What is Section 3?

Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 that is intended to foster local economic development, neighborhood economic improvement, and individual self-sufficiency.  The Section 3 program requires that recipients of certain HUD financial assistance, to the greatest extent feasible, provide job training, employment and contracting opportunities for low- and very-low-income residents in connection with projects and activities in their neighborhoods.

  Back to the top

Who Must Comply with Section 3 Requirements?

Section 3 “preference” requirements are triggered by the need for new hires (whether individual employees, contractors or subcontractors) for work on a project using funding from HUD (or any federal agency) covered by Section 3 legislation. This includes all public housing funds received from HUD as well as CDBG and HOME funded projects.

  Back to the top

Who are Section 3 residents?

Section 3 residents are:

  • Public housing residents
  • Section 8 Voucher holders
  • Persons who live in the area (Will County, in this case) where a HUD-assisted project is located and who have a household income that falls below HUD’s income limits.

  Back to the top

Determining Income Levels

  • low-income is defined as 80% or below the median income of that area
  • Very low-income is defined as 50% or below the median income of that area

The HUD income limits as of 2011 for the Chicago-Joliet-Naperville metropolitan statistical area are as follows:

Will Co. Income
Limits 2016
$43,050 $49,200 $55,350 $61,500 $66,450 $71,350 $46,300 $81,200

  Back to the top

What is a Section 3 business concern?

A business that:

  • Is 51% or more owned by Section 3 residents:
  • Employs Section 3 residents as 30% of its full-time, permanent staff; or
  • HUD Youthbuild programs being carried out in the metropolitan area in which Section 3 covered assistance is expended.

  Back to the top

What are the numerical goals of the program?

  • Employ qualified Section 3 residents, as 30 percent (30%) of aggregate NEW hires resulting from contracts and subcontracts on a Housing Authority of Joliet project.
  • Award to Section 3 business concerns at least ten percent (10%) of the total dollar amount of all section 3 covered contracts for building trades work.
  • Award to Section 3 business concerns at least three percent (3%) of the total dollar amount of all section 3 covered contracts for non-construction work.

  Back to the top

What is a “new hire”?

A new hire means a full-time employee for a new permanent, temporary or seasonal position that is created during the expenditure of Section 3 covered financial assistance.

  Back to the top

What is the order of preference for meeting the hiring goals?

The Housing Authority of Joliet has outlined the following order of preference for meeting the Section 3 employment and training goals when utilizing Public and Indian Housing (PIH) funding:

  • HAJ residents from property work site* and HAJ Section 8 Voucher holders in same census tract as work site
  • Section 3 residents from other HAJ* properties or HAJ Section 8 Voucher holders outside of work site census tract
  • Non-HAJ Section 3 residents in Youthbuild Program (in Will County)
  • Non-HAJ Section 3 residents of Will County,  including homeless

* Preference will be given to residents enrolled in Family Self-Sufficiency and Step Up Training programs

  Back to the top

How can I determine if my business is a Section 3 business?

You may qualify as a Section 3 business based on company ownership or workforce composition.

(a) Ownership: Review your company ownership to determine if the company is at least 51% owned by Section 3 residents.

(b) Workforce composition: Review your current payroll data to determine if you employ a workforce of at least 30% workers who live in low-income households.  Any current employee who lives within Will County and who lives in a household with an income level below the low-income limits listed in the table is eligible to be counted as a Section 3 resident and employee.  Employers should have all employees complete the Section self-certification form in order to determine if the business is eligible for Section 3 certification.

  Back to the top

How does Section 3 differ from Minority Business Enterprise (MBE), Women Business Enterprise (WBE) or Disadvantaged Business Enterprise (DBE) programs?

Section 3 is both race and gender neutral. This means that neither race nor gender are considered when determining if an individual is a Section 3 resident.  The preferences provided under this regulation are based on income level and location.  The Section 3 regulations were designed to encourage recipients of HUD funding to direct new employment and contracting opportunities to low-income residents, and the businesses that employ these persons, within their community regardless of race and/or gender.

  Back to the top

How are Section 3 requirements affected by the Davis-Bacon and Related Acts?

Contractors and subcontractors must still comply with the labor standards provisions of 29 CFR Parts 3 and 5, also known as the Davis-Bacon and Related Acts, including the prevailing wage, reporting requirements, apprentice and trainee standards and overtime provisions.

  Back to the top

How is Section 3 affected by ARRA funding requirements?

Since ARRA funding is specifically intended to create jobs and other economic opportunities for those most impacted by the recession, compliance with the requirements of Section 3 is critical.

ARRA does not increase or reduce each recipient’s Section 3 responsibilities. In fact, the requirements of Section 3 apply in the same manner as they do for other types of covered HUD financial assistance.  Specifically, grantees and other direct recipients of Section 3 covered ARRA funding are required to comply with the statutory and regulatory requirements of Section 3.

  Back to the top

Are Section 3 residents or business concerns guaranteed employment and contracting opportunities under Section 3?

No. Section 3 residents must demonstrate that they meet the qualifications for new employment opportunities created as a result of the expenditure of the covered assistance (i.e., the construction of a HOPE VI-funded project).

Section 3 business concerns must submit evidence to the satisfaction of the party awarding the contract (Housing Authority of general contractor) to demonstrate that they are responsible firms and have the ability to perform successfully under the terms and condition of the proposed contract.

  Back to the top

Are recipients and contractors required to provide long-term employment opportunities, and not simply seasonal or temporary employment?

Recipients and contractors are required, to the GREATEST extent feasible, to direct all employment opportunities to low- and very low-income persons – including seasonal and temporary employment opportunities.

Recipients and contractors are encouraged to provide long-term employment.  They may count a Section 3 resident employee for three years to meet the business criterion that at least 30 percent of the permanent, full-time employees are Section 3 residents.

Where can I get technical assistance for questions related to Section 3 activities or reporting requirements?

Recipients and contractors can contact Lisa Johnson, Section 3 Coordinator, at 815-823-8400 or via email by clicking here.

  Back to the top