Tag: Coronavirus

President Biden Signs Landmark COVID-19 Aid Legislation Passed by Congress in Near Party-Line Votes

Posted on by Trey Jackson

President Biden Signs Pandemic Relief Bill March 11, 2021

President Joe Biden signed his landmark $1.9 trillion pandemic relief package (H.R. 1319) into law yesterday – the largest injection of federal cash in history into a growing U.S. economy – before unemployment benefits begin expiring on March 14. (Politico March 9, Wall Street Journal March 10 and AP, March 11) 

Why It Matters 

  • The total economic stimulus passed by the U.S. government over the past year now totals $5.3 trillion. The American Rescue Plan Act of 2021 is the third and largest coronavirus relief package. (U.S. News and World Report, March 10 and Axios Capital, Mach 11)
  • President Biden commented during the signing ceremony of the relief package, “…this historic legislation is about rebuilding the backbone of this country and giving people in this nation — working people and middle-class folks, the people who built the country — a fighting chance. That’s what the essence of it is.” (White House, March 11, Remarks by President Biden at Signing of the American Rescue Plan)
  • Key provisions of the new law are detailed in The Roundtable’s “Summary and Analysis of Key Economic Provisions in The American Rescue Plan.” Recovery rebates of $1,400 for the vast majority of Americans and large one-year expansions of the child and child care tax credits are provided, along with increases in subsidies for health insurance and the earned income tax credit.  Additional provisions include:
     
    • $350 billion in direct fiscal aid to state and local governments
    • $242 billion to extend enhanced unemployment benefits through Sept. 6
    • $170 billion for educational institutions
    • $28.6 billion for a Restaurant Revitalization Fund
    • $26.1 billion for urban mass transit grants
    • $21.55 billion for residential rental assistance
    • $5 billion for tenant-based residential rental vouchers 
  • The bill does not include an extension of the current eviction moratorium for residential tenants or an increase in the federal minimum wage.
     
  • While there is little business tax relief in the bill, provisions excluding restaurant and small business grants from income tax should further strengthen The Roundtable’s push to exclude COD income from tax during the pandemic, particularly since The Roundtable has explicitly proposed that the exclusion be accompanied by offsetting adjustments to tax attributes.
  • The Roundtable is also continuing to urge Congress to enact the Retail Revitalization Act (H.R. 840) as part of its relief efforts. This bill would save thousands of retail jobs by allowing REITs to make equity investments in struggling tenants without violating current related-party rent rules. The bipartisan bill is cosponsored by a growing list of Ways and Means Committee Members. (Roundtable Weekly, Feb. 5, 2021)

 Reference:

 What’s Next  

  • Economists expect the legislation to spark 5.95% GDP growth, the fastest in nearly 40 years, according to a recent survey by the Wall Street Journal. The poll also reports that economists expect consumer prices will rise 2.48% by December, compared to last year, and projects employers will add an average 514,000 jobs per month over the next four quarters. (Wall Street Journal, March 10)

Congressional Democrats passed the massive relief package using a budget process called reconciliation that requires a simple majority vote, bypassing the 60-vote requirement typically needed to advance most legislation in the 50-50 Senate. It is uncertain whether Democrats will opt to take a similar approach to other major policy initiatives as President Biden prepares his next major legislative push on infrastructure. 

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Senate Advances Pandemic Relief Package as President Biden Pushes Infrastructure Plan

Posted on by Trey Jackson

White House with Washington monument in background

Senate Democrats this week advanced an amended, $1.9 trillion pandemic relief package that is expected to pass on a party-line vote – then sent back to the House for final passage before current unemployment benefits expire March 14. (Politico, March 4 and Congress.gov, actions on H.R. 1319)  

