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.

APPLICABILITY

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

SECTION 3 RESIDENTS

Section 3 residents are those individuals living in New York City who are EITHER residents of NYCHA housing OR whose median household income (varies by household size) is 80% or less of the area median income.  In New York City, the maximum income for each household size is shown in this chart:

Section 3 employment guidelines are triggered by the need for new full time hires (be they seasonal, permanent, or temporary).  Section 3 requires that Section 3 Residents have the opportunity to apply to all available positions created on Section 3 covered Projects.  The types of applicable jobs include construction, administrative, etc.; any and all jobs that arise in connection with construction or rehabilitation activities.

SECTION 3 REPORTING RESPONSIBLITIES: EMPLOYMENT/TRAINING

Sponsors, contractors and subcontractors must complete Form S3-NHR, “Section 3 New Hire Report” to document all new hires and to indicate whether Section 3 residents were hired to fill any available positions.  Use the definition of Section 3 Residents found above as a guide for determining the status of all new employees.  Those entities that have direct agreements with HPD – sponsors or contractors - regarding a Section 3 Project are responsible for collecting Section 3 New Hire Reports from their contractors, subcontractors, consultants, etc.

FINDING QUALIFIED SECTION 3 RESIDENTS

HPD has developed relationships with construction employment and training agencies that offer formal training, job readiness and pre-screening programs.  These agencies will help your firm to find qualified candidates for any construction trade or management related job opportunities that may arise.  Our current list is available here: Section 3 Employment Referral List

Section 3 regulations require that recipients of Section 3 covered assistance can demonstrate compliance with the goal of extending contract opportunities to entities owned by or substantially employing Section 3 residents by awarding contracts to Section 3 Business Concerns.

SECTION 3 BUSINESS CONCERN

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

The business is at least 51 percent or more 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.

CERTIFICATION

HPD has developed a certification program for businesses seeking recognition as a Section 3 Business Concern.  Certified firms will be included in our online directory of Section 3 Business Concerns and will receive information, counseling and invitations regarding business opportunities from HPD and the New York City Department of Small Business Services.  To be considered for certification, firms should complete and submit to the agency as per the instructions found therein:
“Section 3 Business Certification Package ”

SECTION 3 CONTRACTOR RESPONSIBILITIES

Each Sponsor or Contractor signatory to an agreement or contract covered by Section 3 must complete Form S3-C - “Section 3 Project Summary”, which documents all contracting and subcontracting activity for each quarterly period during the life of the project and indicates whether Section 3 Business Concerns were awarded contracts.  Utilize the directory of Section 3 Business Concerns to determine the Section 3 status of all business entities. 

Form S3-C - “Section 3 Project Summary ”