Stimulus Bill Passes Congress, Biden to Sign into Law Shortly
The House and Senate approved a $1.9 trillion COVID-19 relief package; which was signed into law by President Biden on March 11.
NAHB recognizes this bill is far from perfect but, an economic stimulus package is desperately needed and this legislation contains important provisions for the housing community.
Millions of Americans remain underemployed or unemployed, millions of small businesses still require economic relief, and millions of mom and pop landlords have not been receiving rent payments for months, threatening their economic livelihoods. The legislation includes additional funds for small businesses, rental assistance, school reopenings, nationwide coronavirus vaccine delivery, and aid to state and local governments — which are critical to help many of our members and get the economy back on track.
Regarding aid to state and local governments, this provision is a net plus for members. Without federal aid, critical government services such as planning approvals, building permits and timely inspections are at risk of being curtailed or eliminated, which would result in construction delays and increased costs to home buyers.
We have highlighted below some of the major provisions included in the legislation:
- Additional recovery rebates up to $1,400 per taxpayer. Single taxpayers earning up to $75,000 and married couples earning up to $150,000 will be eligible for the full amount. However, the rebates will disappear for individuals earning more than $80,000 annually and couples earning more than $160,000.
- Child Tax Credit expansion. For 2021, the Child Tax Credit will be fully refundable, and the credit will be increased to $3,000 per eligible child, or $3,600 for children under the age of six. In addition, for 2021, 17-year-old children would be eligible. House Democrats also plan to create a mechanism to advance a portion of the credit to eligible taxpayers monthly.
- Paid medical and sick leave credits. Employers offering their employees COVID-related paid medical and sick leave would be eligible for an expanded tax credit through Sept. 30.
- Employee Retention Tax Credit. Eligible employers would be able to claim this credit through the end of 2021.
- Additional aid for small businesses. The legislation provides an additional $7.25 billion for the Paycheck Protection Program (PPP). Existing eligibility rules remain in place for small businesses seeking to participate in the PPP, including 501(c)(6) organizations, which include state and local home builders associations. The measure also provides an additional $15 billion for the targeted Economic Injury Disaster Loan (EIDL) advance program.
- $27.5 billion for emergency rental aid. The rental component includes the following:
- $21.5 billion for the Emergency Rental Assistance Program.
- Unlike previous funds, there is no specific language mandating a portion of the funds for rental arrears.
- $5 billion for emergency Housing Choice Vouchers.
- $100 million for unassisted households in USDA-subsidized properties.
- $750 million for the Indian Housing Block Grant program and the Indian Community Development Block Grant program.
- $100 million for NeighborWorks housing counseling.
- $21.5 billion for the Emergency Rental Assistance Program.
- Extension of unemployment benefits. The existing $300 weekly federal unemployment benefits that were due to expire on March 14 will be extended through Sept. 6. The first $10,200 of unemployment benefits will be tax-free for households earning less than $150,000.
- Home owner assistance efforts. The bill includes $10 billion for home owner assistance efforts, including direct relief with mortgage payments, small 1-4 rental unit properties, property tax payments and utility costs.
- Homelessness assistance funding. The legislation provides $5 billion for homelessness assistance funding.
- $350 billion in state and local pandemic relief. Additional funding will enable state and local governments to avoid layoffs of police, teachers and firefighters, and discourage local jurisdictions from increasing impact fees and other construction fees that harm housing affordability.
Marcia Fudge Confirmed as HUD Secretary
Marcia Fudge was confirmed as HUD Secretary on March 10, 2021. NAHB sent a letter to the Senate in support of her confirmation. Rep. Fudge has a strong public service background and a firm commitment to addressing the housing needs of low-income Americans.
Lawmakers Ask Biden and the Justice Department to Act on Lumber
Reps. Jim Costa (D-Calif.) and Jodey Arrington (R-Texas) sent a letter to President Biden and the Department of Justice on March 4 urging the administration to respond to rising building materials prices and supply shortages, particularly, lumber, that are harming the housing market and threaten the economic recovery.
Using data provided by NAHB, the lawmakers stated that “shortages of lumber have nearly tripled the price of lumber since mid-April 2020, causing the price of a new single-family home to increase by more than $24,000.”
NAHB’s top priority is to find solutions that will ensure a lasting and stable supply of lumber for the home building industry at a competitive price. NAHB is urging the Commerce Department to investigate why lumber production — particularly sawmill output — remains at such low levels during a period of prolonged high demand.
Reps. Costa and Arrington mirrored our concerns and stressed the need to boost sawmill activity in their letter to Biden and the Department of Justice. “Unfortunately, this unprecedented price increase on new homeowners, as well as home builders, will persist until new sawmills come online and current mills re-open and operate at full capacity,” the letter stated. “To address this issue, we ask your Administration to facilitate a discussion with all stakeholders, including sawmills, home builders, loggers, and distributors, to ensure all needs are met in a timely manner.”
The two lawmakers also attached a letter sent last fall to President Trump that was signed by nearly 100 members of the 116th Congress seeking action on the lumber issue.
House Passes Anti-Business Labor Bill Strongly Opposed by NAHB
The House on March 9 approved legislation strongly opposed by NAHB that contains dozens of sweeping labor law revisions that would negatively affect the construction labor market at a time of critical skilled worker shortages. The bill is expected to die in the Senate.
H.R. 842, the Protecting the Right to Organize (PRO) Act, would expand employers’ liability for the labor practices of subcontractors and third-party vendors and narrow the circumstances under which an individual can work as an independent contractor — effectively gutting the contracting business model that serves as the foundation of the residential construction sector.
NAHB sent a letter to the full House designating a vote in opposition to H.R. 842 as a “key vote” because of its importance to the housing industry.