  • President Biden, who has championed the COVID-19 legislation, agreed to changes in the package such as restrictions on the use of $350 billion in state and local funding to solidify Democratic support in the 50-50 Senate. (BGov, March 4 and text of the amended Senate bill)
  • CQ reported that financial allocations changes for states and local governments require federal assistance be used for specific purposes, including: 
    • Aid to households, small businesses or nonprofits, or aid to “impacted” industries like tourism, hospitality and travel;
    • Funding government services that reduced due to the pandemic-related hit to tax revenue;
    • “Necessary investments” in water, sewer, or broadband infrastructure. 
  • Senate Majority Leader Chuck Schumer (D-NY) said yesterday, “No matter how long it takes, the Senate is going to stay in session to finish the bill, this week.” (Politico, March 4).
  • Meanwhile, the White House push for a massive infrastructure bill was discussed on March 4 in a meeting with President Biden, Transportation Secretary Pete Buttigieg and a bipartisan group of House members led by Rep. Peter A. DeFazio (D-OR), chairman of the House Transportation Committee.  (Bloomberg, March 4)
  • Biden remarked at the start of the meeting, “We’re going to talk about infrastructure and American competitiveness and what we’re going to do to make sure that we once again lead the world across the board on infrastructure. It not only creates jobs but it makes us a helluva lot more competitive around the world.”  (White House, March 4)
  • The White House infrastructure plan is expected to emphasize climate change, but legislation has not been unveiled nor has its cost or methods to pay for the initiative. (Wall Street Journal, March 4)
  • The critical need for investing in modern and sustainable infrastructure was also the focus of a Feb. 11 White House meeting between Biden, Vice President Kamala Harris, Buttigieg and a bipartisan group of senators from the Environment and Public Works Committee. (Roundtable Weekly, Feb. 12)
  • In a December 16, 2020 letter, The Roundtable and 12 national real estate organizations provided detailed recommendationsto then President-elect Biden and Vice President-elect Harris that included infrastructure funding and modernization as engines to drive recovery and job growth from the economic fallout of the COVID-19 pandemic.

The Roundtable is part of Build by the 4th coalition led by U.S. Chamber of Commerce, which encourages the Biden Administration and the new Congress to pass a comprehensive infrastructure deal by Independence Day 2021. 

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House Passes $1.9 Trillion Virus Relief Package; Fed Reports Concerns About CRE

Posted on by Trey Jackson

Congressional Democrats racing to enact President Biden’s landmark $1.9 trillion COVID-19 relief package before unemployment benefits expire March 14 passed The American Rescue Plan Act of 2021 (H.R. 1319) early Saturday morning on a near party-line vote. The massive aid bill now goes to the 50-50 Senate where Democrats cannot afford to lose a single vote. (Associated Press, Feb. 27 and Politico, Feb. 26 and text of the bill)

  • The House bill provides $638 billion in tax cuts, offset by $45 billion in tax increases, representing over 2% of GDP in 2021 and a significant individual income boost for low- and middle-income Americans. While there is no business tax relief in the bill, it includes:
    • $245 billion to extend enhanced unemployment benefits through August;
    • $350 billion in fiscal assistance for States and localities;
    • $170 billion for schools and colleges – and $85B for vaccine distribution.
    • $30.5 billion in grants to mass transit
        
  • Key elements of the bill affecting real estate include:
    • $19 billion for residential rental assistance through Sept. 30, 2027, which adds to the existing $25 billion in rental assistance provided in December’s omnibus legislation;
    • $10B homeowner assistance fund to help prevent foreclosure or eviction due to the pandemic;
    • a new $25B Restaurant Revitalization Fund to provide cash grants to food and beverage establishments.

Fed Concerns on Pandemic & CRE

As the $1.9 trillion relief package made its way through the House this week, Federal Reserve Chairman Jerome Powell testified before congressional committees on the Fed’s semiannual monetary policy report to Congress before the Senate Banking, Housing and Urban Affairs Committee on Feb. 23 and the House Financial Services Committee on Feb. 24.

  • The Fed’s Feb. 19 Monetary Policy Report warned of significant risks to the economy as a result of the ongoing national impact of the pandemic. The report noted, “Commercial real estate prices remain at historically high levels despite high vacancy rates and appear susceptible to sharp declines, particularly if the pace of distressed transactions picks up or, in the longer term, the pandemic leads to permanent changes in demand.”  (Bloomberg, Feb. 19, “Fed Sounds Alarm on Commercial Real Estate, Business Bankruptcy”)

“We don’t have a plan specifically for commercial real estate,” Powell testified. “I will say that we do see a number of sectors of commercial real estate that are under pressure, particularly office [and] hotels … which are directly affected by a pandemic. The best thing that can happen for the commercial real estate sector is [to] … get the pandemic behind us.” (Powell House Testimony)

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White House Requests Information from Businesses on Their COVID-19 Efforts

Posted on by Trey Jackson

The Biden Administration is calling on the private sector to share their unique contributions in combatting the pandemic. In the coming weeks, The White House plans to elevate these examples to show how businesses across the country are doing their part to fight the coronavirus. (New York Times and White House Press Briefing, Feb. 26)

