Affordable housing projects face delays due to Build America, Buy America Act

The Facts -

The initiative known as Build America, Buy America aims to rejuvenate the U.S. manufacturing sector by requiring that federally funded projects use American-made materials. However, this policy has introduced challenges for affordable housing developers.

Critical components in affordable housing projects, such as HVAC systems, lighting fixtures, and other essentials, are required to have a Made in the USA label if they receive federal funding. Developers face difficulties as many of these products have traditionally been sourced from markets with lower labor costs. Although waivers can be applied for, the Department of Housing and Urban Development (HUD), with its reduced workforce, has only approved a limited number, contributing to construction delays and increased costs amid a growing affordable housing crisis.

Tyler Norod of Westbrook Development Corporation highlights the urgency, stating, "They need to be treating this like the fire that it is." The waiver process has left developers like Diana Lene in a precarious situation. Lene, living in Fargo, North Dakota, is on affordable housing waitlists. On her Social Security income, she finds maintaining her current living situation increasingly challenging.

Nonprofit developer Beyond Shelter's CEO, Dan Madler, is building 36 units for individuals like Lene but faces delays over verifying American-made products and awaits waiver approval for unavailable items like ceiling fans.

Implemented as part of the Infrastructure Investment and Jobs Act in 2021, the Build America, Buy America Act was intended to boost the U.S. economy post-recession. Yet, developers like Julie Hoebel in Denver have incurred significant costs on consultants and labor to source American-made materials, with no waivers yet approved for her project's 125 materials.

Facing a Standstill

Developers report that HUD is taking at least six months to process many waiver requests. Even supporters of the act recognize the need for HUD to expedite waivers and provide clearer guidance.

HUD did not respond to Associated Press inquiries concerning delays and additional costs. However, it stated a commitment to supporting America's industrial base while monitoring construction costs.

HUD Secretary Scott Turner mentioned that the department is exploring flexibility within the BABA framework for certain projects, acknowledging the industry's need for adaptable solutions.

Scott Paul from the Alliance for American Manufacturing expresses skepticism about continued reliance on imported materials, while Jennifer Schwartz from the National Council of State Housing Agencies notes the waiver process's shortcomings due to premature requirements without assessing domestic manufacturing capabilities.

Developers face challenges with American-made products, as Kaitlyn Snyder of the National Housing and Rehabilitation Association points out, especially with manufactured goods. Vermont developer Jessica Neubelt conveyed frustration over the time and costs dedicated to verifying compliance.

Debates over Solutions

Nebraska Representative Mike Flood suggests taking measures to alleviate the financial burdens by exempting certain HUD funds from BABA requirements. While some, like United Steelworkers' Roy Houseman, argue that concerns about cost increases are exaggerated, union leaders acknowledge the law does offer some flexibility.

Exemptions are possible if the cost of American-made products increases a project's expenses by over 25%. However, developers claim this allowance is insufficient to cover all non-domestic items.

Some developers are exploring alternatives to federally funded projects, but challenges remain. For instance, Kentucky developer Scott McReynolds is opting for smaller projects to sidestep BABA regulations, especially given the scarcity of American-made materials in rural areas.

McReynolds describes the situation as "a nightmare," illustrating the broader struggles faced by developers across the country.

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