delete PART 75—ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS
Section 3 of the Housing and Urban Development Act of 1968 requires recipients of certain HUD financial assistance and their contractors to make 'best efforts' to direct employment and business opportunities to low- and very low-income persons, particularly public housing residents and Section 8 recipients. The regulation establishes numerical benchmarks for labor hours worked by 'Section 3 workers' and 'Targeted Section 3 workers,' requires annual reporting, and creates compliance obligations for contractors and subcontractors, with exclusions for material supply contracts and professional services.
This regulation mandates employment and contracting preferences based on income and residency status, violating free market principles that hiring decisions should be based on merit, qualifications, and voluntary agreement. The compliance burden—tracking, certification, and reporting—imposes significant hidden costs on PHAs, contractors, and ultimately taxpayers, with small enterprises disproportionately affected. It represents federal overreach into local economic decisions, distorting incentives and potentially lowering project quality by prioritizing demographic criteria over competence. The 'best efforts' standard creates legal uncertainty and regulatory overreach, while the bureaucratic apparatus for monitoring and benchmarking expands the administrative state without demonstrable evidence of achieving its goals more effectively than market-based solutions or targeted training programs.