Section 3
Economic Opportunities for Low and
Very Low-Income Persons
2010
Fair Housing Policy Conference
New Orleans, LA
Staci Gilliam Hampton, Director
Economic Opportunity Division
Washington, DC 20410
202-402-3468
section3@hud.gov
www.hud.gov/section3
Section 3 History
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Civil Rights Movement and
Protests of the 1960’s
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Race Riots 1965-1968
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Los Angeles (Watts), Chicago,
Detroit, Newark
Section 3 History
Kerner Commission—1968
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President Lyndon Johnson
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What happened?
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Why?
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What can be done to prevent
from happening again?
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7 months of investigation
Section 3 History
Kerner Commission—1968
Findings:
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Riots occurred because of frustration with the
lack of economic opportunities.
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“Our nation is moving to toward two societies,
one black, one white—separate and unequal.
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Dr. King called the report: “a physician’s
warning of approaching death, with the
prescription for life”.
Section 3 History
Kerner Commission—1968
Recommendations:
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Create Jobs
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Construct New Housing
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Stop de-facto segregation
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Hire diverse and sensitive police force
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Open suburban residential areas to minorities
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Government programs were needed to provide
these services (HUD, DOJ, DOL, etc)
Section 3 History
Kerner Commission—1968
Outcome:
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
Lyndon Johnson rejected the Commission’s
recommendations
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April 1968 (one month after Report was
released) Dr. Martin Luther King, Jr. was
assassinated
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Rioting broke out in more than 100 cities
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Most of the Commission’s recommendations
were ultimately adopted
Statute and Regulation
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Section 3 of the Housing and Urban
Development Act of 1968
 12 U.S.C. 1701u
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Economic Opportunity Regulation
 24 CFR Part 135
Regulatory Description
To ensure that economic
opportunities generated from HUD
funded projects, to the greatest
extent feasible, will be directed to
low and very low-income persons particularly those receiving
assistance for housing, and the
businesses that provide them
economic opportunities
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To the Greatest Extent
Feasible???
Recipients must make every
effort to recruit, target, and direct
economic opportunities to
Section 3 residents and
businesses.
 Comprehensive strategies that
are beyond normal procedures.
Simply Stated…
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
HUD funds are one of the largest
sources of federal investment in
distressed communities

These funds typically result in new
employment, training and
contracting opportunities
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Section 3 is designed to direct new
economic opportunities to local
residents and businesses
Intent
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
HUD funding creates opportunities
“beyond bricks and mortar”

Promote Self-Sufficiency amongst
low-income persons

Multiplier Effect for HUD dollars
Intent

Not intended to require recipients or
their contractors to hire, provide
training or award contracts beyond what
is absolutely required

If there are going to be new job, training,
or contracting opportunities –Section 3
applies
Applicability
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
Public and Indian Housing
 Development
 Operation
 Modernization

Housing and Community
Development
 Housing rehabilitation
 Housing construction
 Other public construction
Section 3 Covered Assistance
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PIH Allocations
 Operations, Capital, Modernization,
HOPE VI
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CDBG Funding
HOME Funding
NAHASDA funding
Competitive Grants
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EDI and BEDI
Lead Based Paint
202/811
ROSS
Project Based Vouchers
Section 3 Covered Funding
2010 Proposed HUD Budget
Public and Indian Housing
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•
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$7,749 billion
Public Housing Capital Fund
Choice Neighborhoods (formerly HOPE VI)
Public Housing Operating Fund
Native American Housing Block Grants
Native Hawaiian Housing Block Grants
Housing
$1,015 billion
• Housing for the Elderly (202 Grants)
• Housing for Persons with Disabilities (811 Grants)
Community Planning and Development
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•
•
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$8,456 billion
Community Development Block Grant Fund
HOME Investment Partnerships Program
Self-Help Homeownership Opportunity Program (SHOP)
Housing Opportunities for Persons with Aids (HOPWA)
Lead Hazard Control Grants
TOTAL Section 3 Covered Funds
$69 million
$17,289 billion
40% of HUDs Budget
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Applicability to Economic
Stimulus Funds
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PIH Public Housing Capital Funds
Neighborhood Stabilization Program
Community Development Block Grants
Native American Housing Block Grants
Assisted Housing Energy & Green
Retrofits
Lead Hazard Control (LHC Grants Only)
Total: $7.8 Billion
(57% of HUD’s Stimulus Funds)
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Section 3 Compliance
Certification(s)
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Annual Certifications
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Signed by Highest-Elected Officials
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Westchester County, NY
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Failing to comply with Section 3
Certifications could have severe
consequences
Failure to Comply with
Section 3
HUD holds direct
recipients of covered
funding accountable for
their own compliance, and
the compliance of their
subrecipients and
contractors
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Penalties for
Noncompliance
Sanctions for noncompliance
may include:
 Debarment
 Suspension
 Limited Denial of Participation in
HUD Programs
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Section 3 Beneficiaries
&
Responsibilities
Section 3 Resident
Public Housing Resident,
or
 A resident of metropolitan area
or non-metropolitan county in
which the Section 3 covered
assistance is expended, and
who qualifies as a low- or very
low-income person.

