TABLE OF CONTENTS

Statement of Purpose Page
4

Definitions Page 5
Goal Statement Page 7

CHA Preference Tiers Page 8
Section 3 Compliance Requirements Page 10

HUD, 24 CFR 135, the Section 3 Rules Attachment

STATEMENT OF PURPOSE

The purpose of Section 3 of the Housing and Urban Development Act of 1968, as amended
by Section 915 of the Housing and Community Development Act of 1992, is to ensure that
employment and other economic opportunities generated by certain HUD financial
assistance shall, to the greatest extent feasible, and consistent with existing Federal,
State, and local laws and regulations, be directed toward low- and very low-income
persons, particularly those who are recipients of government assistance for housing, and
to business concerns which provide economic opportunities to low- and very low-income
persons. The 1992 Act sets forth:
. The types of HUD financial assistance, activities, and recipients subject to
the requirements of Section 3;
. The specific individuals and business concerns who are the intended
beneficiaries of the economic opportunities generated from HUD-assisted activities; and
. The order of priority in which these individuals and business concerns
should be recruited and solicited for the employment and other economic opportunities
generated from HUD-assisted activities.

The CHAs Section 3 policy is expressed in this statement, the goal statement, and the
preference tiers. Implementation procedures may be amended periodically by the Chief
Executive Officer or their designee to insure that the policy requirements are being met or
to bring about efficiencies in the implementation of the program based on the practice and
experience of running the program.

DEFINITIONS

NEW HIRES Full-time employees for permanent, temporary, or seasonal employment
opportunities.
RESIDENT OWNED BUSINESS (ROB) A ROB is a business concern owned or controlled by
public housing residents, that is: (a) at least 51% owned by one or more public housing residents;
and (b) whose management and daily business operations are controlled by one or more such
individuals. For purposes of Section 3 compliance, a ROB must also meet the CHA definitions of a Section 3 business concern as described below.
EMPLOYMENT OPPORTUNITIES GENERATED BY SECTION 3 COVERED ASSISTANCE All
employment opportunities generated by the expenditure of Section 3 covered PIH assistance (i.e.
operating assistance, development assistance, and modernization assistance) and with respect
to Section 3 covered housing and community development assistance, all employment
opportunities arising in connection with Section 3 covered projects,including management and
administrative jobs (including architectural, engineering, or related professional services and jobs
directly related to administrative support of these activities) connected with the Section 3 covered
project.
RECIPIENT Any entity which receives Section 3 covered assistance, directly from HUD or from
another recipient and includes, but is not limited to, any State, unit of local government, PHA,
IHA, Indian Tribe, or other public body, public or private nonprofit organization, private agency or
institution, mortgagor, developer, limited dividend sponsor, builder, property manager, community
housing development organization, resident management corporation, resident council, or
cooperative association. Recipient also includes any successor, assignee, or transferee of any
such entity, but does not include any ultimate beneficiary under the HUD program to which
Section 3 applies and does not include contractors.
SECTION 3 Section 3 of the Housing and Urban Development Act of 1968, as amended (12
U.S.C.1701u).
SECTION 3 BUSINESS CONCERN --As defined by the CHA, a Section 3 business concern is
one:
A.
That is Fifty-one (51%) percent or more owned by Section 3 residents; or
B.
Whose permanent, full-time employees includes persons, at least 30 percent of
whom are current Section 3 residents, or were Section 3 residents within three
(3) years of the date of first employment with the business concern; or
C.
That provides evidence of a commitment to: (1) subcontract 20 percent or more
of the total amount of the contract (including any modifications); and (2) in turn
subcontracts in excess of 25 percent of the amount from (1) to Section 3
business concerns as defined in A or B (25% of 20%). Example: If the Contract
Amount is = $1,000,000, vendor must subcontract at least 20% or $200,000. Of
the $200,000, 25% or $50,000 must go to Section 3 business concern(s) as
defined in A or B.
SECTION 3 CLAUSE The contract provisions and sanction set forth in 24 CFR 135.38
SECTION 3 COVERED ACTIVITY Any activity that is funded by Section 3 covered assistance
including Public housing assistance.
SECTION 3 COVERED ASSISTANCE There are no dollar amount thresholds for PIH (Public and
Indian Housing) funded Section 3 covered activities. Section 3 applies to all contractors and
subcontractors performing work in connection with the following assistance regardless of the
amount of the contract or subcontract:
.

