Section 3 Information
What is Section 3?
Section 3 is a U.S. Department of Housing and Urban Development (HUD) requirement designed to ensure that the HUD funds invested in housing and community development activities provide employment opportunities for low- to very-low income people. HUD’s regulations state “that to the greatest extent feasible businesses and employers working on HUD-funded projects must make a good faith effort to train and employ low-to-very low income individuals in the area (called “Section 3 residents”) and also to contract with businesses identified as Section 3.
In summary, the obligations of Section 3 are to the greatest extent feasible:
- Provide training for Section 3 residents and report on the outreach and training undertaken.
- Hire and train Section 3 residents and report on employees and new hires.
- Contract with Section 3 businesses and report on contracts and subcontracts.
Section 3 Contracting and Hiring Obligations
As a recipient of select HUD funds, Shelby County’s Division of Planning and Development (DPD) is required to comply with Section 3 regulations. DPD has established the following contracting and hiring goals to fulfill the requirements of Section 3 when applicable to select HUD contracts.
Contracting Obligations - Applies to contracts utilizing HUD governed grant funds.
To the greatest extent feasible, at least ten percent (10%) of the total dollar amount of select HUD-funded construction contracts shall be awarded to businesses identified as Section 3 and at least three percent (3%) of the total dollar amount of select HUD-funded, non-construction contracts shall be awarded to businesses identified as Section 3. A Section 3 business is defined as a business that meets one of the following criteria:
- Fifty-one percent (51%) or more owned by Section 3 residents, or
- At least thirty percent (30%) of its full time employees include persons that are currently Section 3 residents; or
- Were Section 3 residents within three years for the date of first hire; or provides evidence, as required, of a commitment to subcontract in excess of twenty-five percent (25%) of the dollar award of all subcontracts to businesses that meet one of the qualifications above.
Contact the Shelby County Department of Housing at 901-222-7600 or view for a list of businesses identified as Section 3.
Hiring Obligations Applying to all projects
Thirty percent (30%) of the aggregate number of new positions during a one year period shall be filled with Section 3 residents. Example: A construction contractor hires 10 new workers. Three of the new workers should qualify as local, low- to very-low income persons. A Section 3 resident is defined as a local resident who meets one of the following criteria:
Is a low- to very-low income resident of the housing development or developments in which HUD funds shall be expended; or is a low- to very-low income resident of other housing developments managed by the local Housing Authority(ies); or is a participant in a HUD Youthbuild program; or is a resident of the Memphis Metropolitan Statistical Area (including Section 8 recipients) who meets the low- to very-low income guidelines.
View more information on how to qualify as a Section 3 resident.
How to Qualify - Residents
Contact the Shelby County Department of Housing at 901-222-7600 for a list of residents identified as Section 3.
Section 3 Bid/Application Materials
Bidders and applicants submitting proposals governed by Section 3 are required to submit a Section 3 Opportunity Plan, in addition to other documents outlined in the bid request or application. Prior to a contract award, the Section 3 Opportunity Plan, must be approved by DPD and shall become a binding component of the project agreement. Bidders applications who fail to provide a Section 3 Opportunity Plan that addresses all requirements will not be granted contract consideration.
Access more a complete package of Section 3 bid application materials.
View for a complete package of Section 3 materials for Projects with a 90 day or less time frame.
For more information contact Alfred Garrett, Grants Coordinator at 901-222-7601 or by email