Economic Opportunities for Low- and Very Low-Income Persons

Section 3 of the Housing and Urban Development Act of 1968 (Section 3) ensures that HUD-funded jobs training, and contracts are provided to local low-income residents, particularly those that reside in public housing, and businesses that substantially employ them. Section 3 is important because it helps foster local economic development, neighborhood improvement, and individual self-sufficiency in communities where covered financial assistance is spent.

Since 1994, the Section 3 program has been governed by an interim regulation. For the first time in 20 years, HUD is proposing a new rule that would expand opportunities for public housing residents and low-income workers and increase contracting opportunities for local businesses.

The proposed rule clarifies definitions and provisions that are left to interpretation and eases barriers to reaching compliance for recipients of HUD funding. It ensures that Public Housing Authorities and other grantees are implementing consistent procedures for determining which residents and businesses should be counted towards Section 3 compliance. The proposed rule also addresses a number of concerns expressed by stakeholders to HUD and codifies “best practices” implemented by high-performing grantees.

The proposed rule is estimated to direct an additional 1,400 jobs to Section 3 residents, and an additional $172+ million in HUD-funded contracts awarded to Section 3 businesses each year. Section 3 requirements apply to approximately 5,000 recipients of HUD funding (such as Public Housing Authorities, State and local government agencies, low-income housing providers, etc.) and their sub-recipients and contractors. Up to 40 percent of HUD’s annual budget is subject to Section 3 requirements.