Section 3 Benchmarks for Creating Economic Opportunities for Low- and Very Low-Income Persons and Eligible Businesses

Issuing agencies

Abstract

HUD's regulations require that HUD set Section 3 benchmarks by publishing a notification, subject to public comment, in the Federal Register and update the benchmarks no less frequently than once every three years by the same method of notification. This document serves as an update of the 2023 benchmark Notice and requests public comment about the Section 3 benchmark goals.

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[Federal Register Volume 91, Number 191 (Monday, October 5, 2026)]
[Rules and Regulations]
[Pages 63146-63147]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-20374]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

24 CFR Part 75

[Docket No. FR-6622-N-01]


Section 3 Benchmarks for Creating Economic Opportunities for Low- 
and Very Low-Income Persons and Eligible Businesses

AGENCY: Office of the Assistant Deputy Secretary for Field Policy and 
Management, Department of the Housing and Urban Development (HUD).

ACTION: Notification of benchmark updates and request for comments.

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SUMMARY: HUD's regulations require that HUD set Section 3 benchmarks by 
publishing a notification, subject to public comment, in the Federal 
Register and update the benchmarks no less frequently than once every 
three years by the same method of notification. This document serves as 
an update of the 2023 benchmark Notice and requests public comment 
about the Section 3 benchmark goals.

[[Page 63147]]


DATES: Effective November 4, 2026. The public comment period for the 
Notice published in the Federal Register is December 4, 2026.

FOR FURTHER INFORMATION CONTACT: Jasmy Methipara, Management Analyst, 
Office of Field Policy and Management, Department of Housing and Urban 
Development, 2415 Eisenhower Avenue, Alexandria, VA 22314-4684; 
telephone 202-402-2188 (this is not a toll-free number). General email 
inquiries regarding Section 3 may be sent to: 
<a href="/cdn-cgi/l/email-protection#703f16161913151f163619151c14201f1c191309111e143d111e1117151d151e04301805145e171f06"><span class="__cf_email__" data-cfemail="5b143d3d32383e343d1d323e373f0b34373238223a353f163a353a3c3e363e352f1b332e3f753c342d">[email&#160;protected]</span></a>. HUD welcomes and is prepared 
to receive calls from individuals who are deaf or hard of hearing, as 
well as individuals with speech or communication disabilities. To learn 
more about how to make an accessible telephone call, please visit 
<a href="http://www.fcc.gov/consumers/guides/telecommunications-relay-service-trs">www.fcc.gov/consumers/guides/telecommunications-relay-service-trs</a>.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 3 of the Housing and Urban Development Act of 1968, as 
amended by the Housing and Community Development Act of 1992 (Section 
3), attempts to direct employment and other economic opportunities 
generated by Federal financial assistance for housing and community 
development programs, to the greatest extent feasible, toward low- and 
very low-income persons, particularly those who are recipients of 
government assistance for housing. HUD is statutorily required to 
implement and enforce Section 3 through regulation, which HUD has done 
through the Section 3 regulations at 24 CFR part 75.
    The Section 3 regulations require HUD to establish Section 3 
benchmarks for Section 3 workers and Targeted Section 3 workers through 
a document published in the Federal Register. 24 CFR 75.13(b) and 
75.23(b). The regulations require HUD to update the benchmarks through 
a document published in the Federal Register, subject to public 
comment, not less frequently than once every three years. The first 
publication related to updating these Section 3 benchmarks, titled 
Section 3 Benchmarks for Creating Economic Opportunities for Low- and 
Very Low-Income Persons and Eligible Businesses, was published in the 
Federal Register at 85 FR 60907 (Sept. 29, 2020). The second 
publication related to these Section 3 benchmarks was published in the 
Federal Register at 88 FR 69219. The regulations require HUD to update 
the benchmarks through a document published in the Federal Register, 
subject to public comment, not less frequently than once every three 
years.

II. Benchmark Notice

    The regulation indicates that alteration of and updates to the 
established benchmark goals should be made in consideration of Section 
3 labor hour data collected during the prior three-year period. After 
evaluation and consideration of the data collected to date, HUD has 
determined that the available data is not a sufficiently representative 
sample to support the alteration of the current published benchmark 
goals. Therefore, the benchmark goals will continue to be the ratios 
established in the original Section 3 benchmark Notice, and HUD will 
continue to support the labor hour goal methodology contained therein.
    HUD considered a number of factors in making this decision. Most 
important of these is the fact that the relevant data is not yet 
available. Despite being published on September 29, 2020, the rule did 
not go into effect until November 30, 2020, and compliance only began 
to be required for Section 3 projects funded on or after July 1, 2021. 
The count of labor hours and evaluation of achievement of benchmark 
goals are not determined until a project is completed. Given the 
varying duration of construction projects, a number of larger Section 3 
projects-those with higher numbers of labor hours-funded after July 1, 
2021, have not yet completed construction and therefore have not 
reported final labor hours for Section 3 workers or Targeted Section 3 
workers. Additionally, the Section 3 Reporting Application for Public 
Housing Financial Assistance was launched on January 21, 2026 for 
recipients with fiscal year end dates of September 30, 2025, and 
December 31, 2025. The reporting window for the last cohort of public 
housing authorities closes July 30, 2026. This means that Public 
Housing Financial Assistance recipients will have only reported their 
first year of data under the Section 3 regulations by July 30, 2026 as 
they were not required to report labor hours under 24 CFR part 75 until 
a reporting system was in place, which does not give HUD a full three 
years of data to review. factors, among others, have contributed to 
initial reports containing limited data on a small subset of projects, 
which HUD believes does not create a large or representative enough 
sample of data to merit a change to the existing benchmarks.
    While HUD has decided not to change the benchmark goals for Public 
Housing Financial Assistance and Section 3 Projects, the department 
would like to solicit comments on the overall experience of grantees, 
contractors, and other stakeholders in achieving the existing benchmark 
goals along with any challenges faced or recommendations for 
appropriate benchmarks for future updates.
    HUD will publish another update Notice no later than three years 
after the publication of this Notice, as required by the Section 3 
regulations. Also, the department will not be issuing a second Notice 
subject to public comment unless comments are received that provide 
basis for additional revision of this Notice.

Joseph DeFelice,
Assistant Deputy Secretary for Field Policy and Management.
[FR Doc. 2026-20374 Filed 10-2-26; 8:45 am]
BILLING CODE 4210-67-P


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