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: 

  1. The worker’s income for the previous or annualized calendar year is categorized as low-income (80% AMI or less);
  2. The worker is employed by a Section 3 Business (these are also Targeted Section 3 Workers); or
  3. 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:

  1. At least 51 percent owned and controlled by low-income persons;
  2. Over 75 percent of the labor hours performed for the business over the prior three-month period are performed by Section 3 Workers; or
  3. 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: 

  1. is employed by a Section 3 Business; or 
  2. 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.

Section 3 Policy Manual

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://forms.office.com/g/XtC2LpxJ4w

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

HUD Link OR NYSHCR Form: https://hcr.ny.gov/S3BusinessSelfCert

Section 3 Hiring Form

Form to be used to determine which employees/applicants are Section 3 Workers % Targeted Section 3 Workers

Awardee, GC, all Subs

NYC English

NYC Spanish

Mid Hudson English

Mid Hudson Spanish

Long Island English

Long Island Spanish

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

Capital Region

Central New York

North Country

Western New York

Mohawk Valley

Finger Lakes

Southern Tier

Training

Section 3 Business Registry

Registering Your Business

To register your business as a Section 3 Business Concern with the US Department of Housing and Urban Development in the Section 3 Business Registry:  https://hudapps.hud.gov/OpportunityPortal/

Note: You must create an account and log-in to register your business in the Section 3 Registry.

Search for a Section 3 Business

To search for a Section 3 Business in your local area: https://hudapps.hud.gov/OpportunityPortal/searchBusiness.action

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:

Section 3 Legacy Contracts Manual