HUD Section 3

​​​ HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD is working to strengthen the housing market to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; build inclusive and sustainable communities free from discrimination; and transform the way HUD does business.

Understanding Section 3

Section 3 is a HUD (US Department of Housing and Urban Development) requirement designed to ensure that HUD funds invested in housing and community development activities contribute to employment opportunities for low-income people living in or near the HUD-funded project.

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-income individuals living in the local area (Section 3 residents) and also to contract with businesses owned by or that employ Section 3 residents (24CFR 135.5).

HUD’s Section 3 regulations appear in the Code of Federal Regulations, at 24 CFR Part 135. These regulations describe the obligations of each party working on the project. Non-compliance with HUD’s regulations may result in sanctions, termination of this contract for default and debarment or suspension from future HUD assisted contracts. (24CFR 135.38(F))

Does Section 3 pertain to my organization?

Section 3 pertains to all City of Bellingham programs accessing HUD Section 3-covered funds that allow any construction, demolition or rehab (HOME, CDBG and NSP)

The City of Bellingham sub-recipients (aka: Contract Administrators, Developers, and Reservation System Participants) receiving funds covered by the HUD Section 3 rule (24CFR 135) may interpret the following terms found in the rule as applicable to them: recipient, sub-recipient, and awardee. Any entity, other than the ultimate beneficiary household and direct hires, receiving Section 3 covered funds from a recipient, sub-recipient or awardee in exchange for providing goods or services, should adhere to the requirements for “contractors” and subcontractors”.

HUD applies Section 3 obligations equally to The City of Bellingham and its sub-recipients except that the City reports directly to HUD; sub-recipients submit Section 3 reports to the City; and contractors submit Section 3 reports to the sub-recipients who issued them the contract. The Section 3 Report Responsibility Chain Diagram (PDF) graphically illustrates award recipients’ reporting obligations. This video may provide you with additional information on your roles and responsibilities with HUD Section 3 compliance.

Contractors for the City of Bellingham Home Rehabilitation Program

The City is always seeking qualifications from licensed, bonded, and insured general contractors experienced with the rehabilitation of single family (1-4 unit) homes. The Notice to Contractors webpage contains additional information.