housing financial assistance in the PHA's fiscal year are Targeted Section 3 workers, as defined at 24 CFR Part 11.
Targeted Section 3 Labor Hours/Total Labor Hours = 5%
(Housing and community development financial assistance)
- 25% or more of the total number of labor hours worked by all workers on a Section 3 project are Section 3 workers;
Section 3 Labor Hours/Total Labor Hours = 25%
And
- 5% or more of the total number of labor hours worked by all workers on a Section 3 project are Targeted Section 3 workers, as defined at 24 CFR Part21.
Targeted Section 3 Labor Hours/Total Labor Hours = 5%
HUD establishes and updates Section 3 benchmarks for Section 3 workers and/or Targeted Section 3 workers through a document published in the Federal Register, not less frequently than once every 3 years. Given that the Section 3 benchmarks are subject to change every three years or sooner, Spartanburg Housing will review and update the Section 3 Plan every three years, as needed.
It is the responsibility of contractors to implement efforts to achieve Section 3 compliance. Any contractor that does not meet the Section 3 benchmarks must demonstrate why meeting the benchmarks were not feasible. All contractors submitting bids or proposals to the [recipient/grantee] are required to certify that they will comply with the requirements of Section 3.
Current Income Limit for the Section 3 Program is $41,850, effective April 18, 2022.
HUD Section 3 Business Registry Section 3 businesses must register with HUD on a national level. HUD provides a searchable list of these Section 3 businesses.
Section 3 Business Registry Search Results
Section 3 Brochure - English
Section 3 Brochure - Spanish
Section 3 FAQs
Davis-Bacon Resources:
Making Davis-Bacon Work Contractors Guide Prevailing Wage Requirements
Davis-Bacon and Labor Standards (DBLS) Forms
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