This organized labor “wish list” bill resurrects bad policies that have previously been rejected by Congress and courts alike, including:
- Eliminating right-to-work protections nationwide;
- Stripping employer and employee free choice and privacy in union elections; and
- Curbing opportunities for independent work and subcontracting.
NAHB’s letter opposing the bill said that the “nation is currently facing a housing affordability crisis which will only worsen if Congress promulgates misguided policies that force the labor market to contract and inflate the costs of home construction.”
Fannie Mae, Freddie Mac Extend Foreclosure, Eviction Moratoriums
The Federal Housing Finance Agency (FHFA) has announced that Fannie Mae and Freddie Mac will extend their moratorium on single-family foreclosures and evictions until June 30, 2021. The foreclosure moratorium applies to Fannie Mae and Freddie Mac-backed single-family mortgages only. The eviction moratorium applies to properties that have been acquired by Fannie and Freddie through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on March 31.
The eviction moratorium applies to properties that have been acquired by an Enterprise through foreclosure or deed-in-lieu of foreclosure transactions. The current moratoriums were set to expire on March 31, 2021.
FHFA also announced that borrowers with a mortgage backed by Fannie Mae or Freddie Mac may be eligible for an additional three-month extension of COVID-19 forbearance. This additional three-month extension allows borrowers to be in forbearance for up to 18 months. Eligibility for the extension is limited to borrowers who are in a COVID-19 forbearance plan as of Feb. 28, 2021, and other limits may apply.
Further, COVID-19 Payment Deferral for borrowers with a Fannie Mae or Freddie Mac backed mortgage can now cover up to 18 months of missed payments. COVID-19 Payment Deferral allows borrowers to repay their missed payments at the time the home is sold, refinanced, or at mortgage maturity.
Home owners and renters can visit consumerfinance.gov/housing for up-to-date information on their relief options, protections, and key deadlines.
NAHB Opposes House Bill to Eliminate Carried Interest
Rep. Bill Pascrell (D-N.J.), along with Reps. Andy Levin (D-Mich.) and Katie Porter (D-Calf.), this week introduced H.R. 1068, the Carried Interest Fairness Act of 2021. The bill would impose a major tax increase on real estate by generally requiring carried interest to be classified as ordinary income rather than a capital gain. Rep. Pascrell has introduced similar legislation in the past.
A carried (or promoted) interest is a profits interest in a business deal that is larger as a share of the total return than the share of the initial equity investment. Under present law, if the income paid out as the carry is a capital gain, then the carry is taxed at capital gains tax rates (in general, up to 23.8%). In 2017, the Tax Cuts and Jobs Act increased the holding period required to qualify for long-term capital gains treatment as a carried interest from one to three years.
NAHB opposes changes to the taxation of carried interest because it would have a significant negative impact on the multifamily housing industry and on the bottom lines of companies that participate in real estate investment partnerships. Despite the focus on the financial sector, the use of carried interest is common in real estate.
NAHB expects not only carried interest but capital gains tax rates to come under additional scrutiny under the Democratic-controlled Congress. President Biden has called for increasing the long-term capital gains and qualified dividend rate for taxpayers with income in excess of $1 million to the ordinary income tax rate — a rate he also called to be increased from its current 37% to 39.6%.
Biden Issues Two Executive Orders to Rescind Trump-Era Environmental Regulations
Immediately after taking office, President Biden signed two executive orders that signaled his intention to take a comprehensive review of all the Trump administration’s deregulatory actions concerning climate change, energy efficiency and the environment.
The first executive order, Revocation of Certain Executive Orders Concerning Federal Regulations, repeals a Trump Administration’s executive order (E.O. 13771, entitled “Reducing Regulation and Controlling Regulatory Costs”) that limited the growth of federal regulations across the entire federal government.
E.O. 13771 established an annual regulatory budget for each federal agency that set a cap on the total cumulative economic impact each federal agency’s regulations could have on the entire U.S. economy. To stay under these caps, federal agencies were also encouraged to rescind two existing regulations whenever they proposed a new federal regulation.
A second Trump era executive order (E.O. 13777, “Enforcing the Regulatory Reform Agenda”) directed federal agencies to create internal task forces to identify and solicit the public’s input (including regulated entities) on outdated, overly burdensome, or inefficient existing regulations to be eliminated.
The Biden administration has described the repealing these two Trump deregulatory executive orders as “removing needless obstacles to regulating in the public’s interest.”
Reviewing Current Regulations
Another Biden administration executive order entitled, Protecting Public Health and the Environment & Restoring Science to Tackle the Climate Crisis, contains a provision requiring the incoming head of each federal agency to review and potentially eliminate all regulations issued during the Trump administration that cover climate change, public health, environmental or species protection, or federal energy efficiency standards.
In addition, the executive order directs incoming Attorney General Merrick Garland to pursue opportunities before the federal courts to request stays of Trump environmental rules not yet enacted. As for effective rules currently under litigation by environmental groups or the even the states, the executive order encourages federal courts to voluntarily remand these Trump-era environmental rules back to federal agencies for further review and potential removal.
While the executive orders identify some Trump environmental regulations by name, Biden’s directive to the incoming agency heads is to develop their own comprehensive “lists” of Trump-era regulations. Some could be withdrawn during the first a year of the Biden administration, while other Trump regulations — presumably those rules already finalized and effective like the Environmental Protection Agency and U.S. Army Corps of Engineers narrower regulatory definition of the term “waters of the U.S.” under the Clean Water Act — could be withdrawn before the end of the Biden administration’s first term.
The list of Trump-era environmental rules slated to be withdrawn are due to key officials within the Biden White House within 30 to 60 days. NAHB will continue to monitor the situation closely.