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Housing Industry Groups Raise Concerns About BABA

David Krechevsky
Mar 28, 2023
White House

24 organizations send letter to Biden Administration saying act could negatively affect development of affordable housing.

A group of 24 housing industry organizations and representatives have sent a letter to President Biden urging the administration to exempt the development and repair of affordable housing from provisions in the Build America, Buy America Act (BABA). 

The group — which includes Habitat for Humanity International, The Mortgage Bankers Association, the National Association of Home Builders and the National Association of Realtors — states it is concerned about “the likely impact of the revised guidance on the implementation of [BABA] provisions of the Infrastructure Investment and Jobs Act on affordable housing development and the cost of housing in America.”

According to the letter, BABA requires the Office of Management and Budget (OMB) to issue standards that define “all manufacturing processes” in the case of construction materials.

“We are concerned that the implementation of OMB’s proposed rule would undercut your administration’s efforts to address the housing affordability crisis and reduce inflation,” the letter states. “OMB should clarify ‘buildings and real property’ do not include single-family and multifamily residential properties.”

The letter notes that, according to an analysis by Up for Growth, the U.S. is “facing a shortage of 3.8 million housing units,” which has “significantly contributed to extreme growth in housing unaffordability in markets throughout the country, many of which have never [before] experienced double-digit growth in housing costs.” It adds that this is also a “major headwind into efforts to close the minority homeownership gap,” and that shelter costs remain “a major driver of inflation.”

According to the most recent consumer price index, which rose 0.4% in February, the all-items index increased 6% year over year. The index for shelter was the largest contributor, accounting for 70% of the increase.

The letter states that several of the programs on the U.S. Department of Housing and Urban Development’s (HUD) list of federal financial assistance (FFA) published in January, “are critical financing options used to acquire, construct, rehabilitate, and preserve affordable housing for low-income households.” Adding BABA requirements as a condition of funding for FFA programs “will place an enormous administrative burden on builders and developers of affordable housing, restrict the supply of necessary construction materials, and further exacerbate the American housing affordability crisis,” the organizations state.

According to the letter, “OMB’s guidance specified, ‘Projects consisting solely of the purchase, construction, or improvement of a private home for personal use, for example, would not constitute an infrastructure project.’ This rationale should also apply to all affordable housing development and repair, including affordable homeownership repair and development programs and HUD-assisted and USDA-assisted multifamily housing.”

The letter concludes by stating that the groups “strongly urge OMB to take no action that could have the unintended consequence of increasing housing costs for all Americans.”

The groups and individuals that signed the letter are: National Housing Conference, Atlanta Neighborhood Development Partnership; Enterprise Community Partners; Habitat for Humanity International; Homeownership Alliance; Housing Assistance Council; Housing Partnership Network; Local Initiatives Support Corp.; Manufacturing Housing Institute; Mortgage Bankers Association; National Association of Affordable Housing Lenders; and the National Association of Home Builders.

Also: National Association of Local Housing Finance Agencies; National Association of Realtors; National Community Stabilization Trust; National Council of State Housing Agencies; National Housing Trust; National Leased Housing Association; National Multifamily Housing Council; National NeighborWorks Association; SKA Martin; Up for Growth Action; Jacqueline O’Garrow; and Pam Patenaude.

Mar 28, 2023
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