Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968 that helps 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- or very-low income residents in connection with projects and activities in their neighborhoods. Section 3 applies to HUD-funded Public and Indian Housing assistance for development, operating, and modernization expenditures. Section 3 also applies to certain HUD-funded Housing and Community Development projects that complete housing rehabilitation, housing construction, and other public construction. Any employment resulting from expenditures, including administration, management, clerical support, and construction, is subject to compliance with Section 3.

Define Section 3 Business

Section 3 business concerns are businesses that can provide evidence that they meet on the following:

  • 51 percent or more owned by Section 3 residents; or
  • At least 30 percent of its full time employees include persons that are currently Section 3 residents, or within three years of the date of first employment with the business concern were Section 3 residents; or
  • Provides evidence, as required, of a commitment to subcontract in excess of 25 percent of the dollar award of all subcontracts to be awarded to business concerns that meet the qualifications in the above two paragraphs.