The purpose of Section 3 is to ensure that employment and other economic opportunities generated by certain HUD financial assistance shall, to the greatest extent feasible, and consistent with existing Federal, State, and local laws and regulations, be directed toward low- and very low-income persons or business concerns residing in the community where the project is located. Section 3 is part of the Housing and Urban Development Act of 1968, as amended by Section 915 of the Housing and Community Development Act of 1992.
Section 3 Resident is a person that meets one of the following criteria:
- Person is a public housing resident; or
- Person whose household income is 80% or less of Area Median Income (AMI).
Table below provides the 2020 Section 3 household income limits.
|Persons in Household
|80% AMI (gross income)
Section 3 Business Concern is a business that meets one of the following criteria:
- Business is majority (51%) owned by low-income Section 3 individual; or
- 30% of permanent full-time employees are low-income Section 3 individuals; or
- Business subcontracts 25% of their award amount to Section 3 business concerns.
Who is subject to Section 3?
Section 3 requirements apply to construction and rehabilitation projects that receive HUD funding through Will County Community Development. Any subgrantee/developer, contractor and/or subcontractor receiving more than $100,000 contract is subject to Section 3.
Any tier contracting for $100,000 or less is not responsible for complying with Section 3; however, it is encouraged that any contractor or new hire which qualifies as Section 3 be documented and reported to meet the numerical objectives as a whole.
What are Section 3 requirements?
To the greatest extend feasible all subgrantees/developers, contractors and subcontractors working on Section 3 covered projects must document their efforts to meet the following numerical Section 3 goals:
- Thirty percent (30%) of the aggregate number of new hires to be Section 3 residents.
- Ten percent (10%) of total dollar amount of all Section 3 covered capital contracts to be awarded to Section 3 businesses.
- Three percent (3%) of total dollar amount of all Section 3 covered non-construction contracts to be awarded to Section 3 businesses.
Section 3 Certification
Why should an individual or business become certified as Section 3? Any entity receiving federal funding through HUD for a construction project will be required to solicit bids and/or new hires from Section 3 registry.
Does being self-certified as a Section 3 Business mean that a firm is automatically entitled to HUD-funded contracts? A Section 3 business is not entitled to a contract simply by being listed in the HUD Section 3 Business Registry database. Section 3 businesses may need to demonstrate to the satisfaction of the recipient agency (i.e., Public Housing Authority, local government agency, developer, etc.) that they are a responsible bidder with the ability to perform successfully under the terms and conditions of prospective contracts. The Section 3 regulation at 24 CFR Part 135.36 provides preference to Section 3 businesses that submit responsible bids for contracts and subcontracts, but does not guarantee the award of contracts.
Section 3 Business Registry
The Section 3 Business Registry is a registry of businesses that have self-certified their status as Section 3 Businesses. Businesses who self-certify that they meet one of the regulatory definitions of a Section 3 business will be included in a searchable online database. The database can be used by agencies that receive HUD funds, developers, contractors, and others to facilitate the award of covered construction and non-construction contracts to Section 3 businesses. Section 3 residents are also encouraged to use the registry to identify businesses that may have HUD-funded employment opportunities.
The Will County Community Development Division requires notice of bid opportunities be sent directly to any appropriate contractor identified on the Section 3 Business Registry for projects partially assisted with federal funds allocated to Will County through the U.S. Department of Housing & Urban Development. A link to HUD’s Section 3 Business Registry for the Chicago-Joliet-Naperville, IL HUD Metro Metropolitan Area can be found here: Section 3 Business Registry