Federal programs & compliance
Section 3
Section 3 of the HUD Act of 1968 — hiring, training and contracting goals for low-income residents on covered HUD-assisted projects, tracked by labor hours.
Definition
Section 3 of the Housing and Urban Development Act of 1968 (12 U.S.C. § 1701u, archived with the FHA insurance statutes) requires that HUD-funded housing and community development work direct employment, training and contracting opportunities, to the greatest extent feasible, toward low- and very low-income residents and the businesses that substantially employ them.
HUD's implementing rule at 24 C.F.R. Part 75 runs on labor-hour benchmarks — HUD's benchmark notice targets 25% of construction labor hours from Section 3 workers, including 5% from Targeted Section 3 workers — and covers public housing assistance plus HUD housing and community development assistance above the rule's project threshold.
Why it matters in an underwrite
Section 3 is an effort-and-reporting obligation rather than a wage premium — cheaper than Davis-Bacon, but operationally real: the GC must track worker residency and income status by labor hour, and the recipient reports results to HUD. It typically arrives stacked with other federal strings on PBV, HOME or public-housing money, and funders check both at draws. Put the benchmarks and data-collection duties into the GC contract and subcontractor buyouts up front.
Sources & related guides
See also
See the term in the law itself
Read the controlling text in the Code Library, or ask the AI how it applies to your project.
Last reviewed 2026-07-29. General information, not legal advice.