Build America, Buy America Act Stalls Affordable Housing Projects, Raises Costs

The Build America, Buy America Act (BABA), intended to foster domestic manufacturing and job growth, has created a significant challenge for affordable housing projects receiving federal funding. The law mandates that nearly all materials in these projects, including HVAC systems, lighting, and ceiling fans, must be American-made.

Developers report difficulty sourcing many necessary products domestically, as these items have historically been imported due to lower labor costs. Although a waiver process exists through the Department of Housing and Urban Development (HUD), approvals have been limited. This has led to substantial construction delays and increased costs, sometimes hundreds of thousands of dollars per project.

Impact on Developers and Residents

"The situation might lead to fewer affordable housing units being built nationwide during an existing housing crisis."
— Tyler Norod, President, Westbrook Development Corporation

Tyler Norod, president of Westbrook Development Corporation, warns that the current challenges could result in fewer affordable housing units being built nationwide, exacerbating an existing housing crisis.

For instance, developer Dan Madler of Beyond Shelter postponed lumber orders for a 36-unit building to ensure BABA compliance. He also reports being unable to find American-made ceiling fans and is currently awaiting HUD waiver approval for them.

Denver developer Julie Hoebel spent over $60,000 on a consultant specifically to identify American-made materials for an 85-unit building. Her waiver requests for approximately 125 materials, submitted in November, remain unapproved, putting her project at risk of a standstill.

Vermont-based developer Jessica Neubelt estimated an additional $150,000 was spent on verifying iron and steel for one of her projects, alongside hundreds of hours dedicated solely to compliance.

Agency Response and Advocacy

HUD has taken at least six months to approve many waivers. Even proponents of BABA acknowledge that HUD needs to expedite its waiver process and provide clearer instructions, mirroring practices seen in other federal agencies.

While HUD did not directly address questions regarding these waiver approval delays, the agency affirmed its commitment to supporting America’s industrial base while closely monitoring the cost impacts on builders. HUD Secretary Scott Turner has indicated the agency is examining ways to provide flexibility for certain projects.

Supporters of BABA, including unions in the steel and manufacturing industries, argue that taxpayer funds should exclusively support American-made materials and believe that domestic suppliers will adapt to the increased demand.

However, Jennifer Schwartz of the National Council of State Housing Agencies stated the waiver process is...