US Housing Crisis Deepens Due to Domestic Production Law
The law known as "Build America, Buy America" aims to boost domestic manufacturing and create jobs in the United States. However, it's causing a significant slowdown in the development of affordable housing.
Under this law, everything from light fixtures to ceiling fans used in federally-funded housing projects must bear the "Made in the USA" label. The problem is, many of these products have traditionally been imported from countries where labor costs are lower. Builders can apply for waivers, but the approval process has been slow, leading to construction delays and increased costs.
The Impact on Affordable Housing Developers
For affordable housing developers, the law has meant increased costs and fewer units being built. Tyler Norod, a developer based in Maine, expressed his frustration: "We’ve sort of resigned ourselves that we’re just gonna build less units across the entire country during a housing crisis."
Another developer, Julie Hoebel, has spent over $60,000 hiring a consultant to source American-made materials, in addition to labor costs. But the waivers she submitted for around 125 materials in an 85-unit building haven’t been approved.
Affecting Those in Need
76-year-old Diana Lene has been on affordable housing waitlists for the past five years. Living close to her family in Fargo, North Dakota, she's struggling to afford her rent on her Social Security income. She is waiting for one of Dan Madler's apartments, a nonprofit developer who had to postpone his 36-unit project due to the law's requirements.
Delays in the Waiver Process
The Department of Housing and Urban Development (HUD) is taking at least six months to approve many waivers. Even supporters of the law agree that HUD needs to expedite the process and provide clearer guidelines.
Jennifer Schwartz, director of tax and housing advocacy at a national housing agency, commented that the waiver process is "failing," as requirements were put in place before assessing domestic manufacturing capacity.
Addressing the Law's Challenges
Despite these challenges, supporters argue taxpayer money should support American-made products. They believe suppliers will adjust to meet the demand for products not currently available in the US.
However, Kaitlyn Snyder, managing director of a national housing association, noted that while it might be feasible for suppliers to produce more raw materials domestically, it will take time for items like appliances to become available. She also questioned the economic viability of producing small components like door hinges domestically.
Seeking Solutions
The debate continues on how to address these issues. Some, like U.S. Rep. Mike Flood, advocate for exempting some HUD funding from the law. Others, like Union leaders, argue that cost complaints are exaggerated and that developers should make more effort to comply with the law.
Regardless of the solution, the current situation is causing some developers to consider avoiding federal funds altogether. But this is challenging, as even a small portion of federal funding can make a significant difference in whether an affordable housing project is financially viable.
Scott McReynolds, a developer in Kentucky, has opted to build smaller projects that aren't subject to the law, stating that finding American-made materials is especially difficult in rural areas.
As the debate continues, it's evident that the law intended to boost domestic manufacturing is adding to the challenges faced by the affordable housing sector.