SECTION 3 INFORMATION
What is Section 3? Section 3 is a provision of the Housing and Urban Development Act of 1968. 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 to low- and very low-income persons, particularly those who are recipients of government assistance for housing, and to business concerns which provide economic opportunities to low- and very low-income persons.
- What Does “Section 3 Worker” Mean? A Section 3 worker is any worker who currently fits, or when hired within the past five years fit, at least one of the following categories, as documented:
a. The worker’s income for the previous or annualized calendar year is below the income limit established by HUD;
b. The worker is employed by a Section 3 business concern; or
c. The worker is a YouthBuild participant.
- What Does “Section 3 Business Concern” mean? A Section 3 business concern is a business that meets at least one of the following criteria, documented within the last six-month period:
a. At least 51 percent owned and controlled by low- or very low-income persons;
b. Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 workers; or
c. A business at least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing.
- How are low-income and very low-income determined? Low- and very low-income limits are defined in Section 3(b)(2) of the Housing Act of 1937 and are determined annually by HUD. These limits are typically established at 80 percent and 50 percent of the area median individual income. HUD income limits may be obtained from: https://www.huduser.gov/portal/datasets/il.html.
- Does qualifying as a Section 3 businesses mean that the business will be selected if it meets the technical requirements of the bid, regardless of bid price? No. As provided in 2 CFR 200.318(h), contract awards shall only be made to responsible contractors possessing the ability to perform under the terms and conditions of the proposed contract. In order to meet the requirements of Section 3 and Federal and state procurement laws, recipient agencies must develop procedures that are consistent with all applicable regulations.
- Does a business have to be incorporated to be considered a Section 3 eligible business? No. A Section 3 business concern can be any type of business, such as a sole proprietorship, partnership, or a corporation, properly licensed and meeting all legal requirements to perform the contract under consideration.
For more information on the requirements of Section 3, please visit www.hud.gov.
MINORITY/WOMEN’S BUSINESS ENTERPRISE INFORMATION
- What is a Minority Business Enterprise (MBE)? Minority business enterprise ( MBE ) is an American designation for businesses which are at least 51% owned, operated, and controlled on a daily basis by one or more (in combination) American citizens of an ethnic minority.
- What is a Women’s Business Enterprise (MBE)? A woman-owned business (WBE) company must be 51% owned, operated, and controlled on a daily basis by women who are U.S. citizens.
- Does being a MBE or WBE Business mean that a firm is automatically entitled to HUD-funded contracts? These businesses will need to demonstrate to the satisfaction of the recipient agency they are a responsible Contractor with the ability to perform successfully under the terms and conditions of prospective contracts. The MBE/WBE at 24 CFR Part 85.36 Contracting with Minority and Women’s Business Enterprises states that: The grantee and sub-grantee will take all necessary affirmative steps to assure that minority firms or women business enterprises are used whenever possible.