HUD has finalized how Section 3 reporting will be enforced moving forward, closing years of uncertainty across the field. With the release of Notice PIH 2025-29, Section 3 reporting is no longer deferred or paused. S3R, the new reporting system that replaces SPEARS, has launched, and PHAs are now in their first active reporting cycle.
For Public Housing Authorities, the question is no longer if reporting will resume, but whether internal systems are ready to support it.
What Changed and What Didn’t
Section 3 itself is not new. It has required PHAs and their contractors to make best efforts to connect low- and very-low-income individuals to economic opportunities generated by HUD-funded activities for decades.
What HUD finalized is how compliance will now be reported and monitored.
Under PIH 2025-29:
- Section 3 reporting delays have officially ended
- S3R replaces SPEARS as the required reporting system
- Reporting timelines are tied to each PHA’s fiscal year
The underlying benchmarks and requirements remain unchanged. What has changed is that reporting is now fully operational and enforceable.
One clarification worth noting: PIH 2025-29 applies to PHAs receiving public housing financial assistance, specifically Operating Fund and Capital Fund funding, including RAD conversion work. It does not apply to HOME or CDBG. Those programs carry separate Section 3 reporting requirements under different parts of the regulation.
When Reporting Became Mandatory
Section 3 reporting became mandatory beginning January 1, 2026.
PHAs must submit one annual report within 60 days after the close of their fiscal year, capturing labor hours, Section 3 worker participation, and compliance efforts from the prior year. HUD has provided a phased first cycle schedule to ease the transition, but after that initial year, reporting becomes routine.
PHAs with a fiscal year ending September 30, 2025 have been granted a one-time adjusted deadline of March 1, 2026 for their first S3R submission.
Small PHAs retain certain flexibilities, including qualitative reporting options. However, all agencies, regardless of size, must meet submission deadlines and maintain documentation sufficient to demonstrate compliance during monitoring or audits.
One operational item to address immediately: S3R account activation emails were distributed to PIC points of contact beginning January 21, 2026. Those emails carry a 24-hour activation window. If that window has passed, a service ticket must be submitted through HUD Exchange to request a new activation link. Confirming account access now avoids delays when the submission window opens.
Why This Matters Now
The most significant impact of this notice is operational.
Section 3 is no longer an intermittent requirement that can be revisited later. Beginning in 2026, it becomes a standing compliance function that requires consistent tracking, documentation, and internal coordination. There are no new penalties and no new benchmarks. But there is now clarity, enforceability, and expectation. PHAs that integrate Section 3 reporting into their annual compliance planning will be far better positioned than those treating it as a one-time exercise.
How AMA Supports Agencies Through This Shift
AMA Consulting Group works with Public Housing Authorities to translate finalized HUD requirements into clear, sustainable operational practices. Our support often includes helping agencies establish Section 3 tracking systems, prepare for S3R reporting, align documentation practices, and strengthen overall monitoring readiness.
As Section 3 reporting moves into an active enforcement cycle, many agencies are using this transition period to assess whether their current systems and workflows are positioned to meet 2026 requirements. If your team is reviewing Section 3 readiness or planning ahead for upcoming reporting cycles, early alignment can reduce administrative strain and help prevent issues during monitoring or audit reviews.
Resources to Support Your Team
For agencies reviewing internal compliance practices or preparing for potential monitoring activity, structured evaluation tools can help identify potential gaps before oversight occurs.
AMA regularly publishes policy updates, regulatory analysis, and operational guidance designed to help housing professionals understand federal housing policy developments and oversight trends.
When Additional Guidance May Be Helpful
Section 3 compliance reporting or often requires coordination, resources and capacity your team may not have.
Targeted advisory support can help housing agencies:
- Review internal compliance systems
- Strengthen documentation and recordkeeping practices
- Evaluate monitoring and governance structures
- Prepare for potential HUD or OIG audit activity
AMA Consulting Group works alongside housing agencies to support program compliance, operational strategy, and governance practices aligned with HUD requirements.
