How The New Stimulus Bill Will Impact Real Estate
UPDATE, DEC. 28, 10:26 A.M. ET: President Donald Trump signed the stimulus bill into law on Dec. 27. He had delayed signing as he pushed for an increase in the direct payments to Americans from $600 to $2,000, but the bill went through with the $600 agreed on by Congress last week.
Congressional leaders have completed negotiations on a large stimulus bill that will provide $900B in coronavirus pandemic relief, along with a $1.4 trillion omnibus spending package.
The relief measure, expected to be passed by the House and then the Senate as early as Monday, includes a number of provisions that will help various sectors of the real estate business — though it is missing key programs industry groups lobbied for.
At the heart of the bill is $300 added to weekly unemployment benefits through March 14, plus direct payments of $600 to most Americans. That will probably help some sectors of the real estate industry inasmuch as the cash helps people with paying rent or buying more from retailers. There will also be $300B for small business aid, along with cash infusions for schools, hospitals and vaccine distribution.
More directly for real estate, the bill provides $25B for rental assistance, a relief measure that apartment landlords have been begging for since the beginning of the crisis. Under the rent relief, households may receive assistance for 12 months, plus another three months if necessary. Most of the relief will be for households that are at or below 50% of their area median income or households with members who have been unemployed for 90 days or longer.
The package also includes a one-month extension to Jan. 31 of the Centers for Disease Control and Prevention eviction moratorium. At that point, an inaugurated Joe Biden could extend it further.
The bill includes a second round of Paycheck Protection Program loans with a nearly $300B pot while at the same time increasing the size of PPP loans to 3.5 times payroll. It will also make expenses associated with PPP loans tax-deductible.
"The proposed measure provides temporary relief over the next few months and will help thousands of hotels stay open and retain employees," American Hotel & Lodging Association President Chip Rogers said in a statement. "[The renewed PPP] will provide a critical lifeline for hotels and other businesses that have been decimated by the pandemic."
Last month, the organization reported that 71% of the hoteliers it surveyed said they wouldn't survive another six months without further federal assistance, and 77% of the respondents said they will be forced to lay off more workers.
The measure includes provisions from the Save Our Stages Act, which will provide around $15B in relief to smaller music venues and movie theaters, most of which have been closed since March.
Another part of the bill allows for the deduction from federal taxes of corporate meal expenses. Proponents of the provision, including the White House, argue that it will boost the restaurant business. Critics assert that the measure will do little to help restaurants but rather represents a tax giveaway to large corporations, the Washington Post reports.
A more fundamental criticism of the bill is that it doesn't do enough for besieged industries such as apartment landlords or the restaurant trade, which is facing a tough winter.
"More rental assistance is needed to protect residential and commercial tenants and property owners who will still struggle to pay their rent or mortgage over the months to come," Real Estate Board of New York President James Whelan said in a statement, adding that more infrastructure and transit funding is also needed.
“Ten months into the pandemic, when countless restaurants and jobs have been lost, and indoor dining has again been shut in New York City, it’s shameful that the federal government again failed to enact the bipartisan RESTAURANTS Act, which would provide structured support to save these small businesses that have been uniquely devastated by COVID-19," NYC Hospitality Alliance Executive Director Andrew Rigie said in a statement.
The RESTAURANTS Act, which was introduced to the House of Representatives in June but which has made no progress since then, would award grants to food and beverage purveyors with annual revenues of less than $1.5M.
"Although the agreed-upon stimulus includes the important Save Our Stages Act, another round of the Paycheck Protection Program is merely a band-aid on a cannon wound," Rigie said. "It is better than nothing, yet still a disgrace."
This story will be updated as it develops.