  • For more information, email publicprivatepartnerships@who.eop.gov and provide the name of your organization, location, and 3-5 bullets about your efforts toward defeating the virus. (Download White House document Join Us to Help Defeat COVID-19  for more details).
  • Examples of how commercial real estate owners are offering to open their buildings for COVID-19 testing are provided in a Feb. 24 Bloomberg report (subscription only).
  • The Bloomberg article focuses on the efforts of several companies exploring how to open coronavirus testing centers for the public good. “SL Green Realty Corp. and Rudin Management Co. have expressed interest in offering tests at their buildings. And Vornado Realty Trust and Boston Properties Inc. are among companies that agreed to let the state set up testing centers in select buildings,” according to the article.
  • Companies such as Related Cos. and RXR Realty are noted for having added on-site testing at their properties for returning clients. Roundtable Member and RXR Chairman and Chief Executive Officer Scott Rechler told Blooomberg, “You think to yourself, as a real estate owner and operator, we need to provide testing to help our tenants.”

Roundtable President and CEO Jeffrey DeBoer noted the continuing efforts of Roundtable members in fighting the pandemic. “Commercial real estate owners of buildings small and large have been active in combatting COVID-19 on behalf of their employees, tenants and investors since the early days of the outbreak,” DeBoer said. “These focused efforts will continue to help Americans in towns and cities throughout the nation until the pandemic is defeated and a sense of normalcy returns to the workplace.” 

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House Committees Advance Provisions Supporting President Biden’s $1.9 Trillion Virus Relief Proposal; Democrats Aim to Pass Final Bill by Month’s End

Posted on by Trey Jackson

U.S. Capitol

House committees this week advanced legislative language that will transform President Joe Biden’s $1.9 trillion pandemic relief package proposal into a consolidated bill and provide details on aid for states and local communities; assistance for renters and homeowners; and support for small businesses.

  • The progress in the House is a positive development that brings much-needed economic relief and funding to defeat COVID-19 one step closer to enactment. The Real Estate Roundtable consistently has urged policymakers to take aggressive actions to combat the pandemic.
  • Roundtable President and CEO Jeffrey DeBoer said,” The Real Estate Roundtable is encouraged by both Democratic and Republican efforts to work toward additional economic relief from the pandemic. Given the continuing great need for additional assistance to cities, people and businesses, we continue to urge policy makers to find a path forward.” (Roundtable Weekly, Feb. 5)
  • Democrats plan to pass the final legislation through “reconciliation” procedural protections, which will prevent a filibuster by Republicans when the measure reaches the 50-50 Senate. House Speaker Nancy Pelosi (D-CA) yesterday said she expects the House will approve a bill “by the end of February so we can send it to the president’s desk before unemployment benefits expire” on March 14.  (CNBC, Feb. 11 and Roundtable Weekly, Feb. 5)
  • The House Ways and Means Committee on Feb. 11 approved over $630 billion in new tax relief, including $460 billion in 2021 alone.  Their provisions include $1,400 payments to individuals; credits for children, childcare and dependent care; and expansion of the Earned Income Tax Credit. The temporary federal unemployment and benefit would also be extended through August 29, 2021, increasing the weekly benefit from $300 to $400. (Wall Street Journal, Feb. 11and Ways and Means Committee mark-up videos)
  • The committee proposal – “Subtitle G. Budget Reconciliation Legislative Recommendations Relating to Promoting Economic Security – passed on a partisan 24-18 vote with  no amendments. (Section-by-section summary and Joint Committee on Taxation (JCT) description)

House Ways and Means Chairman Richard Neal (D-MA)