Public and Indian housing development assistance provided pursuant to Section
5 of the 1937 Act;
.

Public and Indian housing operating assistance provided pursuant to Section 9 of
the 1937 Act; .

Public and Indian housing modernization assistance provided pursuant to
Section 14 of the 1937 Act;
.

Section 8 assistance for work arising in connection with: housing rehabilitation,
housing construction, or other public construction projects.

SECTION 3 COVERED CONTRACT A contract or subcontract (including a professional service
contract) awarded by a recipient or contractor for work generated by the expenditure of Section 3
covered assistance or for work arising in connection with a Section 3 covered project. Section 3
covered contracts do not include contracts for the purchase of supplies and materials except,
whenever a contract for materials includes the installation of the materials, the contract
constitutes a Section 3 covered contract.
SECTION 3 COVERED PROJECT The construction, reconstruction, conversion or rehabilitation
of housing (including reduction and abatement of lead-based paint hazards), other public
construction which includes buildings or improvements (regardless of ownership) assisted with
housing or community development assistance.
SECTION 3 JOINT VENTURE An association of business concerns, one of which qualifies as a
Section 3 business concern, formed by written joint venture agreement to engage in and carry out
a specific business venture for which purpose the business concerns combine their efforts,
resources, and skills for joint profit, but not necessarily on a continuing or permanent basis for
conducting business generally, and for which the Section 3 business concern:
.

Is responsible for a clearly defined portion of the work to be performed and holds
management responsibilities in the joint venture; and
.

Performs at least 25% of the work and is contractually entitled to compensation
proportional to its work.

SECTION 3 RESIDENT
1.) A public housing resident, or 2.) An individual who resides in Cook County and who meets the
following criteria:
.

Low-income persons families (or single persons) whose incomes do not
exceed 80 per centum of the median income for the area.
.

Very low-income persons families (or single persons) whose incomes do not
exceed 50 per centum of the median income for the area.

GOAL STATEMENT

It is the CHAs policy to achieve Section 3 goals through the following means:
HIRING

At least 30% of the aggregate number of full-time new hires must be Section 3
residents, with a preference for residents at the development where the work is being
performed.

CONTRACTS Contractors may demonstrate Section 3 compliance by providing a notarized
statement committing to award to Section 3 business concerns:
. At least 10% of the total dollar amount of all Section 3 covered contracts
for building trades work for maintenance, repair, modernization, or development of Public
housing, or for building trades work arising in connection with housing rehabilitation,
housing construction and other public construction.
. At least 3% of the total dollar amount of all other Section 3 covered
contracts.
. CHA's preference is to contract directly with a Section 3 business or
contract with vendors that subcontract to a Section 3 business. In either case, CHA's
preference is further defined as prioritizing business concerns that employ CHA residents
from the property where the work is being performed.

Note that Supply and Delivery contracts are excepted from these Section 3 Policy
requirements.

OTHER ECONOMIC OPPORTUNITIES
Providing other economic opportunities to train and employ Section 3 residents or
contributing to a Section 3 compliance fund which provides other economic opportunities.
Firms may provide other economic opportunities or make a direct cash contribution. CHA has
established the following minimum threshold requirements for contribution to any fund
that provides other economic opportunities:
a) For trade, construction and rehabilitation work the
"value" of the other economic opportunity must equal or
exceed 5% of the total contract amount plus any
modifications;
b) For other types of contracts, including service
cont