While the Build America, Buy America Act ("BABA" or the "Act") was enacted on November 15, 2021, as part of the Infrastructure Investment and Jobs Act, its impact on affordable housing developments that qualify as infrastructure projects funded by Federal Financial Assistance ("FFA") awards is peaking given the Department of Housing and Urban Development's ("HUD") phased implementation of the Buy America Preference ("BAP"). With HUD fiscal year 2025 well underway, BABA and BAP are now applicable to all new obligations of covered community planning and development ("CPD") programs administered by HUD. For developers and stakeholders in the affordable housing sector, understanding the nuances of BABA and the associated BAP is crucial, particularly as these requirements can influence project planning, design, cost, and compliance.
This article provides a summary of the BAP and outlines essential considerations to guide affordable housing development projects that may trigger buy American requirements by receiving covered HUD CPD funding.
Applicability of Buy America Preference
Under BABA, the BAP applies to "infrastructure projects" which are defined as "any activity related to the construction, alteration, maintenance, or repair of public infrastructure in the United States regardless of whether infrastructure is the primary purpose of the project." 1 Infrastructure includes buildings and real property. 2 Housing projects with five or more units are considered "public infrastructure" projects and are subject to the BAP absent a waiver or exemption. 3 In contrast, housing projects with one to four units are "private" and not subject to the BAP. 4 Thus, most affordable housing developments are infrastructure projects. Infrastructure also applies to road and sidewalk improvement projects, water, sewer, and other utility projects and broadband infrastructure. 5
Specifically, the BAP applies to infrastructure projects funded by covered FFA (e.g., Community Development Block Grant Formula Programs (CDBG), HOME Investment Partnerships Program (HOME), Housing Trust Fund (HTF)) (after taking into account obligation dates pursuant to HUD's phased implementation waiver) and utilizing: 1) iron and steel, 2) manufactured products, and 3) construction material:6
Iron or steel: defined as "articles, materials, or supplies that consist wholly or predominantly of iron or steel or a combination of both." 7 A product consisting of "predominantly" iron and steel means:
that the cost of the iron and steel content exceeds 50 percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate of the cost of iron or steel components.8
When a product falls within this definition, it must be produced in the United States meaning "all manufacturing processes, from the initial melting stage through the application of coatings, occurred in the United States."9
Manufactured Products: defined as "[a]rticles, materials, or supplies that have been: 1) [p]rocessed into a specific form and shape; or 2) [c]ombined with other articles, materials, or supplies to create a product with different properties than the individual articles, materials, or supplies." 10 Manufactured products must also be produced in the United States meaning:
1) The product was manufactured in the United States; and 2) The cost of the components of the manufactured product that are mined, produced, or manufactured in the United States is greater than 55 percent of the total cost of all components of the manufactured product, unless another standard that meets or exceeds this standard has been established under applicable law or regulation for determining the minimum amount of domestic content of the manufactured product. 11
Construction Materials: defined as "articles, materials, or supplies that consist of only one of the items listed in paragraph (1) of this definition, except as provided in paragraph (2) of this definition. To the extent one of the items listed in paragraph (1) contains as inputs other items listed in paragraph (1), it is nonetheless a construction material." 12 The list includes non-ferrous metals, plastic and polymer-based products (including polyvinylchloride, composite building materials, and polymers used in fiber optic cables), glass (including optic glass), fiber optic cable (including drop cable), optical fiber, lumber, engineered wood, and drywall. 13 Further, Construction materials must be produced in the United States meaning "all manufacturing processes for the construction material occurred in the United States. 14
Available Waivers
Both general and specific waivers are available:
General Waivers: The following are in effect until November 23, 2027, or such shorter time as HUD may announce via notice. These may be applied to all or a portion of an infrastructure project without prior approval from HUD when the conditions of the waiver are met.
- Small Grants: Total cost of the infrastructure project is equal to or less than $250,000.
- De Minimis: BABA requirements do not apply to a "de minimis portion" of an infrastructure project, meaning a cumulative total of no more than five percent of the total cost of the iron, steel, manufactured products, and construction materials used in and incorporated into the infrastructure project, up to a maximum of $1,000,000.
- Exigent Circumstances: The infrastructure project must be completed immediately because of a threat to life, safety, or property of residents and the community. 15
Project-/Product-Specific Waivers: If general waivers are not sufficient, a grantee may apply for a project-/product-specific waiver for covered materials that can only be sourced from foreign or unknown sources.
Project-/Product-Specific Waiver Types:
- Public Interest: The use of American made products would be inconsistent with the public interest and have an impact on the community if certain materials/products are not used.
- Non-Availability: The item is not produced in the United States at enough volume or at a satisfactory quality.
- Unreasonable Cost: Compliance would increase the cost of the project by more than 25%. 16
Application Process:
HUD reviews a waiver request and then notifies the Made in America Office at the Office of Management and Budget ("MIAO"). Next, following this consultation with MIAO, HUD is required to post the proposed waiver on its BABA website with the proposed determination to issue the waiver and must provide at least 15 days for public comment. Once the public comment period ends, HUD will submit the proposed waiver to MIAO to determine if the waiver is consistent with applicable law and policy. The MIAO will then notify HUD of its determination of the proposed waiver. Only after this process has been completed may HUD issue the waiver. 17 There is a website where the MIAO is publishing approved waivers, but there seems to be little experience with the process. 18 While at one industry conference an attorney participating on a session panel stated they had submitted a waiver request for a client and at another industry conference an attendee reported that a waiver had been received by their organization, such waivers are not reflected at madeinamerica.gov as of the writing of this article. The last publication governed HUD's proposal to issue a temporary, limited non-availability partial waiver of the manufactured product requirements for domestically assembled solar modules; the proposed waiver covers multiple projects. 19
Considerations for Affordable Housing Developers
1. Early Assessment of Funding Sources
Examine all potential sources; a grantor or lender that is not a federal agency may be loaning or granting federal funds. The requirements of BABA apply to subrecipients of such funds, making familiarity with the Act critically important for parties at every level.
