Texas Department of Housing & Community Affairs - Building Homes and Strengthening Communities

HUD Section 3 Definitions

For HUD’s complete list on this rule, visit: 24 CFR 135.5 Definitions (www.ecfr.gov)

Award [sub]Recipient
Participants in TDHCA programs that receive awards (funded by HUD) through the TDHCA board of directors are “award [sub]recipients”. [Sub]recipients incur reporting obligations to TDHCA. The HUD rule does not distinguish between “recipient” and “subrecipient.”
Any entity which contracts to perform work in connection with a Section 3-covered project.
Good Faith Effort
Taking and documenting concrete actions to expand local economic opportunities, such as notifying Section 3 residents and businesses of available contract jobs, training, and employment positions, encouraging them to apply, and actually employing them or awarding contracts.
gross household income 80% or less of HUD area median income (AMI).
“Low-income persons” and “very low-income persons”
(Visit https://www.huduser.org/portal/datasets/il.html)
These have the same meanings given the terms in section 3(b)(2) of the United States Housing Act of 1937. Low-income persons mean families (including single persons) whose incomes do not exceed 80 percent of the median income for the area. Very low-income persons mean low-income families (including single persons) whose incomes do not exceed 50 percent of the median family income for the area, as determined by the HUD Secretary with adjustments for smaller and larger families, except that the HUD Secretary may establish income ceilings higher or lower than 50 percent of the median for the area on the basis of the HUD Secretary’s findings that such variations are necessary because of unusually high or low family incomes.
Numerical Goals and Compliance
Goto the Hiring Obligations section of the Obligations page.
Section 3 Business Certification form
(Business Certification form) will help to document a business as a “Section 3 business concern”. Reference the current income limits page in the Compliance area for income criteria. Those businesses seeking preference in contracting should register with HUD https://www.hud.gov/section3.
Section 3 Business Concern
Meets one of the following conditions: (1) Owned 51 percent or more by Section 3 residents; or (2) permanent, full‐time employees include persons, at least 30 percent of whom are currently section 3 residents, or within three years of the date of first employment with the business concern were section 3 residents; or (3) Provides written commitment to subcontract more than 25 percent of the dollar value of its subcontracts to Section 3 businesses (items (1) or (2) preceding).
Section 3-covered assistance
Funding provided under any HUD housing or community development program expended for work arising in connection with: (1) Housing rehabilitation (including reduction and abatement of lead-based paint hazards, but excluding routine maintenance, repair, and replacement); (2) Housing construction; or (3) Other public construction project (which includes other buildings or improvements, regardless of ownership).
Section 3-covered contract
Any contract or subcontract (including contracts for professional services) awarded by a [sub]recipient or contractor for work generated by a Section 3-covered project. These do not include contracts for the purchase of supplies and materials. However, when a contract for materials includes installation of materials, the contract constitutes a Section 3 covered contract.
Section 3 Resident Certification form
(Resident Certification form) will help to establish status of an individual as a “Section 3 resident”. Please reference the current income limits page in the TDHCA Compliance area. Also consult HUD Income Limits (huduser.gov).
Section 3 Residents:
Low-income individuals (including public housing residents and day-laborers) living in the metro area (MSA) or nonmetro county in which the project resides.
Section 3 Service Area
Encompasses the metropolitan area (MSA) or non-metropolitan county in which the HUD-assisted project will reside.
Any entity which has a contract with a contractor to undertake a portion of the contractor’s obligation for the performance of work on a Section 3-covered project.
Equates to “lower-tier contractors” term in Davis-Bacon guidelines.
Very low income
gross household income 50% or less of HUD AMI.

If you have any questions, please email hudsection3@tdhca.state.tx.us or contact TDHCA Program Services staff.