Low- and Very Low-Income
HUD sets the low-income limit
at 80% and very low income
limits at 50% of the median
family income for counties or
metropolitan areas across the
country
http://www.huduser.org/portal/datasets/il.html
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Section 3 Preference

Not Minority/Women Business
Enterprise requirements

The preferences provided
under Section 3 are based on
income and location.
Race and Gender Neutral

Poverty is color-blind

Low-Income persons in urban
areas “may” be minorities

HUD funds assist persons with
the greatest economic needs
regardless of race or gender
Today Section 3 Residents
May Include….
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Residents of Public Housing
Section 8 Voucher Holders
Recently Unemployed
Veterans
Recipients of Other Federal Assistance
(TANF, unemployment, etc)
Single Mothers Re-entering the
Workforce
Recent College Graduates
Section 3 Business Concern
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51% or more owned by Section 3
Residents, or
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30% of employed staff are
currently Section 3 Residents or
were Section 3 residents within
three years of the date of first
employment; or
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25% of the dollar award of all
subcontracts committed to Section
3 Businesses.
Eligibility for employment and
contracting
A Section 3 resident must meet
the qualifications of the position
to be filled.
A Section 3 business concern
must have the ability and
capacity to perform.
Eligibility for employment and
contracting
Section 3 is not intended to create an
“entitlement” for eligible residents and
businesses—it creates opportunities
Simply meeting the definitions does
not automatically mean that they will
be given jobs or contracts
Overview of
Recipient Responsibilities
Recipient Agencies
Direct Recipients of covered HUD
funding or recipients of covered
funding from another direct recipient
 CITIES, COUNTIES, STATES
 UNITS OF LOCAL GOVERNMENT
 PUBLIC OR INDIAN HOUSING AUTHORITIES
 DEVELOPERS
 NON-PROFIT ORGANIZATIONS
 PRIVATE AGENCIES
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Responsibility #1
Design and implement
procedures to comply
with the requirements of
Section 3
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Responsibility #2
Notify Section 3
residents about training
and employment
opportunities and
Section 3 businesses
about contracting
opportunities
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Responsibility #3
Notify covered
contractors about the
requirements of
Section 3
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Responsibility #4
Incorporate the Section
3 clause into covered
solicitations and
contracts
--24 CFR Part 135.38
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Responsibility #5
Facilitate training and
employment of Section 3
residents and the award
contracts to Section 3
businesses, as appropriate
to reach the minimum
numerical goals
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Responsibility #6
Minimum Numerical Goals:
 30% of new hires annually
 10% of the total dollar amount of
covered construction contracts
 3% of the total dollar amount of
covered non-construction
contracts
Employment Opportunities
Public Housing Authorities

All jobs with PHA or contractors
Housing & Community Development
 Construction Labor
 Management & Administrative Support
 Architectural, Engineering and
Professional services
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Contracting Opportunities
Public Housing Authorities

All contracts and subcontracts awarded
with Public Housing funds regardless of
the dollar amount
Housing & Community Development
 Contracts for activities involving
housing construction, rehabilitation, or
other public construction
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 Contractors may also have
responsibilities depending on the dollar
amount of their award.
Minimum Numerical Goals
 24 CFR Part 135.30
 Numerical Targets (may be
exceeded)
 Safe Harbor Compliance
 Other Efforts Taken to Achieve
Compliance—To the Greatest
Extent Feasible
Responsibility #7
Assisting and actively
cooperating with the
Assistant Secretary in
obtaining the compliance
of contractors
Responsibility #8
Refraining from
entering into contracts
with contractors that
fail to comply
Responsibility #9
Documenting actions
taken to comply with the
requirements of Section 3,
results of actions taken,
and impediments,
if any
Section 3 Reporting
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
Form HUD-60002

Online Reporting System

Reports submitted to FHEO in
Washington, DC
Determining Compliance
 Absent Evidence to the Contrary
 Meeting Minimum Numerical
Goals—Safe Harbor
 Narrative Explanations
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Section 3 Complaint
Investigations
Form HUD-958
Complaint Processing
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Form HUD 958 filed within 180
days of alleged noncompliance
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Most complaints are associated with
contracting issues
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Preference- to conciliate
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May result in sanctions
Other Section 3
Enforcement Actions

Compliance Reviews
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Limited Monitoring Reviews
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On-Site Technical Assistance
Visits
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VCAs
2008 Outcomes/Results
 75% 0f Covered Agencies submitted reports
 Overall 38% of employment and training
opportunities were provided to Section 3
residents (17,569 economic opportunities)
 9.4% of Construction Contracts were awarded
to Section 3 businesses ($354 Million)
 Many larger recipients still failed meet
minimum goals or provide adequate
explanations
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2010 & 2011 Initiatives
 Increase Section 3 reporting
rates and accuracy
 Increase overall compliance
 Provide more training/technical
assistance
 Listening Sessions
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2010 & 2011 Initiatives
 New Guidance Materials
 New Section 3 reporting forms
and online system
 Revised Section 3 regulation
 Section 3 Business Concern
Registry—Pilot Program
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2010 & 2011 Initiatives
 Section 3 Implementation and
Coordination NOFA
 Incorporate Section 3 compliance
into Annual Plans and Performance
Assessments
 Enforce penalties for noncompliance
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Additional Resources
Please visit our webpage:
www.hud.gov/section3
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Guidance Materials
Sample Documents
Link to Online Reporting
Upcoming Trainings
Model Programs
Contact Information
Section3@hud.gov