CDBG Entitlement FAQ

When is Section 3 triggered for a CDBG project?

Date Published: May 2015

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Section 3 applies to projects of a certain scope and monetary amount and is triggered when the following thresholds are met and new hiring and/or contracting opportunities are generated by the use of grant funds.

  • Scope: Section 3 requirements apply to projects that involve work arising in connection with the construction or rehabilitation of a HUD-assisted project, regardless of how the grant funds are actually spent. Section 3 requirements do not apply to projects that do not involve rehabilitation and new construction, such as direct homebuyer assistance for the purchase of standard housing, or tenant-based rental assistance programs.
  • Dollar Thresholds: Section 3 applies when these thresholds are met:
    • The grant administering entity receives more than $200,000 in grant funds, and invests any amount of these funds to carry out new construction or rehabilitation activity (including demolition and lead-based paint abatement). The administering entity includes the PJ/grantee, as well as any subrecipient (unit of local government) or subrecipient (nonprofit organization) that receives over $200,000.
    • A contractor/subcontractor of a project receives a contract for $100,000 or more in grant assistance.

Once it is determined that Section 3 applies to a project, the Section 3 requirements apply to all contracts, provided that at least $1 of grant funds is being used. If the grant administering agency receives more than $200,000 in grant funds, but no single contractor is awarded more than $100,000, then the Section 3 requirements apply to the training, employment, and contracting activities of the PJ/grantee, or subrecipient but not to those of the contractor(s) of the project. This means new hiring and contracting opportunities generated by the PJ/grantee, subrecipient that is related to work arising in connection with the HUD-assisted new construction or rehabilitation project would be subject to the Section 3 hiring and contracting goals.

Tags: CDBG Entitlement Program Section 3