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HUD Section 3

Any entity within the state of Utah that receives and distributes HUD funds (e.g., HOME, CDBG, HOPWA, CRG, etc.) is required by law to promote section 3 of the Housing and Urban Development Act of 1968. This section requires projects funded by the department of Housing and Urban Development to meet “to the greatest extent feasible” specific goals for contracting, hiring and training low-income individuals to work on these projects.

Section 3 FAQs

What projects carry Section 3 obligations?

All contractors or subcontractors that receive HUD funded contracts for housing construction, rehabilitation or other public construction are required to comply with the requirements of section 3.

When is Section 3 triggered?

Section 3 is triggered when the normal completion of construction and rehabilitation projects created the need for new employment, contracting, or training opportunities.

Who qualifies as a Section 3 business?

There are two ways in which a business can become a Section 3 business.

  1. The business is at least 51 percent owned by low-income individuals (those who earn less than 80 percent of the area median income). Find the 80 percent area median income threshold in your area.
  2. Thirty percent of the workforce is currently low-income or were low-income within the last three years.

*A business is only considered a section 3 business within its own MSA or county.

Why should I become a Section 3 business?

Section 3 businesses may receive preferential consideration in the process for soliciting government contracts in which HUD funds are involved.

How do I recruit Section 3 residents?

HUD funds recipients are required to promote employment and training opportunities for low-income individuals. This responsibility includes but may not be necessarily limited to:

  • Notifying Section 3 residents about the availability of training and/or employment opportunities. (e.g. distribute flyers and post signs at job site, place ads in local newspapers)
  • Notifying Section 3 business concerns about the availability of contracting opportunities
  • Notifying any potential contractors for Section 3 covered projects about the requirements of Section 3
  • Incorporating the Section 3 clause into all solicitations and contracts
  • Facilitating the training and employment of Section 3 residents
  • Facilitating the award of contract to Section 3 business concerns
  • Providing preference in contracting to Section 3 business concerns
  • Documenting actions taken to comply with the requirements of Section 3, along with the results of any actions taken and any impediments encountered

Utah’s Section 3 Plan