Section 3 Program

What is Section 3?
Section 3 is a provision of the Housing and Urban Development (HUD) Act of 1968, federal regulation §24 CFR 135.  The City of Detroit is committed to their Section 3 Program to foster local economic development, neighborhood economic development, and individual self-sufficiency.  Section 3 Program requires recipients of certain HUD covered projects and activities, to the greatest extent feasible, to provide employment and job training for Section 3 residents and contracting opportunities to Section 3 businesses in connection with projects and activities in their neighborhoods.

What is a Section 3 Resident?
A Section 3 Resident is an individual: (1) receiving public housing assistance or (2) that meets the requirement of household income listed below and resides in the Detroit-Warren-Livonia Metropolitan Statistical Area (MSA), which includes the following counties:  Lapeer, Macomb, Oakland, St. Clair, and Wayne. 

FY2020 - 2021 $78,500 Median Family Income

Family Size 1 Person 2 Persons 3 Persons 4 Persons 5 Persons 6 Persons 7 Persons 8 Persons
Income $44,000 $50,250 $56,550 $62,800 $67,850 $72,850 $77,900 $82,900

(source:  Income limits subject to change per fiscal year, July 1 - June 30; Detroit-Warren-Livonia MI HUD METRO FMR AREA Income Limits as of 07/01/2020; )

What is a Section 3 Business Concern?
A Section 3 Business Concern meets one of the following criteria:

  • Fifty-one percent (51%) or more of the business is owned by Section 3 residents; OR
  • Thirty percent (30%) or more current permanent full-time employees are Section 3 residents or within 3 years of the date of 1st employment with the business concern were Section 3 residents; OR
  • Business can provide a firm commitment to subcontract in excess of twenty-five percent (25%) or more of the total dollar amount of contracts to Section 3 business concerns.

Section 3 Compliance
The first step in compliance is submitting a Section 3 Plan.  A Section 3 Plan is submitted when a company is bidding on or has been pre-approved for a HUD funded covered project.  When awarded HUD funds for a covered Section 3 project, the Section 3 Plan is used as a baseline for meeting the minimum goal requirements as stated under Section 3 Goals.  Compliance documents:

  • Section 3 Plan
  • Workforce Form
  • Verification of Income Form
  • Section 3 Summary Form

Section 3 Goals
The goals for each developer, contractor and subcontractor on a covered Section 3 project must acknowledge and actively seek to achieve the following Section 3 goals:

  • At least thirty percent (30%) of all new hires needed to complete the project shall be Section 3 Residents; and
  • At least ten percent (10%) of the total Detroit dollar amount awarded of all covered construction contracts shall be awarded to Section 3 Business Concerns; and
  • At least three percent (3%) of the total Detroit dollar amount awarded of all covered non-construction (including routine maintenance, HVAC servicing, re-painting, lawn care, and professional services – architectural, engineering, legal services, accounting, marketing, etc.) contracts shall be awarded to Section 3 Business Concerns.

Section 3 Business Concern Certification
Any business seeking to be placed on the City of Detroit certified Section 3 Business list must complete the Section 3 application for certification.