Congress Reaches Agreement on COVID Relief Package
Republicans and Democrats reached a deal today on COVID-19 relief legislation and an omnibus federal funding bill, which appears to include several items of interest to the apartment industry.
First, the legislation extends the CDC eviction order through January 31, 2021. This one-month extension is not ideal but is shorter than what many initially sought.
The agreement also creates a $25 billion emergency rental assistance program administered by the Department of the Treasury. Note that this is not via the Emergency Solutions Grants (ESG) program proposed in earlier, Democratic legislation. The real estate community broadly had significant concerns about ESG as the channel for rental assistance and we think the option taken here is a better way. Here are the highlights of the program:
- Funds are distributed to states and directly to cities with 200k+ population (those localities of less than 200K population would have to secure an allocation from their states).
- Funds are eligible for current or unpaid rent and utility payments (9 months of rent arrears, 3 months going forward) and other directly or indirectly-incurred housing expenses because of the pandemic.
- Eligible households are those (1) with a household income below 80 percent of area median income (AMI); (2) with a demonstrable risk of experiencing homelessness or housing instability; and (3) have one or more household members who qualify for unemployment benefits or experienced financial hardship due, directly or indirectly, to the pandemic.
- Assistance would be prioritized for renter households that do not exceed 50 percent of AMI as well as renter households who are currently unemployed and have been unemployed for 90 days. Income Eligibility is based on time of application and must be recertified every three months.
- Renters apply for assistance from their administrative agency managing the program. Payments are sent directly to the housing provider. Residents may receive payment directly from the administrative agency and pay their provider if that provider does not want to participate in the program. Housing providers can also apply for rental assistance on behalf of the resident, but must inform them and secure their consent.
Other provisions in this agreement include:
- An extension of the deadline in the CARES Act for states and localities to spend Coronavirus Relief Funds for one year. This is important since many existing rental assistance programs were funded via these dollars and there are significant unspent dollars that would have gone unused.
- An additional $300 per week in federal unemployment insurance and individual stimulus checks of $600 ($1,200 per couple and $600 per child). Together with the emergency rental assistance, these resources will be critical in helping renters meet their financial obligations. Reportedly, the first stimulus checks will be sent as early as next week.
- Extension of the employee retention tax credit.
- Setting at 4 percent the new construction/substantial rehab credit in the Low Income Housing Tax Credit program.
- Deductibility of expenses associated with Paycheck Protection Program loans (there are reportedly some guardrails on this. TBD).
All indications are that the President will sign the legislation once it passes the House and Senate. This is a victory for our industry and a testament to the effort of all of you and NAA members around the country in making sure our voice was heard by policymakers. While certainly not all that is needed, this $25 billion – and the other $286 billion in individual assistance the agreement provides – will help millions of residents get and stay current on their financial obligations and assist thousands of housing providers rebuild depleted reserves and ensure they can pay their own bills.
Stay tuned for additional updates in the coming days.