As the COVID-19 virus spreads across the country, NMHC stands ready to support the apartment industry and its residents with a multi-faceted approach. Apartment firms nationwide are developing and executing plans to respond should a resident or employee become infected. And with an economic threat looming, Congress is evaluating how to provide support to both individuals and industries suffering financial hardships. NMHC is actively communicating with Congress, the White House, CDC and other federal agencies to share information and provide policy guidance.
Apartment owners and operators are preparing to educate residents and employees on prevention and potential exposure to COVID-19. To aid in their preparation, NMHC has compiled an overview of suggested considerations:
NMHC's Overview of Suggested Considerations
- Coronavirus Preparedness for Apartment Firms: Outlines basic steps firms should take from an emergency preparedness perspective, including labor policies and procedures, legal liabilities, fitness center operations and more.
- Coronavirus Resources for Apartment Firms: Links to federal agency resources as well as documents addressing resident communications, cleaning protocols, workers' rights and more.
- Emergency Preparedness: Offers general advice in planning for any emergency.
- Emergency Preparedness Listserve: Provides a platform for industry members to share resources (member communications, cleaning protocols, travel guidance, etc.) as well as ask questions of fellow practitioners.
In addition to providing resources that protect the 40 million Americans the apartment industry houses, NMHC and NAA are also actively engaged with Congress to enact economic relief.
Many Americans are expected to suffer a loss of income as a result of the COVID-19 outbreak, which could inhibit their ability to pay their rent. These challenges faced by residents could easily translate into cash-flow challenges for multifamily businesses as they continue to pay employees and satisfy other financial obligations. Accordingly, NMHC and NAA believe Congress should focus on enacting the following proposals to provide direct assistance to individuals and support for impacted owners and operators who provide the housing needed for families and individuals:
Direct Assistance to Individuals
Emergency Assistance Fund for Renter Households: NMHC and NAA strongly support providing short-term financial assistance to renter households that will enable individuals and families to overcome temporary financial challenges that would otherwise result in delinquencies and ultimately the loss of their housing.
Payroll Tax Cut: Congress could provide taxpayers with extra funds to absorb increased cuts resulting from COVID-19 by reducing payroll taxes. Specifically, Congress could reduce the employee side of the payroll tax by two percentage points, to 4.2 percent for employees (10.4 percent for the self-employed), in 2020. Under current law, a 12.4 percent Social Security payroll tax is assessed on employee earnings up to $137,700. The tax is equally divided between employees and employers.
Unemployment Compensation Exclusion: Congress could help stretch unemployment income for individuals who experience job loss as a result of COVID-19. Under current law, unemployment compensation is taxable income. Congress could exclude such income from tax for 2020.
Support for Impacted Owners and Operators
Mortgage Forbearance: NMHC and NAA urge any measure that allows for mortgage forbearance be extended to rental property owners. Most rental properties are owned by individuals and small businesses that have financial obligations to meet such as mortgages, utilities, payroll, insurance and taxes. If rental property owners are unable to collect rents because their residents are suffering a loss of income as a result of the COVID-19 outbreak, then the rental property owners will be put at risk of being unable to satisfy their own financial obligations – putting the property and community at risk.
Student Housing Relief: Colleges and universities across the nation are increasingly shuttering their doors, ordering students not to return to campus from Spring Break and moving their educational coursework online in response to the outbreak. Private student housing operators work side-by-side college and universities to house their student populations and are an integral part of campus life. Student housing leases operate under a different model than other multifamily housing leases, which poses significant financial challenges if prolonged absences at college campuses are ordered. In addition, possible construction delays at ongoing projects could threaten the opening or viability of entire student housing communities. These challenges will, much like other critical industries, require financial relief. Private student housing providers are at particular risk because resident leases operate under a different model than other multifamily housing leases, which poses significant financial challenges if prolonged absences at college campuses are ordered.
Estimated Tax Payments: Congress could help ease cash-flow challenges that taxpayers who own real estate partnerships or corporations may face by reducing 2020 quarterly estimated tax payments. Under current law, sole proprietors, partners and S corporation shareholders must make quarterly estimated tax payments if they expect to owe $1,000 or more in tax when a return is filed. Corporations must make estimated payments if they expect to owe more than $500 when a return is filed. If taxpayers do not make sufficient estimate payments, a penalty is assessed. The penalty is waived if taxpayers paid 90 percent of tax for the current year or 100 percent of last year’s liability (110 percent for taxpayers with adjusted gross income of over $150,000). The proposal would waive penalties for taxpayers owing more than $1,000 (sole proprietors, partners, and S corporations) or $500 (corporations) if they paid at least 90 percent of last year’s liability in tax.
Net Operating Loss Carryback: Congress could help ease cash-flow challenges for businesses by allowing net operating losses (NOLs) generated in 2020 to be carried back for three years. Under current law, taxpayers are not able to carryback current-year losses against prior-year income and, thereby, obtain a tax refund. Instead, losses may be carried forward indefinitely with the limitation that only 80 percent of a loss may be offset against a particular year’s income. This proposal would enable taxpayers to carryback 2020 losses to 2017, 2018, and/or 2019 and eliminate the 80 percent loss limitation.
Business Credit for Quarantined and Self-Isolated Employees or Those Taking Care of Dependents: This proposal would provide a wage credit for employers who continue to pay employees impacted by COVID-19. The COVID-19 outbreak may require employees to be quarantined or employers to close facilities on a temporary basis. Other employees may have to take time off for work to care for sick dependents or children whose schools have closed. Affected employees may have insufficient sick time to allow them to remain in pay status. Paying employees who cannot work in a closed facility or who have exhausted sick leave benefits could be a costly expense for employers. This proposal would provide a wage credit for up to $1,500 in weekly wages for employers who continue to pay eligible employees.
It is critical that federal policymakers focus on leveraging federal dollars to help keep people in homes while ensuring housing providers can properly manage and maintain their properties. NMHC and NAA are encouraged that Congress is considering relief for individuals and industries impacted by the effects of COVID-19. To view NMHC and NAA’s letter to the House and Senate outlining recommendations, please click here.
The nation and industry have been here before, having confronted the 2009 pandemic flu (H1N1), as well as Ebola and SARS. With every challenge, the industry learns more and refines processes to ensure residents and employees are protected. NMHC will continue to strive to keep the industry informed and protected.
Please feel free to reach out to NMHC’s Kim Duty at firstname.lastname@example.org with any questions regarding preparedness and Cindy Chetti at email@example.com with questions regarding potential federal legislation.