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Money And KeyNMHC and NAA appreciate Congressional action on the COVID-19 stimulus package that was signed into law today. This legislation, the Coronavirus Aid, and Economic Security Act, (CARES Act), includes important provisions intended to stave off total economic collapse in the wake of the coronavirus crisis.

Prior to the passage of this legislation, NMHC and NAA called on lawmakers to enact a number of provisions that would provide assistance to renters and property owners affected by financial hardships as a result of the COVID-19 outbreak.

These past two weeks the NMHC and NAA government affairs teams has been working directly with Congressional leadership around the clock to help shape the multiple federal bills being drafted in response to the COVID-19 outbreak. NMHC and NAA have also been constantly communicating with Administration officials as they work to provide additional relief. Three different recovery packages have been passed over the last two weeks. The most extensive package, the CARES Act, consisted of over 800 pages and final language was not available to policymakers until shortly before the Senate vote. Given the magnitude of the task and the speed in which this package was moving, mistakes were made. Consequently, there are provisions that will be helpful to the industry and its renter, and there are others that will create substantial challenges challenges for rental property owners and the housing stability Americans need and deserve during this crisis.

For example, while we understand the intent of the national eviction moratorium included in the legislation, lawmakers inadvertently neglected to specifically tie the moratorium to those affected by the COVID-19 crisis. Instead, what should be a limited protective step is expanded to those who have not been financially impacted by the pandemic. This is already creating an expectation that unaffected renters do not have to meet their lease obligations. The language as drafted raises questions about whether housing providers may evict a resident for reasons other than nonpayment of rent. This could pose significant health and safety concerns for residents, housing providers and their staffs. The unintended consequences of the eviction moratorium will wreak havoc on the stability of the rental housing market and places it out of step with similar state and local actions. Congress must swiftly address this discrepancy.

Second, the current package provides substantial financial support to residents though HUD and unemployment insurance, however, more direct emergency rental assistance is necessary—particularly for those who do not presently receive federal housing assistance but now find themselves needing it.

Finally, at the urging of NMHC and NAA, Congress provided mortgage forbearance for multifamily property owners negatively impacted by the COVID-19 outbreak. The legislation, however, only provides this relief to owners with federally backed mortgages, such as those through the Federal Housing Administration (FHA), Fannie Mae and Freddie Mac. This protection needs to be expanded to all types of mortgages. Owners and operators are tasked with ensuring the viability of apartment communities. They, too, are experiencing financial hardships sometimes tenfold as renters in the communities across the country struggle.

Further, the provision limits forbearance to a 90-day time period, which is out of alignment with the 120-day eviction moratorium. Unless it is fixed, this disconnect could result in a mass wave of financial delinquencies and defaults from rental housing providers of all types and sizes, jeopardizing the stability of entire communities.

Unemployment Insurance

Pandemic Unemployment Assistance—Provides for a major expansion of unemployment benefits for those affected by COVID-19.

    • Unemployed Americans are eligible for an extra $600 per week benefit for up to four months, on top of state unemployment benefits to make up for 100 percent of lost wages.
    • Provides funding to pay the cost of the first week of unemployment benefits through December 31, 2020 for states that choose to pay recipients as soon as they become unemployed instead of waiting one week before the individual is eligible to receive unemployment benefits as is the traditional handling of claims.
    • Expansion also creates temporary financing of short-time compensation paymentswhere employers reduce employee’s hours instead of laying off workers and the employees with reduced hours receive a pro-rated unemployment benefit.
    • The expansion extends eligibility for benefits to those not traditionally eligible for unemployment benefits (self-employed, independent contractors, those with limited work history, and others).
    • Recipients must be directly impacted by COVID-19 (sick, caring for sick or caring for child who is unable to attend school).

Recovery Rebates to Individuals

The Act provides checks of $1,200 to qualifying individuals and $2,400 to qualifying married taxpayers with an additional $500 for each child under 17 years of age. The checks are fully available to individuals earning up to $75,000 and married couples earning up to $150,000 and begin to phase down once those thresholds are reached.

