3-HHA Section 3 Clause 2026.pdf

Harrisburg Housing Authority | Section 3 Clause | Revised September 2026 Page 1

HARRISBURG HOUSING AUTHORITY

SECTION 3 CONTRACT CLAUSE AND COMPLIANCE

REQUIREMENTS

Revised September 2026 | 24 CFR Part 75

1. Applicability This clause applies only when the solicitation or contract is funded, in whole or in part, with financial assistance covered by Section 3 of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u), and 24 CFR Part 75. Harrisburg Housing Authority (HHA) will identify applicability in the solicitation or contract documents.

For public housing financial assistance, Section 3 applies regardless of the dollar amount. For HUD housing and community development financial assistance, Section 3 generally applies to housing rehabilitation, housing construction, and other public construction projects when the amount of covered HUD assistance to the project exceeds $200,000, or $100,000 for applicable Lead Hazard Control and Healthy Homes assistance. Section 3 does not apply to materials-only contracts or contracts that do not require labor. See 24 CFR 75.3.

2. Required Contract Clause

(a) The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (Section 3). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3 shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing.

(b) The parties agree to comply with HUD's regulations in 24 CFR Part 75. By executing the contract, the parties certify that they are under no contractual or other impediment that would prevent compliance with Part 75.

(c) The contractor shall notify each labor organization or representative of workers with which it has a collective bargaining agreement or other understanding, if any, of the contractor's Section 3 commitments. The contractor shall also post notices in conspicuous locations at the work site where employees and applicants can see them.

Notices shall describe the Section 3 preference and identify available employment and training positions, qualifications, application contact and location, and anticipated start date.

(d) The contractor shall include this Section 3 clause in every subcontract subject to 24 CFR Part 75 and shall take appropriate action when a subcontractor violates Part 75. The contractor shall not subcontract with a subcontractor when the contractor has notice or knowledge that the subcontractor has been found in violation of Part 75.

(e) The contractor shall certify that vacant employment or training positions filled after selection but before contract execution with persons who are not entitled to the Section 3 priority were not filled to circumvent obligations under 24 CFR Part 75.

(f) Noncompliance with 24 CFR Part 75 may result in sanctions, termination for default, and suspension or debarment from future HUD-assisted contracts.

3. Contractor Responsibilities

• Make best efforts, consistent with existing Federal, state, and local laws and regulations, to provide employment and training opportunities generated by the covered assistance to Section 3 workers and Targeted Section 3 workers in the order of priority stated below.

• Make best efforts to award contracts and subcontracts to Section 3 business concerns in the order of priority stated below.

• Require each covered subcontractor to comply with this clause and provide all data and documentation needed for HHA reporting.

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• Maintain records supporting worker status, labor hours, outreach, recruitment, training, contracting efforts, and any qualitative efforts used when benchmarks are not met.

• Submit complete Section 3 reports in the format and frequency required by HHA. Personally identifiable information must be protected and should not be included in reports unless specifically requested through a secure method.

• Cooperate with HHA monitoring and promptly correct deficiencies.

4. Public Housing Priorities Employment and training opportunities must be directed in the following order of priority, where feasible:

1. Residents of the public housing project or projects for which the public housing financial assistance is expended;

2. Residents of other public housing projects managed by HHA, or residents of Section 8-assisted housing managed by HHA;

3. YouthBuild participants; and

4. Low- and very low-income persons residing within the metropolitan area (or nonmetropolitan county) in which the assistance is expended.

Contracting opportunities must be directed, where feasible, first to Section 3 business concerns that provide economic opportunities to residents of the assisted public housing project(s), followed by those serving residents of other HHA public housing or HHA-managed Section 8-assisted housing, YouthBuild programs, and then Section 3 business concerns that provide opportunities to Section 3 workers in the metropolitan area (or nonmetropolitan county). See 24 CFR 75.9 and 75.11.

