What is Section 3?
Section 3 is a U.S. Department of Housing and Urban Development (HUD) requirement designed to ensure that the HUD funds invested in housing and community development activities provide employment opportunities for low- to very-low income people. HUD’s regulations state that “to the greatest extent feasible” businesses and employers working on HUD-funded projects must make a good faith effort to train and employ low- to very low- income individuals in the area (called “Section 3 residents”) and also to contract with businesses identified as Section 3.
In summary, the obligations of Section 3 are:
- Provide training for Section 3 residents and report on the outreach and training undertaken.
- To the greatest extent feasible hire and train Section 3 residents and report on employees and
- To the greatest extent feasible contract with Section 3 businesses and report on contracts and
for more information about HUD and Section 3.
to view the City of Memphis, Division of Housing and Community Development full Section 3 Plan.
Section 3 Contracting and Hiring Obligations
As a recipient of select HUD funds, the City of Memphis, Division of Housing and Community Development (HCD) is required to comply with Section 3 regulations. HCD has established the following contracting and hiring goals to fulfill the requirements of Section 3:
Applies to projects valued at $100,000 or more
At least ten percent (10%) of the total dollar amount of select HUD-funded construction contracts shall be awarded to businesses identified as Section 3.
At least three percent (3%) of the total dollar amount of select HUD-funded,
non-construction contracts shall be awarded to businesses identified as Section 3.
A Section 3 business is defined as a business that meets one of the following criteria:
51 percent or more owned by Section 3 residents; or
At least 30 percent of its full-time employees include persons that are currently Section 3 residents or were Section 3 residents within three years of the date of first hire; or
Provides evidence, as required, of a commitment to subcontract in excess of 25 percent of the dollar award of all subcontractors to businesses that meet one of the qualifications above.
CLICK HERE for information on how to qualify as a Section 3 business.
Click here for a list of businesses identified as Section 3.
link ‘here’ to a .pdf version of the HCD Section 3 Businesses spreadsheet (forthcoming)
Applies to all projects
Thirty percent (30%) of the aggregate number of new positions during a one year period shall be filled with Section 3 residents. Example: A construction contractor hires 10 new workers. Three of the new workers should qualify as local, low- to very low- income persons.
A Section 3 resident is defined as a local resident who meets one of the following criteria:
Low- to very low-income resident of the housing development or developments in which
the HUD funds shall be expended; or
Low- to very low-income resident of other housing developments managed by the Memphis
Housing Authority; or
Participant in HUD Youthbuild program; or
Resident of the City of Memphis or Shelby County (including Section 8 recipients) who meets the low- to very low-income guidelines
CLICK HERE for information on how to qualify as a Section 3 resident.
Contact HCD Compliance Department at 576-7415 for a list of residents identified as Section 3.
Section 3 Bid/Application Materials
Bidders and applicants submitting proposals for projects governed by Section 3 are required to submit a Section 3 Opportunity Plan, in addition to other documents outlined in the bid request or application. Prior to a contract award, the Section 3 Opportunity Plan must be approved by the HCD Compliance Department – Section 3 and shall become a binding component of the project agreement. Bidders and applicants who fail to provide a HCD Section 3 Opportunity Plan that addresses all requirements will not be granted contract consideration.
CLICK HERE for a complete package of Section 3 bid/application materials
CLICK HERE for a complete package of Section 3 materials for projects with a 90 day or less timeframe.
For more information about Section 3, please contact Michael Sicuro at 576-7415.