Overview
Effective November 30, 2020, housing construction and rehabilitation projects as well as public works projects that receive more than $200,000 in HOME Investment Partnership Program (HOME), Community Development Block Grant (CDBG), federal Housing Trust Fund or other housing and community development funding from the U.S. Department of Housing and Urban Development (HUD) must comply with Section 3 of the Housing and Urban Development Act of 1968 (“Section 3”). Awardees of HUD funds received prior to November 30, 2020 are also subject to Section 3 requirements, as applicable. Please consult the former policy manual for “Legacy Contracts,” below.
Section 3 requires that economic opportunities generated by HUD funds be prioritized for low-income individuals and the businesses that hire or are owned by them, particularly in the neighborhood surrounding the project. All entities involved in the Section 3 Project (the entity awarded the HUD funds through NYSHCR (the Awardee), the General Contractor, other contractors and subcontractors (together, the “Subs”)) must, to the greatest extent feasible, engage in efforts to achieve Section 3 goals and objectives.
The Benchmark Goals for each Section 3 Project are the following:
25% of Total Labor Hours worked by Section 3 Workers, of which
5% of Total Labor Hours worked by Targeted Section 3 Workers.
Please consult the Section 3 Policy Manual, below, for further information.
KEY DEFINITIONS
Section 3 Worker: An individual employed by Awardee or its Subs who works on the Section 3 Project and who currently fits, or when hired within the past 5 years fit, at least one of the following criteria, as documented:
- The worker’s income for the previous or annualized calendar year is categorized as low-income (80% AMI or less);
- The worker is employed by a Section 3 Business (these are also Targeted Section 3 Workers); or
- The worker is a YouthBuild participant (these are also Targeted Section 3 Workers).
The hiring of a Section 3 or Targeted Section 3 Worker shall not be negatively affected by a prior arrest or conviction. The Section 3 Hiring Form (link below) will guide an employer in determining which employees/candidates are Section 3 and Targeted Section 3 Workers.
Section 3 Business or Section 3 Business Concern: These terms are used interchangeably and mean a business that meets at least one of the following criteria, documented within the last 6-month period:
- At least 51 percent owned and controlled by low-income persons;
- Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 Workers; or
- At least 51 percent owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing.
Targeted Section 3 Worker: A Section 3 Worker who:
- is employed by a Section 3 Business; or
- currently fits or when hired fits at least one of the following categories, as documented within the past five years:
(i) Living within the Service Area or the Neighborhood of the project; or
(ii) A YouthBuild participant.
Total Labor Hours: The number of paid hours worked by persons on a Section 3 Project, including those worked by Awardees, subawardees, the General Contractor (“GC”) and all other contractors and subcontractors (together with GC, the “Subs”).
Policy Manual
The Section 3 Policy Manual implements Section 3 of the Housing and Urban Development Act of 1968 and corresponding regulations promulgated by the United States Department of Housing and Urban Development (HUD) found at 24 CFR 75. This Manual covers Section 3 provisions regarding Housing and Community Development Financial Assistance (Subpart C of the regulations), such as HOME, CDBG and federal Housing Trust Fund. This Policy Manual implements the updated Section 3 Regulations that went into effect November 30, 2020. If a Project has HUD funds committed to it before this date, consult the “Legacy Contracts” Policy Manual, below.
Forms & Documents
| Document | Summary | Required for Use by: | Link |
|---|---|---|---|
| Contract Clause | Mandatory language for all S3 projects | Awardee, GC, all Subs | https://hcr.ny.gov/S3ContractClause |
| Participation Plan | Outlines mandatory minimum efforts and sets forth Project’s plan to meet S3 objectives. Must be completed before funding contract execution. | Awardee & GC, Suggested for all Subs | https://hcr.ny.gov/S3ParticipationPlan |
| Sub-Reporting Form & Greatest Extent Feasible Checklist | Form GC and Subs use to report S3 performance up to Awardee | GC and all Subs | https://hcr.ny.gov/S3SubReportingForm |
| Consolidated Awardee Reporting Form | Form Awardee uses to report consolidated S3 performance to NYSCHR | Awardee (consolidating Sub Reporting Forms) | https://s.alchemer.com/s3/Section-3-Reporting |
| Section 3 Business Self Certification | Forms businesses can use to self-certify that they meet the S3 definition for a S3 business | Awardee must have on file for all S3 Businesses on Project | Form: https://hcr.ny.gov/S3BusinessSelfCert |
| Section 3 Hiring Forms | Forms are filed by New York State Regions. Each region contain hiring forms translated into the following 12 languages. -Arabic -Bengali -English -French -Haitian Creole -Italian -Korean -Polish -Russian -Simplified Chinese -Spanish -Urdu -Yiddish | Awardee, GC, all subs |
Training
Section 3 Business Registry
Search for a Section 3 Business
The Section 3 Business List attached is a list of businesses that have self-certified that they meet the definition of a Section 3 Business. However, a Section 3 Business Certification (found here) must be completed before a contract is entered into with one of these entities to ensure that they remain a Section 3 Business. The certification must be dated no more than 6 months prior to the date of the contract. Without the Section 3 Business Certification, Awardee and their Subs will not be able to count the labor hours for the employees that work for the intended Section 3 Business in their Section 3 Worker hours.
NOTE: NYS HCR does not verify the information submitted by the businesses and does not endorse the services they provide. Accordingly, it is strongly encouraged that users perform due diligence before awarding contracts to firms on this list. In addition, Section 3 businesses are not guaranteed to receive contracts because they are included on the Section 3 Business list.
Section 3 Web Resources
Legacy Contracts (Pre-11/30/20)
Awardees with HUD funding that was committed to the project by NYSHCR before November 30, 2021 (“Legacy Contracts”) are still expected to comply with Section 3 goals and objectives as outlined in the previous regulation, and should keep written records of Section 3 efforts, hiring and contracting conducted through the completion of the Project. NYSHCR will continue to require annual reporting on Section 3 utilization and greatest extent feasible efforts for these Legacy Contracts. A summary of the changes between the current rule, 24 CFR 75 and the previous rule, 24 CFR 135, can be found in Appendix A. Awardees with Legacy Contracts should follow policies and procedures laid out in the November 2017 Section 3 Policies and Procedures Manual below: