Highlights Relevant to Housing in Pending American Rescue Plan

Key Highlights

• Latest version ofAmerican Rescue Planhas elements that relate to housing
• Bill expected to be signed by Biden before March 14

Latest Version of American Rescue Plan that Relate to Housing

Expected to be signed into law by President Biden no later than March 14 (before current unemployment benefits expire on the 15^th), the American Rescue Plan has several elements within the package that address housing specifically.  These elements include:

Direct Payments of $1,400/person

Individuals earning up to $75,000 and couples earning up to $150,000 are to receive direct payments of $1,400/person.  Individuals with dependents listed on their tax returns would also receive an additional $1,400/dependent.

Unemployment Benefits 

Federal unemployment insurance payments are to remain at $300/week through September 6.  The first $10,200 in unemployment payments are nontaxable for households with incomes under $150,000/year.

$27B for Emergency Rental Assistanc 

The bulk of this $27B would go toward emergency rental assistance to replenish the Coronavirus Relief Fund, established by the CARES Act in 2020.  This money is to be distributed through state, local and tribal governments.

This $27B is on top of the $25B passed in last December’s relief package.

This financial assistance is to be used for rent, utilities and other housing costs. To qualify, household income cannot be more than 80% of the area’s median income, at least one household member must be at risk of homelessness or housing instability or have experienced either direct or indirect financial hardship due to the pandemic.  Lower income families that have experienced unemployment for three months or more would be given priority for assistance.

 Importantly, this bill provides $10B in homeowners’ financial relief for mortgage payments, utilities and other housing costs.

Approximately $29B in Direct Restaurant Aid

As everyone knows, restaurants and bars were particularly hard-hit by the COVID pandemic.  This bill earmarks $28.6B for direct aid to bars and restaurants. Money is to be distributed in grants up to $5M for restaurants or $10M for those with operations in multiple locations.

This is the first time in the now three federal COVID relief packages that singles out restaurants for assistance.  Research data indicates that the restaurant industry suffered about $240B in lost sales during 2020 and that approximately 100,000 restaurants closed.

Financial assistance can be used to help pay rent, payroll, vendors’ expenses and more.

Major metros such as New York City are now on the way to welcoming back its residents, business workers and international travelers to the pleasures of restaurant and bar life again.

This aid may positively impact urban residential and commercial real estate activity.

Paycheck Protection Plan Law Changes

The Paycheck Protection Planis to be expanded to include more categories of not-for-profit businesses such as business leagues, chambers of commerce and real estate boards.  Any 501© organization that is exempt from taxation is now eligible to receive PPP loans.

$350B in State and Local Aid

 According to the Bureau of Labor Statistics, approximately 1.4M state and local government workers, many employed by schools, have lost their jobs due to the pandemic.  This money is to help cities and states provide essential services such as teachers, first responders and transportation providers.

Cities and counties would receive $120B.  Infrastructure projects would receive $10B.

This aid may also positively impact residential and commercial real estate activity in terms of helping provide essential health and safety services, employment opportunities and overall vibrancy to cities and counties.

Combination of Health and Fiscal Policy Matters

According to the Organization for Economic Cooperation and Development (OECD), the coming passage of the American Relief Plan will accelerate the American economy nearly twice as fast as expected.  In its 6-month outlook, the OECD said the US would expand 6.5% in 2021, up significantly from the3.2% forecast in December of 2020.  It would also provide the momentum to help lift the global output 5.6% from the -3.4% contraction suffered in 2020.

According to Laurence Boone, OCeD’s chief economist, the pairing of economic stimulus with vaccination distribution means that COVID-protected consumers can and will “…go out doing normal things.”  It’s the combination of fast, widespread vaccination programs, consumer spending and business confidence that matter.

Janet Yellen, Treasury Secretary, expects the economy to return to full employment by mid-2022 with the pending passage of this bill.

Bloomberg anticipates that annual inflation will rise to 1.7% from 1.4%.

Thanks to National Public Radio, Bloomberg, the New York Times and Forbes.

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