  • House Ways and Means Committee Chairman Richard E. Neal (D-MA), above, stated, “Over the last two days, the Ways and Means Committee has considered aggressive, science-based solutions that will deliver the urgent relief our country so desperately needs. From unemployment benefits to health care affordability, the work we’ve done is substantial, and it is exactly what the American people have been calling on us to do to meet this moment.” (Ways and Means news release, Feb. 11)
  • The House Financial Services Committee was also one of the House committees this week that held legislative markup sessions to formulate legislative details for Biden’s pandemic relief proposal. (Financial Services Committee Instructions, Feb. 4 and Markup videos, Feb. 10)
  • In her markup opening statement Financial Services Committee Chairwoman Maxine Waters (D-CA) noted, “The package also includes $25 billion to provide rental assistance, including $5 billion towards 70,000 emergency vouchers and funding directed to rural and tribal communities.  The package also includes language … to provide $10 billion to support struggling homeowners, who face a looming foreclosure crisis. And, it … provides $10 billion to support small businesses, including minority-owned businesses that are closing their doors at historic rates.”
  • More than half of 2.7 million active home mortgage forbearance plans are set to end in March, April, May or June, according to mortgage-data firm Black Knight Inc. (Wall Street Journal, Feb. 9)
  • During the Small Business Committee’s Feb. 10 markup, $50 billion in emergency pandemic aid for small businesses was approved. Committee Chairwoman Nydia M. Velazquez said, “Surveys show that one in three small business owners will not survive the next few months without additional financial support.” (Rep. Velaquez opening statement, Feb. 10)
  • The committee’s language would also provide $25 billion for restaurants and bars under a new Small Business Administration program, and $15 billion for “economic injury disaster” loans.  (Washington Post and BGov, Feb. 11)

In the Senate, the pandemic relief package is expected to go straight to the Senate floor, circumventing the committee “mark-up” process, due to the ongoing impeachment trial of former President Donald Trump, which may conclude this weekend. (Bloomberg, Feb. 11)

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Joe Biden Takes Oath as 46th President, Signs Executive Orders on Pandemic Response, Evictions, Climate, Immigration and Racial Equity

Posted on by Trey Jackson

U.S. Capitol Biden-Harris Inauguration

On January 20, the peaceful inauguration of Joe Biden as the 46th president of the United States and Kamala Harris as vice president took place on the steps of the Capitol, where two weeks prior a violent mob attempted to overturn the electoral process.

  • President Biden in his inaugural address emphasized themes of national struggle and unity. He stated, “We must end this uncivil war that pits red against blue, rural versus urban, conservative versus liberal. To overcome these challenges – to restore the soul and to secure the future of America – requires more than words. It requires that most elusive of things in a democracy: Unity.”

  • Vice President Harris – who is the highest-ranking woman of color in U.S. history – stated during a post-inaugural event, “This, too, is American Aspiration. This is what President Joe Biden has called upon us to summon now. The courage to see beyond crisis. To do what is hard. To do what is good. To unite.” (New York Times, Jan. 21)

Coronavirus Response

The new administration’s top priority is to develop and manage a coordinated, national public health and economic response to the COVID-19 pandemic. On its first two days in office it issued:

Additional “Day One” Orders

President Biden signs Executive Orders on

In addition to addressing COVID-19, the Biden Administration moved swiftly on “Day One” with 17 Executive Orders (EOs) covering a range of issues.  (New York Times and CQ, Jan. 20) These actions include: 

  • Extending the federal residential eviction moratorium (scheduled to expire on January 31) through the end of March – with a request to HUD and other agencies to allow forbearance on payments of federally-guaranteed mortgages; 
  • “Restoring science” and “tackling the climate crisis,” such as by rejoining the Paris Climate Agreement, and directing the EPA and the Energy Department to reassess Trump-era rules on building energy codes as well as standards for appliance and motor vehicle fuel efficiency;
  • Advancing racial equity and support for underserved communities; and
  • Restoring protection for “Dreamers” under the Deferred Action for Childhood Arrivals (DACA) program, ending the ban on travel to the U.S. from primarily Muslim countries, and other immigration-related matters. The Roundtable joined an amicus brief to the U.S. Supreme Court last year urging that DACA protections should be re-instated for immigrants brought to the United States as children. (Roundtable Weekly, June 19, 2020 )
  • (Biden has also proposed a legislative immigration overhaul that would provide a path to citizenship for the undocumented, which has already been met with some GOP opposition and “underscore[s] that the measure faces an uphill fight in a Congress that Democrats control just narrowly.” (AP, Jan. 19).

References:

The Biden Administration’s initial actions and policy agenda will be a focus of The Roundtable’s Jan. 26-27 State of the Industry Meeting (held virtually).  Speakers will include:

  • Sen. Sherrod Brown (D-OH) – Chairman, Senate Banking, Housing and Urban Affairs Committee
  • Sen. Joe Manchin (D-WV) – Chairman. Senate Energy and Natural Resources Committee
  • Sen. Ron Wyden (D-OR) – Chairman, Senate Finance Committee
  • Dr. Scott Gottlieb – 23rd Commissioner of the U.S. Food and Drug Administration

  • Penny Pritzker – 38th Secretary of Commerce (2013-2017); Founder and Chairman of PSP Partners

The Roundtable will also unveil its 2021 National Policy Agenda publication soon, which will address policy issues in in the areas of tax, capital and credit, energy and climate, homeland security, and infrastructure and housing.

