This document provides information about Section 3, a HUD program that requires economic opportunities from HUD projects be directed to low-income residents. It defines what makes a business or resident qualify as Section 3, provides income guidelines and certification examples, and tips for businesses to become Section 3 certified like strategic hiring or subcontracting to Section 3 businesses. The key is directing over 25% of contracting dollars or having 30% of staff qualify as Section 3 residents to meet the criteria.

1. Section 3 Certification -
City of Saint Paul
Luis Morales
651-266-8918
Luis.Morales@ci.stpaul.mn.us
www.stpaul.gov/section3

2. WHAT IS SECTION 3?
HUD Requirement: Recipients of certain HUD
financial assistance must, to the greatest extent
feasible, direct economic opportunities (jobs,
contracts, training) to low-income residents in
connection with projects and activities in their
neighborhoods.

3. WHY SECTION 3?

4. SECTION 3 PROJECTS

5. SECTION 3 RESIDENTS
A Section 3 resident must
-reside in the metro area, and be
-lower income
Income Eligibility Guidelines - FY 2012
Household 1 2 3 4 5 6 7
Size
Income $45,500 $52,000 $58,500 $65,000 $70,200 $75,400 $80,600
Limit

6. SECTION 3 BUSINESS CONCERNS
 51% or more owned by Section 3 Residents,
OR
 30% or more of employed staff are Section 3
Residents, or were w/in last three years, OR
 Over 25% of dollar amount of all subcontracts
are committed to Section 3 Business

7. KEY DEFINITIONS
 Employed Staff – All permanent, full-time employees
(includes office staff and trades people)
 Income – All sources of income for household (includes
spouses)
 Household member – someone who lives with
applicant and is related by marriage, birth, or adoption
 Metro Area – Counties of Anoka, Carver, Chisago,
Dakota, Hennepin, Isanti, Ramsey, Scott, Sherburne,
Washington, Wright, Pierce (WI), St. Croix (WI)

8. CERTIFICATION EXAMPLES
 Alice owns Brick Co. She has two kids under 18 and is the sole
breadwinner. Her 2011 income was $47,000. Alice & her company
are Section 3 eligible – 51% Ownership category.
 Mike and Jane are married and own ABC Plumbing (49-51 split).
They have 1 child. Together, Mike and Jane made $75,000 in 2011.
They are ineligible – 51% Ownership category.
 However, ABC Plumbing has six (6) FTEs (2 office workers, 4 trades
people). In 2011, one office worker had a household income of
$67,000 (2 adults, 3 kids). One tradesman is single and a first year
apprentice with no other source of income. Two out of six (2/6)
employees meet the income guidelines. ABC Plumbing is Section 3
eligible – 30% Employees.

9. CERTIFICATION EXAMPLES
 Alice owns Brick Co. She has two kids under 18 and is the sole
breadwinner. Her 2011 income was $47,000. Alice & her company
are Section 3 eligible – 51% Ownership category.
 Mike and Jane are married and own ABC Plumbing (49-51 split).
They have 1 child. Together, Mike and Jane made $75,000 in 2011.
They are ineligible – 51% Ownership category.
 However, ABC Plumbing has six (6) FTEs (2 office workers, 4 trades
people). In 2011, one office worker had a household income of
$67,000 (2 adults, 3 kids). One tradesman is single and a first year
apprentice with no other source of income. Two out of six (2/6)
employees meet the income guidelines. ABC Plumbing is Section 3
eligible – 30% Employees.

10. CERTIFICATION Ex. – 25% Subcont.
$100,000 Project
General Contractor must award over 25%
General performs $50,000 and 25% Sec 3 of $50,000 = $12,500
awards remaining $50,000 to General Here, GC awarded $20,000 to a Sec 3 sub.
three subcontractors Contractor
For this project, the GC is also Sec 3.
Sub # 2 Sub # 3
Sub # 1
Sec 3
$10,000 $20,000 $20,000

11. CERTIFICATION TIPS
 30% Employees
 Strategic hiring – many union workers on bench are
Section 3 eligible. Hiring them can help your
company reach 30% figure.
 The income of 1st and 2nd year apprentices is lower
than guidelines (check for employed spouse!).
 Journeymen could qualify. Check hours worked/wk,
wks/mo, mos/yr, household size (dependents).

12. CERTIFICATION TIPS – CONT’D
 25% Subcontracting
 Could your current subs become Section 3 certified
(51% or 30%)? Are you open to working with Section
3 subs?
 Request Section 3 business list – over 260
businesses certified

13. FIRST STEP?
 Get Certified with the City of Saint Paul
Section 3 Program
 Visit City’s Section 3 Website:
www.stpaul.gov/section3
 Application Forms
 FAQs
 Links to Opportunities