The grantee for your development may have FFA with obligation dates that do not require compliance with the BAP, but the possibility is likely quickly diminishing as we near the end of fiscal year 2025.
2. Product Specification and Sourcing
Review specifications for iron, steel, manufactured products, and construction materials. If the BAP applies, ensure that design professionals select products with compliant origins. Early engagement with suppliers and manufacturers is critical, as certain products may have limited U.S.-made alternatives. Explore alternative designs or engage suppliers specializing in U.S.-made goods.
3. Budget Impact
Domestic materials can sometimes be more expensive or have longer lead times than imported alternatives. Factor potential cost differentials and possible supply chain delays into the project budget and schedule. Also consider the impact on time and cost to seek a project-/product-specific waiver.
4. Waivers
For the de minimis general waiver, the total cost of covered materials in a project first needs to be determined before the lesser of 5% of the total cost or $1 million may be ascertained. If general waivers are not sufficient, keep in mind that there is limited experience with the process of seeking project-/product-specific waivers from HUD for covered materials that can only be sourced from foreign or unknown sources. Anticipate that the process of applying for project-/product-specific waivers will take several months at a minimum to complete given there is not a well-established timeline.
5. Contracts and Communication
Ensure that contracts with all applicable project stakeholders spell out BABA requirements. If applicable notices or guidance are updated, communicate that to all parties.
6. Documentation of Compliance with the BAP
For both public housing agencies and CPD grantees, HUD implementation guidance contains entire sections on documentation and compliance. The HUD notices contain more detailed explanations, 20 but the main points are summarized below:
Public Housing Agencies: For PHAs, the records must, at a minimum, "(1) track product purchases in sufficient detail to identify the source of the funding for the purchase; [and] (2) demonstrate compliance with BABA." 21 Further, "(i) for products purchased in compliance with the BAP, documentation that the product complied with BAP requirements; and (ii) for products purchased pursuant to a waiver or other exemption from the BAP, adequate information to validate that the purchase was covered by a waiver or other exemption."22 The records must be kept until 3 years after completion of the infrastructure project. 23
CPD: "Records should be consistent with existing records retention requirements for each of the Covered CPD programs. 24 If there are no CPD program-specific records requirements, the CPD grantee may follow 'retention requirements for records,' under 2 CFR § 200.334 as applicable to Federal grants." 25
Additional Considerations
While the direct HUD recipient must submit the waiver request, it will likely rely on the developer to provide the information needed to make that request.
The terms and conditions of federal awards attach to the FFA and flow down to subrecipients at all tiers. This means that all subgrantees, developers, contractors, etc., who receive covered CPD funds must comply with BABA requirements.
Project-/product-specific waivers cannot be approved retroactively for items that have already been purchased or incorporated into a project, so that will prevent you from starting while waiting on a waiver determination. You also cannot break up a transaction to skirt BABA.
BABA-triggering funds that are added later trigger BABA for the entire project.
Conclusion
The BAP must be considered for any affordable housing project that may include FFA from HUD. Early identification of BAP-triggering sources, research into compliance and creating timelines that allow for seeking project-/product-specific waivers are advised. Successful navigation of BABA's requirements hinges on early planning, careful documentation and clear communication.
This article was written with assistance of summer associate Eddie Renner.
Footnotes
1. Notice CPD-2025-01, p. 6 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 6-7 (citing 2 CFR 184.3).
2. Notice CPD-2025-01, p. 6 (citing 2 CFR 184.4(c)); Notice PIH-2025-06, p. 7 (citing 2 CFR 184.4(c)).
3. Notice CPD-2025-01, p. 9-10; Notice PIH-2025-06, p. 6-7.
4. Id.
5. Notice CPD-2025-01, p. 23.
6. Section 70912(2) of the Act.
7. Notice CPD-2025-01, p. 6 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 7 (citing 2 CFR 184.3).
8. Id.
9. Notice CPD-2025-01, p. 8 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 8 (citing 2 CFR 184.3).
10. Notice CPD-2025-01, p. 7 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 7 (citing 2 CFR 184.3).
11. Notice CPD-2025-01, p. 8 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 8 (citing 2 CFR 184.3).
12. Notice CPD-2025-01, p. 5 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 5 (citing 2 CFR 184.3).
13. Id.
14. Notice CPD-2025-01, p. 8 (citing 2 CFR 184.3); Notice PIH-2025-06, p. 8 (citing 2 CFR 184.3).
15. Notice CPD-2025-01, pp. 11-12; Notice PIH-2025-06, pp. 2-4.
16. Notice CPD-2025-01, p. 18; Notice PIH-2025-06, p. 14.
17. Notice CPD-2025-01, pp. 19-20; Notice PIH-2025-06, pp. 14-17.
18. https://www.madeinamerica.gov/waivers/
19. https://www.madeinamerica.gov/waivers/federal-financial-assistance/6776ec69fd6c1cd7bd83c555
20. Notice CPD-2025-01, p. 20-22; Notice PIH-2025-06, p. 13-14.
21. Notice PIH-2025-06, p. 13.
22. Id.
23. Id.
24. Notice CPD-2025-01, p. 20.
25. Id.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