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Treasury Department Finalizes Regulatory Projects on Carried Interest, Deductibility of Business Interest

Posted on by Trey Jackson

Treasury Department x475

Treasury Department officials are working overtime to complete several multi-year tax regulatory projects before handing authority over to the new Biden Administration. These rules largely relate to the implementation of the Trump Administration’s signature legislative accomplishment, the Tax Cuts and Jobs Act of 2017. 

  • The recently finalized regulations address carried interest and the deductibility of business interest.
  • The IRS on Dec. 29 issued a final revenue procedure (Rev. Proc. 2021-9) creating a safe harbor for senior housing to qualify for an exception to the new limitation on the deductibility of business interest. The statutory exception is available to a “real property trade or business.” Uncertainty regarding whether an assisted living facility would qualify as a real property trade or business has hung over the senior housing industry since the legislation’s enactment. The new revenue procedure puts those lingering concerns to rest and clarifies that senior housing qualifies for the exception, as long as certain requirements are met.
  • In addition, Treasury released supplemental, final regulations on the deductibility of business interest this week.  The rules address changes made in the CARES Act, as well certain transition relief for partnerships (T.D. 9943)
  • The long-awaited carried interest final regulations implement the new three-year holding period requirement for carried interest to qualify for the long-term capital gains preference (T.D. 9945). 
  • The final carried interest regulations address several comments submitted by The Real Estate Roundtable. Roundtable comments aimed to ensure the rules are consistent with legislative intent of the provision (Oct. 5, 2020 comment letter). 
  • Specific improvements in the final carried interest rules provide greater flexibility for a general partner to finance an equity interest in a partnership with a loan from other partners in the partnership. The final rules also clarify that the three-year holding period does not override other provisions of the tax code that treat certain transactions as nontaxable events. 
  • Proposed regulations still outstanding include tax rules related to the transition away from LIBOR as a reference rate in mortgages and other financial contracts (Roundtable Weekly, Oct. 11, 2019).

The Roundtable’s Tax Policy Advisory Committee (TPAC) will discuss these regulatory efforts in detail on January 27 in conjunction with The Roundtable’s State of the Industry Meeting (all virtual).

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Treasury Launches $25 Billion Emergency Residential Rental Assistance Program Supported by The Roundtable

Posted on by Trey Jackson

treasury-department-building_x475w

A $25 multi-billion residential rental assistance program launched on Jan. 5 by the Treasury Department will use funds from the year-end $900 billon coronavirus relief package signed into law by President Trump on Dec. 27. (Roundtable Weekly, Dec. 22)

  • Treasury Secretary Steven Mnuchin said, “The Emergency Rental Assistance Program will help to keep American families in their homes during this challenging time. Treasury is implementing this program with unparalleled speed so our state, local, and tribal partners across the country can provide assistance to families in need.”  (Treasury news release, Jan. 7, 2021)
  • States, U.S. Territories, tribal and local governments covering more than 200,000 people are now able to enroll in the ERAP through a web portal by providing payment information and accepting award terms. Households or landlords that qualify can apply through the enrolled programs that receive funding from Treasury.
  • Qualifying households include at least one person who is eligible for unemployment insurance or suffered a coronavirus-related financial hardship; is at risk of homelessness or housing instablity; and has a household income at or below 80 percent of “the area median.”
  • A federal rental assistance program—advocated by The Real Estate Roundtable since April 2020—comes as the National Multi-Housing Council reports that 76.6 % of apartment households paid rent as of January 6. (NMHC Rent Tracker)
  • The Roundtable last year called for the establishment of a rental assistance fund for impacted residential and business tenants. Calling it the “rental obligation chain,” The Roundtable emphasized that rent payments support owner payrolls, utility, taxes and debt service and further benefit capital providers and local governments. (Bisnow, April 30, 2020 interview with Roundtable President and CEO Jeff DeBoer and Roundtable Weekly,  Sept. 11, 2020 on MSLP testimony)
  • The enacted year-end omnibus bill took a partial step by establishing a $25 billion fund only for impacted residential tenants, although The Roundtable continues to support a similar, if not greater, fund for small business tenants.
  • The bill also extended the Centers for Disease Control and Prevention (CDC) current federal eviction moratorium one month (through Jan 31, 2021).

