BABA requirements stifling housing

The Build America, Buy America requirements remain a thorn in the side of housing advocates who claim the rule is preventing affordable housing communities from being built. 

"The single cause of this diverse dysfunction, shared by countless other affordable housing developments across the country, is a federal regulation that arguably shouldn't apply to them in the first place," said Stockton Williams, the executive director of the National Council of State Housing Authorities.  

"In any event, the Trump administration can solve the problem." 

BABA was created by the Bipartisan Infrastructure Law passed during the Biden Administration and requires that materials used in the construction of infrastructure projects come from domestic sources. 

The rule loops in affordable housing development that taps federal grants and loans from the Department of Housing and Urban Development

Several trade groups including those representing the housing industry have been pushing back on the rule since it was enacted which resulted in waivers being issued. NCSHA would like the Trump administration to waive BABA for HUD money. 

"The Office of Management and Budget have already determined that BABA requirements don't apply to single-family homes and clarified that federal multifamily financing programs such as the Low-Income Housing Tax Credit and FHA mortgage insurance don't trigger them," said Williams.

"Now it should say the same about federal grant programs." 

Low Income Housing Tax Credits, which rely on private activity bonds, are often teamed up with HUD grants in the capital stack used to develop affordable housing.   

The affordable housing sector scored what appears to be major victories in the One Big Beautiful Bill Act by way of loosening LIHTC restrictions. Bond attorneys are still combing through the fine print. 

LIHTCs are regulated by the Internal Revenue Service which is suffering from budget and labor cuts. 

Housing grants come through HUD, another agency the Trump administration has targeted for shrinkage.   

Congress remains at an impasse over a continuing resolution to keep the government open which could add additional speed bumps for working with either agency during a shutdown.   

According to an alert published by attorneys at Nixon Peabody, "In prior years, HUD issued a Contingency Plan that outlined the staff who would continue to work during a shutdown and a plan for how HUD programs would continue to be funded." 

"At the beginning of the new administration, HUD's Contingency Plan was removed from its website. The White House landing page for agency contingency plans is currently blank." 

"Though a government shutdown would not impact the Low-Income Housing Tax Credit directly, it would disrupt many of the sources of funds from HUD and other agencies that are used alongside the Housing Credit," said Emily Cadik, CEO of the Affordable Housing Tax Credit Coalition. 

 "This would jeopardize developments set to close as well as the ongoing operation of affordable housing, depending how long the shutdown lasts."