About Section 3

Section 3, a provision of the Housing and Urban Development Act of 1968 (12 U.S.C. 1701u), requires, to the greatest extent possible and consistent with applicable laws and regulations, that certain contracts paid for with HUD funds include commitments to provide training, employment, contracting and other opportunities for economic empowerment to low-income individuals, especially recipients of  government assistance for housing, and businesses that provide economic opportunities to low-income persons.

HUD considers public housing authorities to be in compliance with Section 3 if they and their contractors and subcontractors (for contracts other than for materials) meet the following minimum numerical goals for Section 3 Labor Hours and Qualitative Efforts:

Section 3 Worker & Targeted Section 3 Worker Labor Hours Requirements

• 25% or more of all labor hours worked by all workers employed with public housing financial assistance in a public housing authority’s fiscal year must be completed by Section 3 workers (including Targeted Section 3 Workers).
• Of the above 25%, 5% or more of all labor hours worked by all workers employed with financial assistance in PHA’s fiscal year must be Targeted Section 3 workers

• Section 3 Worker labor Hours / Total labor hours = 25%; AND
• Targeted Section 3 labor hours / Total labor hours = 5%.

Qualitative Efforts

If vendors are unable to meet the Section 3 Safe Harbor Benchmarks identified above, a public housing authority may consider a vendor’s Qualitative Efforts. A full list of Qualitative Efforts, including making a contribution to the public housing authority’s Section 3 fund, can be in 24 CFR Part 75.

Additional Information

For more information, visit the Section 3 Guidebook that is available on the HUD Exchange.