The Hill reported that “housing experts, advocates and economists have called on the federal government to provide sufficient rental assistance to protect tens of millions of Americans from eviction when the CDC ban expires.”  (Jan. 7, 2021 and Oct. 11, 2020)

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Congress Passes Pandemic Relief Aid and FY’2021 Funding in Overwhelmingly Bipartisan Fashion; “Omnibus” Includes Important Measures for CRE

Posted on by Trey Jackson

U.S. Capitol Dome with flag

Congress passed a multi-trillion “omnibus” bill Dec. 21 that provides approximately $900 billion in coronavirus relief, as well as $1.4 trillion to fund government operations through Sept. 30. (Text of the 5,550-plus page bill )

  • The legislation is the culmination of months of bipartisan negotiations to further stimulate the COVID-era economy. It will also keep the federal government operational for the rest of the current fiscal year. The Senate approved the legislation on a 92-6 vote, and the House on a 359-53 vote. 

  • “The size of the deal approximates the 2009 stimulus act that Congress passed at the beginning of the Obama administration – and sits on top of the much larger stimulus bill” known as the CARES Act, the $2.2 trillion legislation that President Trump signed last spring.  (New York Times editorial (Dec. 20). See also Roundtable Weekly, March 27) 
  • “The COVID-19 relief package is welcome news to help America’s families, businesses, and communities cope with the pandemic in the midst of the holiday season,” said Roundtable President and CEO Jeffrey D. DeBoer. “With vaccinations underway, this bipartisan package provides hope for a robust economic recovery in 2021 – and is a bridge for the real estate industry to work with President-elect Biden and Vice President-elect Harris on additional measures to push health and economic solutions forward.”  

  • A broad coalition of national real estate organizations endorsed many of the components included in the emergency COVID measure, through a Dec. 16 letter and supporting policy memo sent to the Biden-Harris transition team. (Roundtable Weekly, Dec. 18)  These include direct assistance to families and workers in the form of “stimulus checks” and expanded unemployment benefits; funding for states to distribute coronavirus vaccines; a new round of Paycheck Protection Program (PPP) loans for qualifying small businesses; and an emergency assistance fund to help households that have suffered economic hardship during the pandemic meet their monthly rent and utility bill obligations. 

  • “While there remains much work to do in the coming weeks and months, this effort is clearly a step in the right direction and will come as welcome news for so many households facing financial distress,” said National Multifamily Housing Council President Doug Bibby, and National Apartment Association President and CEO Bob Pinnegar, in a joint statement.  “We are heartened that the legislation includes such critical resources that will allow those impacted by COVID and resulting economic stress to meet their financial obligations, including rent.”     

Summaries provided by various Congressional offices regarding the $900 billion COVID-19 relief package include:

Matters of particular interest to the real estate sector are summarized below.  Additionally, a Roundtable summary PDF can be downloaded.

Direct relief to families, individuals, and the unemployed: $286 billion

  • “Stimulus checks”: $166 billion
    • $600 per individual earning up to $75K per year ($1200 under CARES Act)
    • $1200 per couple earning up to $150K per year 
    • $600 for each dependent child
    • For example, family of four receives $2400 assistance

  • Additional Unemployment Benefits: $120 billion
    • $300 boost in weekly unemployment insurance to supplement existing state and federal unemployment benefits (CARES Act provided $600/week boost)
    • From December 26, 2020 until March 14, 2021 
    • Available to “gig” workers and the self-employed
Paycheck Protection Program (PPP) “Round 2”: $284.5 billion
  • Extends PPP through March 31, 2020
  • Borrower eligibility more limited than CARES Act “Round 1.”  Small business must have:
    • 300 or fewer employees, and
    • 25% revenue loss for any quarter in 2020 (compared to same quarter in 2019)
    • 501(c)(6) organizations now eligible – but not lobbying organizations (501(c)(3)s)
  • Loan amount is generally 2.5-times payroll (same as CARES Act) – with max loan amount of $2 million (CARES Act was $5 million)
    • Loan amount formula is increased to 3.5-times payroll for qualifying small businesses in the restaurant and hospitality industries (NAICS Code 72)
  • Round 2 borrower must have exhausted initial Round 1 PPP loan
  • Expedited forgiveness for loans up to $150K 
  • “60/40 Rule” remains in effect.  That is, no more than 40% of loan proceeds can be used for rent and other non-payroll items.
  • Expanded “allowable uses” for Round 2 PPP loans.
    • COVID-related expenses like PPE purchases, indoor air quality improvements, workplace protection measures
    • Repair property damage from recent social unrest
    • Costs associated with outdoor dining
    • Round 1 allowable uses still apply: payroll, benefits, rent, mortgage, utilities
  • “Passive real estate” remains ineligible for PPP loans.  New law codifies SBA’s “ineligibility rule” at 13 CFR 120.110 for purposes of “passive real estate.”
  • Codifies that “publicly traded companies” are prohibited from accessing PPP loans 
  • PPP and Tax Issues:
    • Forgiven PPP loans are not treated as taxable income
    • Business expenses paid with forgiven PPP loans are tax deductible (a reversal of Treasury guidance and retroactive to enactment of the CARES Act in March)
COVID Vaccine Distribution, Testing, Tracing: $69 Billion. Includes – 
  • $9 billion for CDC and states to distribute vaccines
  • $22 billion directly to states for testing, tracing, and “COVID mitigation” 

