As we await the November 3rd midterm elections and prepare for the lame-duck session and the 120th Congress, we want to let you know we continue working on issues affecting the industry.
One area where we continue to make progress is fixes to the Build America/Buy America program. We have been working directly with HUD's Field Policy and Management (FP&M) office and OMB's Made in America Office (MIAO) to fix BABA, and we are pleased to report on those efforts.
At our most recent meeting this past Tuesday, October 13th, the FP&M staff reported that the HVAC equipment waiver is now at OMB awaiting final approval. HUD staff indicated we are still on track to release the product-wide waiver around the end of November.
In addition, they are working on four other product-wide waivers for electrical equipment, including fire suppression equipment and switchgear, elevators, plumbing, and light fixtures. They are still working on appliances, as they need to distinguish between hardwired and plug-in units, among other issues, and they are also reviewing electric door locks and hardware. Elevators may also have a unique waiver because they are assembled on-site, so some materials may get a waiver while other parts may not. They hope to finalize these in the coming months, and they could announce them by the end of the year or shortly thereafter. These items represent some of the greatest hurdles to domestic sourcing for developers, and the 3-5 year waivers should expedite construction and reduce the cost of complying with the BABA mandate.
Regarding the 3-5 year waivers, we specifically asked whether it was HUD’s responsibility or the industries' to facilitate a waiver extension if domestic production still could not provide these products. The staff indicated HUD would be initiating a study of domestic production during the waiver period and, based on that, would extend the waivers if necessary. They also indicated they are looking at other products that might warrant a waiver.
Regarding what might be eligible for a waiver once it is issued, staff indicated that if the product has not yet been purchased, it would qualify. The legislation's language does not allow retroactive application for a product that has already been purchased/installed.
We also discussed the 5% de minimis test. We provided several examples where the test is insufficient and adds considerable construction costs. They appreciated the data and were surprised by how high costs were on some developments. They are targeting a 10% threshold but indicated that, if the data we provided and information they glean from waivers warrant it, they could recommend a higher de minimis threshold. They also intend to get rid of the $1 million cap.
We are also including a HUD form for multiple grantees on a single project. This form will allow grantees providing Federal financial assistance subject to BABA for the same project to submit one waiver request for the entire project on behalf of all grantees. Regarding the online certificate of this form, we received the following guidance from the FP&M staff:
“The certificate form is unofficially acceptable to OMB. The form is currently undergoing the Paperwork Reduction Act (PRA) review process. There will be a notice published in the Federal Register (federalregister.gov) about it soon that will have the details.
In the interim, the word form (attached to this update) is appropriate.”
We, along with our partners at NCSHA and NH&RA, appreciate the work HUD has been doing to remedy this significant issue. We will continue to monitor this and other regulatory issues with the Administration and will keep you apprised of next steps and updates. If you have waivers pending and have not received a status on them (for at least two weeks), please let us know.
Thank you.