Recipients of federal funding (e.g., HOME, NHTF) from the U.S. Department of Housing and Urban Development (HUD) in a combined amount of $300,000 or more per project must comply with Section 3, which requires that direct employment, training, and contracting opportunities be made available to low-income individuals and the businesses that employ these persons within their community.
Projects subject to Section 3 must submit reports annually to KHC by August 15 of each year to provide data on the Section 3 activities for each fiscal year during which the project is under construction. At project completion, a final, cumulative Section 3 report must be uploaded to the Universal Funding Application (UFA) system with the construction completion/placed-in-service stage. For this year’s submission, owners should report on Section 3 activities that occurred over the past fiscal year, July 1, 2025 – June 30, 2026.
The data included in the annual reports includes the total number of hours worked by all workers on the project and the total number of hours worked by eligible Section 3 or Targeted Section 3 workers. Recipients whose project does not meet the required Section 3 safe harbor benchmarks established by HUD are required to document and report the qualitative efforts that have been pursued to meet the Section 3 goals.
In addition to the report, project owners are required to provide the applicable verification forms for each of the Section 3 workers identified on the report. All reports and supporting documentation must be emailed to [email protected] no later than August 15, 2026.
Please refer to the Section 3 Requirements for more information and to view the reporting and employee certification forms. Additional information about Section 3 can be found on the HUD Exchange.
If you have any questions, email [email protected].