5. Labor-Hour Benchmarks

Measure Benchmark

Section 3 worker labor hours 25% or more of total labor hours

Targeted Section 3 worker labor hours 5% or more of total labor hours (included within the 25%)

These are safe-harbor benchmarks, not hiring quotas and not a condition that allows an unqualified worker to be hired. For public housing financial assistance, reporting is generally based on labor hours worked with the assistance during HHA's fiscal year. Professional-services labor hours may be excluded; if excluded, all such hours must be excluded consistently. See 24 CFR 75.13, 75.15 and 75.23.

6. Definitions and Documentation Section 3 worker. A worker who currently fits, or when hired within the previous five years fit, at least one of these categories: the worker's income for the previous or annualized calendar year is below the applicable HUD income limit; the worker is employed by a Section 3 business concern; or the worker is a YouthBuild participant.

Targeted Section 3 worker - public housing. A Section 3 worker who is employed by a Section 3 business concern; is a resident of public housing or Section 8-assisted housing; is a resident of another project managed by HHA; or is a YouthBuild participant.

Section 3 business concern. A business that, as documented within the preceding six months, is at least 51% owned and controlled by low- or very low-income persons; has over 75% of its labor hours over the preceding three-month period performed by Section 3 workers; or is at least 51% owned and controlled by current public housing residents or residents who currently live in Section 8-assisted housing.

Status may be documented using the certification methods permitted by 24 CFR 75.31, including worker self-certification, certification by a PHA or assisted-housing administrator, or qualifying employer certification. A worker may be counted for up to five years from the date status is established. HHA and contractors must follow

Harrisburg Housing Authority | Section 3 Clause | Revised September 2026 Page 3 applicable record-retention and privacy requirements.

7. Reporting and Qualitative Efforts The contractor shall report, at a minimum, total labor hours, Section 3 worker labor hours, and Targeted Section 3 worker labor hours for itself and each covered subcontractor, together with documentation required by HHA.

Reports are due at the intervals stated by HHA and with the final payment request.

If the benchmarks are not met, the contractor shall provide a narrative and records describing qualitative efforts.

Examples include targeted outreach, job fairs, training or apprenticeships, job-readiness and retention support, technical assistance for workers or Section 3 business concerns, dividing work into smaller opportunities when practicable, bonding assistance, use of business registries, and referrals through workforce-development systems.

See 24 CFR 75.15(b).

8. No Automatic Bid Preference, Fee, or Training-Fund Substitute This clause does not create an automatic price preference, mandatory contribution, penalty schedule, or payment into a training fund as a substitute for compliance. Any solicitation-specific evaluation preference or local program requirement must be separately authorized, stated in the solicitation, consistent with HHA's procurement policy and applicable law, and must not replace the best-efforts and reporting obligations of 24 CFR Part 75.

9. Contractor Certification By signing below, the contractor acknowledges that it has reviewed this clause, will comply with applicable Section 3 requirements, will flow the clause down to covered subcontracts, and will provide required documentation to HHA.

Contractor legal name:

Authorized representative:

Signature:

Title:

Date:

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10. HHA Administration Section 3 compliance questions and required submissions shall be directed to the HHA representative identified in the solicitation or contract. Contractors must use the current forms and reporting instructions supplied by HHA. If this clause conflicts with a controlling Federal statute, regulation, HUD notice, grant condition, or contract form, the controlling requirement governs.

Regulatory references

• Section 3 statute: 12 U.S.C. 1701u

• Section 3 regulations: 24 CFR Part 75, particularly §§ 75.3, 75.5, 75.9, 75.11, 75.13, 75.15, 75.23, 75.27, 75.29, 75.31 and 75.33

• HUD Form 5370, General Conditions for Construction Contracts - Public Housing Programs (current HUD version)

• HUD Section 3 Frequently Asked Questions and implementation guidance

Revision note This revision replaces the prior HHA clause dated May 10, 2021. It removes legacy language and locally imposed provisions that were not stated as requirements of 24 CFR Part 75, clarifies applicability, corrects the relationship between the 25% and 5% benchmarks, and updates reporting, documentation, and priority language.