HUD Section 3

Section 3 of the Housing and Urban Development Act of 1968, as amended by the Housing and Community Development Act of 1992, requires that recipients of financial assistance provided by the U.S. Department of Housing & Urban Development ("HUD"), including developers, owners, contractors and their subcontractors provide, "to the greatest extent feasible," training and employment opportunities for low-income area residents and contract opportunities for the performance of work by local businesses owned by and/or employing low-income residents.

HUD requires HPD to collect information on every sponsor, contractor, subcontractor, etc. that receives a contract or loan agreement, funded entirely or in part by federal funds in excess of $100,000, to ensure compliance with Section 3 regulations. Section 3 applies to contracts for professional services and for construction work.

Funding Recipients 

Projects funded from the following sources by HUD via HPD are subject to Section 3 requirements. The following packages contain guidance and forms for use by recipients in compliance with HUD regulations:

Built It Back

Contractors and subcontractors working on Sandy Recovery projects should register all job opportunities with the Sandy Recovery Workforce1 Centers managed by the NYC Department of Small Business Services.  The Centers work with employers to match their needs with qualified Sandy-affected applicants. Learn more.

Reporting Responsibilities: Employment / Training

Sponsors, contractors and subcontractors must document whether any current employees and new hires, owing to their status as NYCHA residents or NYC residents whose median household income is 80% or less of the area median income (varies by household size), are qualified as Section 3 residents.   A Section 3 employee is either:

  • An employee who is currently a Section 3 resident; or
  • An employee who was hired within the past three years, was a Section 3 resident upon hire, but whose household income/housing status no longer qualifies him/her as a Section 3 resident. Employers may claim credit for these positions for three years after this individual's date of hire.

Workforce 1 Career Centers

Workforce1 is a service provided by the NYC Department of Small Business Services that prepares and connects qualified candidates to job opportunities in New York City. Workforce1 makes strong matches for both candidates and employers by using a unique combination of recruitment expertise, industry knowledge, and skill-building workshops to strengthen candidates’ employment prospects. Account Managers save businesses time and money by recruiting and screening jobseekers from a citywide pool of thousands of candidates and referring the most qualified to them. Learn more.

Business Concerns

Section 3 regulations define Section 3 Business Concerns in one of three ways:

  • The business is at least 51 percent owned and managed by Section 3 residents;
  • The permanent, full-time employees of the business include persons, at least 30 percent of whom are Section 3 residents, or within three years of the date of first employment with the business concern were Section 3 residents
  • The business documents subcontracting at least 25% of its contract award to firms meeting one of the two Section 3 Business Concerns definitions above.

The HUD Section 3 Business Registry is a national listing of firms that have self-certified that they meet one of the regulatory definitions of a Section 3 business and so are included in this searchable online database that can be used by recipients of HUD funding to identity and include Section 3 firms in upcoming business opportunities.  Owners can register a business for inclusion in this Business Registry.