Transportation Assistance: $45 billion. Includes – 

  • $15 billion: Airline workers
  • $14 billion:  Mass transit agencies
  • $10 billion: State highway agencies
  • $2 billion: Airports and airport concessionaires
  • $1 billion: Amtrak 

Residential Rent Assistance, Eviction Moratorium: $25 billion

  • CDC’s current federal eviction moratorium extended one month (through Jan 31, 2021)
  • Funds available through December 31, 2021
  • Covers household rent past due, coming due, and utility bills
    • Assistance not to exceed 12 months of payments, with a limit up to three months for prospective rent.  Household can apply for additional assistance depending on availability of funds.
  • States/localities receive “grants” from U.S. Treasury, apportioned based on Social Security formula.
  • Households apply to state/local for assistance.  Landlords can help household apply. 
  • Assistance paid directly to landlord.
  • Households at 50% AMI are “prioritized” for assistance; no household over 80% AMI can receive assistance.
  • Renter must have experienced “financial hardship” due to COVID, or is “at risk” of homelessness. 
  • State/local grantee only considers the household’s monthly income at the time the household applies for assistance, or total income for calendar year 2020. 
  • State/local grantee “shall ensure” “to the extent feasible” that any emergency rental assistance here does not duplicate other Federal rent assistance (e.g., Section 8)
  • Emergency rental assistance is not income for tax purposes.
  • No provisions regarding allowable forbearance on mortgage payments by property owner (as in CARES Act).
 

Shuttered Theaters and Live Venues: $15 billion 

  • Small Business Administration grants available to eligible live venues, independent movie theaters, museums
  • Maximum grant amount is $10 million
 

Unwinding the Federal Reserve’s Emergency Lending Facilities

  • Winds down the 13(3) emergency lending facilities created under the CARES Act (the Main Street Lending Program for mid-size businesses, and three other facilities aimed to boost purchases of municipal and corporate bonds)
  • These 13(3) program cannot be re-opened or duplicated in the future by the Fed without Congressional authorization
  • $429 billion in unspent CARES Act funds intended for Fed facilities repurposed to offset the overall $900B package
  • Fed retains more flexibility over the Term Asset-Backed Securities Loan Facility (TALF), initially launched during the 08-09 financial crisis to jumpstart the economy and increase banks’ liquidity. TALF supports the issuance of CMBS and other asset-backed debt securities. This bill closes TALF, but the Fed can re-start this facility in the future as emergency economic conditions may arise.
  • More details on the cessation of the CARES Act 13(3) programs as reported in The Hill (Dec. 20). 
 

Real Estate-Related Tax Relief and Tax Extenders

  • Reduces the cost recovery period for residential rental property placed in service before 2018 to 30 years under the alternative depreciation system (relevant to owners of multifamily housing who elect out of the new TCJA limits on the deductibility of business interest)
  • Minimum 4% credit amount for low-income housing tax credit projects that involve the rehabilitation and renovation of affordable housing (in recent years, the 10-year credit for qualifying projects has fluctuated between 3.15% and 3.97%)  
  • Temporary reinstatement of the full 100% deduction for business meals expenses (food and beverages) in 2021 and 2022
  • 6-month extension and expansion of the employee retention tax credit for businesses that retain their employees despite government-ordered shutdowns or steep declines in business revenue (>20%) 
  • Permanent extension of the enhanced deduction for energy-efficient commercial buildings (section 179D)
  • 5 year extension of the new markets tax credit, tax incentives for Empowerment Zones, and the tax exclusion for mortgage debt forgiveness on a principal residence
  • 2-year extension of the tax credit for residential solar property and other residential renewable energy improvements tax (section 25D)
  • 1-year extension of the $2,000 tax credit new energy efficient homes (section 45L), the deductibility of mortgage insurance premiums, and the tax credit for energy efficient improvements (e.g., windows, insulation, roofing, doors) to owner-occupied homes (section 25C)
 

