On July 15, LeadingAge submitted comments calling on HUD to reconsider the scope and applicability of a new “Buy America Preference” (BAP) to exclude HUD-assisted housing programs. Without exemptions from HUD, the requirement will apply to project funded through certain HUD awards beginning in mid-November, 2022.

The Build America Buy America Act, enacted in November 2021, establishes a new domestic procurement requirement for construction and manufacturing products, as well as all iron and steel products, used in the construction, alteration, maintenance, and repair of federally-funded infrastructure in America. In June, HUD published a Request for Information to housing stakeholders asking for input as the agency implements the major new procurement sourcing restrictions for HUD-funded projects.

In a listening session with housing stakeholders, HUD indicated to LeadingAge that several key housing programs would likely be implicated by the new requirements, including Section 202 Capital Advance, HOME and the Community Development Block Grant (CDBG), and even Multifamily Housing program. With construction material costs and other inflation at record levels, new restrictions on materials used in HUD-funded projects could derail planned and anticipated affordable senior housing construction and rehab.

“While the goals of BABA are important, implementing such requirements may exacerbate the massive and nationwide affordable housing shortage and ultimately have an overall negative impact on the country’s affordable housing goals,” LeadingAge writes in its comments to HUD.

LeadingAge further states that “applying the [BAP] requirement to HUD programs could jeopardize affordable housing options even as housing cost burdens skyrocket.” The comments make the case that the Infrastructure Investment and Jobs Act (IIJA), which carried the new domestic procurement requirement to enactment, decisively left HUD-funded housing out of the new infrastructure funding allotments.

In addition, LeadingAge’s comments outline a number of available exemptions available through a federal waiver process to the BAP, including a “General Applicability Waiver” that could apply to all manufactured and construction products used in HUD-funded projects due to the significant construction material costs and supply chain disruptions already impacting negatively affordable housing developments.

LeadingAge also recommended that HUD consider the possibility of implementing “Public Interest Waivers” based on a number of factors:

• Infeasibility for housing providers to be aware of or have the ability to track material sourcing;
• Need for portfolio preservation and improvement to mitigate disaster risk;
• High cost of developing affordable housing in difficult development areas;
• Limited amounts of funding sometimes awarded or utilized by HUD funding recipients (small grants and de minimis exemptions);
• Need for an adjustment period to domestic-focused construction supply; and
• Risk to affordable housing development and preservation because of the lack of willingness of contractors to accept infrastructure contracts subject to BABA.

LeadingAge will continue to advocate with HUD for a delayed or limited implementation of domestic procurement requirements to avoid negative impacts on the expansion and preservation of affordable housing across the United States. More information on the BAP is available here, and LeadingAge’s comments are available here.