On Thursday, March 11, President Biden signed the American Rescue Plan Act of 2021 into law. Below is an analysis of the legislation with a focus on the aspects impacting the multifamily industry.
The Consolidated Appropriations Act, which was enacted in December 2020, provided $25 billion for the NMHC-supported Emergency Rental Assistance Program (ERAP). Since the passage of the previous package, NMHC has been advocating for additional funding while pushing for efficient distribution to renters in need across the income spectrum. The reconciliation package currently under consideration includes an additional $21.6 billion in rental assistance payments to be disbursed through the Treasury Department’s ERAP with much of the same guidelines in place.
The legislation directs Treasury to ensure each grantee receives at least 40 percent of its allocation within 60 days of the measure’s enactment. Once the funds are received, grantees must use the funds primarily for rental assistance and utility payments. While local jurisdictions have the ability to apply additional criteria and limitations, Congress instructs eligibility to be limited to those households who qualify for unemployment benefits or have experienced a reduction in household income, incurred significant costs, experienced a financial hardship due to COVID-19, demonstrated a risk of experiencing homelessness, or have household income that doesn’t exceed 80 percent of AMI.
The legislation continues to limit assistance per household to a total of 18 months. These funds remain available through Sept. 30, 2025. The bill also extends the use of rental assistance funds under the previous package through Sept. 30, 2022.
The legislation provides another round of direct payments of as much as $1,400 for an individual, $2,800 for joint filers and $1,400 for each qualifying dependent up to age 24. And because Republicans and some Democrats have pushed back on income limitations set forth in previous packages, changes have been made to garner additional support of the package. As of this writing, the payments will begin to phase out for individuals with adjusted gross incomes of over $75,000 per year and will zero out once earnings reach $80,000. Joint filers earning less than $150,000 per year will receive $2,800 with payments phased out for joint filers earning in excess of $160,000.
- Increasing the duration of Pandemic Unemployment Assistance (PUA) benefits to as long as 74 weeks, from 50 weeks, for individuals who don’t qualify for regular benefits such as gig workers or those who typically are self-employed.
- Extending to 48 weeks, from 24 weeks, benefits under the Pandemic Emergency Unemployment Compensation program for those who’ve exhausted regular benefits.
Notably, the unemployment provisions are still under debate as the Senate considers this bill, but there is universal agreement that these benefits will be extended past the March 14 date. As of this writing, it is unclear exactly what the rate and the duration of the supplemental benefit will be.
The bill would also extend other CARES Act jobless benefits slated to expire on March 14, with changes that include:
The bill also includes $2 billion in funding for the Labor Department to address fraud and access to unemployment benefits. Funds could be used to provide grants to states and U.S. territories to develop tools for identity verification and fraud detection and to accelerate claims processing.
Non-corporate loss provision
The American Rescue Plan Act of 2021 extends through 2026 a provision limiting excess business losses incurred by non-corporate taxpayers that was set to expire at the end of 2025. A non-corporate taxpayer has an excess business loss to the degree that total business deductions exceed business income, plus $250,000 for single filers and $500,000 for joint filers. Notably, The CARES Act suspended the limitation of excess business losses applicable to pass-through businesses and sole proprietors that would otherwise be applicable for 2018, 2019, and 2020.
The new legislation would increase funding and expand eligibility for the Paycheck Protection Program. Specifically, it would increase the program’s lending authority to $813.7 billion. Multifamily firms should consult the SBA FAQ to determine eligibility.
The CARES Act established a refundable employee retention tax credit for employers subject to closure due to COVID-19. The Consolidated Appropriations Act passed in December extended and expanded this provision such that it covers 70 percent of up to $10,000 in quarterly wages per employee for qualifying businesses. This new legislation would again extend it through Dec. 31 from its otherwise-scheduled June 30 expiration.
Beginning in 2027, the limitation on deducting compensation in excess of $1 million for publicly traded companies’ five most highly paid executives would be expanded to include the next five additional highly compensated employees.
The legislation includes $350 billion for states, localities, tribes and territorial governments to pay for COVID-related expenses and programs.
This legislation includes $5 billion for emergency Section 8 Housing Choice Vouchers, which would be allocated to state and local governments to individuals and families who are currently or recently homeless, and to those fleeing domestic violence, sexual assault or human trafficking. An additional $5 billion is included to provide supportive services for homelessness and at-risk individuals. Specifically, the funds could be used for tenant-based rental assistance, the development of affordable housing, housing counseling for the homeless and purchasing non-congregate shelter units.
- $750 million through tribal grant programs for housing assistance and community development services;
- $100 million for individuals living in rural Agriculture Department-subsidized properties; and
- $100 million for grants to housing counseling groups.
The legislation also includes:
- NMHC Leads Coalition Opposing Eviction Moratorium Provision in Proposed ERAP Legislation
- Real Estate Coalition Letter Opposing Eviction Moratorium in H.R. 5196
- Representing the Nation’s Apartment Industry, Chairman and CEO of Waterton, David Schwartz, Testifies Before the House Committee on Financial Services
- Trade Group Coalition Letter to House Ways and Means Committee Opposing Proposed Tax Increases
- Family Business Estate Tax Coalition Letter Expressing Support for Stepped-Up Basis