Troubled Debt Restructurings (TDRs)

  • CARES Act’s TDR provisions extended until January 1, 2022. (ABA Banking Journal, Dec. 21)
  • Extension provides an additional year of relief from accounting and disclosure requirements on loan modifications made in response to the COVID-19 pandemic.
     
  • The Roundtable and other real estate groups recently requested an extension to the TDR relief period  “to offer prudent relief to commercial real estate owners who have been acutely affected by the pandemic.” (Roundtable Weekly, Nov. 13)
 

What’s Not Included in the $900 billion package 

  • Liability protections for businesses, non-profits, schools, hospitals
  • Federal aid to state and local governments for general revenue shortfalls (but aid for vaccine distribution provided as noted above) 
 

Omnibus Appropriations Bill for FY 2021

  • $1.4 trillion in federal spending through end of FY’2021 (Sept. 30, 2021)
  • EB-5 Regional Center investment visa program extended until June 30, 2021 – with no legislative reforms at this time

The omnibus and its impact on The Roundtable’s 2021 policy agenda will be a focus of discussion during The Roundtable’s State of the Industry Meeting and Policy Advisory Committee Meetings Jan. 26-27 (all virtual).

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Congress Struggles to Complete COVID-19 Aid Package for Inclusion in Multi-Trillion Omnibus Funding Bill

Posted on by Trey Jackson

Capitol Dome Stormy weather

Congressional leaders will work through the weekend in an effort to reach agreement on an omnibus bill that would attach approximately $900 billion in coronavirus relief to a $1.4 trillion bill to fund the government until Oct. 1, 2021 – the final piece of legislation in the lame-duck session. Another short-term stopgap measure needs to be passed before midnight tonight to extend current funding, prevent a partial government shutdown and allow more time for Congress to complete the omnibus negotiations. (BGov, Dec. 18 and Deloitte Tax News and Views, Dec. 18)

  • Republicans and Democrats have inched toward a deal on a coronavirus relief package this week that currently includes $600 in direct payments for individuals, $300 for enhanced weekly unemployment benefits, aid to small businesses, distribution of the Covid-19 vaccine and other measures. (Wall Street Journal, Dec. 18 and Roundtable Weekly, Dec. 11)
  • A bipartisan group of US Senators on Dec. 14 released text of the Bipartisan Emergency COVID Relief Act of 2020, which is under negotiation by House, Senate and White House policymakers – see section-by-section summary and draft text of the bill.
  • The Act includes $25 billion for residential rental assistance, augmented unemployment insurance benefits, a scaled-down Paycheck Protection Program (PPP) – as well as money for vaccine development, supply, and testing and tracing programs.

  • The bill also provides for emergency rental assistance, which may soften the impact of the Centers for Disease Control (CDC) moratorium that expires Dec. 31.The Act would also extend the moratorium through Jan. 31, 2021. Landlords/owners could assist or apply for rental assistance on behalf of renters.
  • Politico reported this week that state and local funding and a business liability shield would be excluded from the final bill, although talks remain in flux. (Politico, Dec. 16) 
  • Extended troubled debt restructuring (TDR) relief is also currently not included in the package. (Roundtable Weekly, Nov. 13) 
  • Senate Majority Leader Mitch McConnell (R-KT) said today, “I am even more optimistic now than I was last night that a bipartisan, bicameral framework for a major rescue package is close at hand.  Like I’ve said, the Senate will be right here until an agreement is passed, whenever that may be.” (NBC News, Dec. 18) 
  • Disagreements continue among policymakers about the Fed’s emergency lending programs, stimulus check eligibility and the use of disaster relief funds. (Politico, Dec. 17 and CQ, Dec. 18) 

The Roundtable and 12 national real estate organizations this week sent President-elect Joe Biden and Vice President-elect Kamala Harris several policy options for COVID-19 relief, as well as recommendations aimed at long-term challenges – see story below for details. 

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