Forbearance for Multifamily Properties with Federally Backed Loans

Provides up to 90 days of forbearance for multifamily borrowers with a federally backed multifamily mortgage loan who have experienced a financial hardship as a result of COVID-19. Borrowers receiving forbearance may not evict or charge late fees to tenants for the duration of the forbearance period. The bill also prevents the owner from sending a notice of eviction until after the forbearance ends and then prevents the eviction from happening for 30 days more. Does allow for necessary evictions for criminal activity/endangering other residents, etc. to move forward.

Temporary Moratorium on Eviction Filings

Imposes a 120-day eviction moratorium at any property that has a mortgage backed by the federal government (HUD, GSE, USDA loan products). The bill also prevents the owner from sending a notice of eviction until after the forbearance ends and then prevents the eviction from happening for 30 days more. Does allow for necessary evictions for criminal activity/endangering other residents, etc. to move forward.

Tax Provisions

Provisions for Businesses

      • Employee Retention Credit: The Act establishes a refundable employee retention tax credit for employers subject to closure due to COVID-19. The tax credit covers 50 percent of wages up to $10,000. Employers must exclude wages covered by employee sick leave tax credits provided for in the Phase 2 Coronavirus relief package. Employers eligible for the tax credit are those that: (1) see operations fully or partially suspended due to orders from a governmental authority due to COVID-19; or (2) see gross receipts falling by more than 50 percent from the same quarter in the prior year.

        For employers with greater than 100 full-time employees, qualified wages are wages paid to employees when they are not providing services due to the COVID-19-related circumstances described above. For eligible employers with 100 or fewer full-time employees, all employee wages qualify for the credit, whether the employer is open for business or subject to a shut-down order. The credit is provided for wages paid or incurred from March 13, 2020, through December 31, 2020.

      • Delay of Payment of Employer Payroll Taxes: The Act enables employers and the self-employed to delay the payment of the employer side of Social Security payroll taxes. The provision enables the deferral of the 6.2 percent tax from the date of enactment through the remainder of 2020. Half of the amount must be repaid by December 31, 2021, and the other half must be repaid by December 31, 2022. Taxpayers with forgiven indebtedness arising from the small business loans authorized in the Act are ineligible to defer payroll taxes.
      • Net Operating Loss Carryback: The Act allows net operating losses (NOLs) generated in taxable years beginning in 2018, 2019, and 2020 to be carried back for five years. The provision also eliminates the 80 percent taxable income limitation to allow an NOL to fully offset income. Under current law, NOLs cannot be carried back. Thus, eligible taxpayers can amend prior-year returns and claim tax refunds.
      • Suspension of Limits on Excess Business Losses: The Act suspends the limitation of excess business losses applicable to pass-through businesses and sole proprietors that would otherwise be applicable for 2018, 2019, and 2020. This provision will help impacted taxpayers benefit from the NOL carryback described above.
      • Limitations on Business Interest: The Act increases to 50 percent the 30 percent business interest limitation rule for taxable years beginning in 2019 and 2020. Special rules apply to partnerships. Real estate taxpayers to whom the limitation applies may still elect out so long as real property is depreciated under the Alternative Depreciation System instead of MACRS.

Provisions for Individuals

    • Recovery Rebates to Individuals: The Act provides checks of $1,200 to qualifying individuals and $2,400 to qualifying married taxpayers with an additional $500 for each child under 17 years of age. The checks are fully available to individuals earning up to $75,000 and married couples earning up to $150,000 and begin to phase down once those thresholds are reached.
    • Use of Retirement Funds: The Act waives the 10 percent early withdrawal penalty for withdrawals of up to $100,000 from qualified retirement accounts for COVID-19 related purposes. Distributed amounts could be recontributed to a qualified retirement account over within three years. Tax can also be spread out over three years on distributed payments.
    • Waiver of Required Minimum Distribution Rules: The Act waives required minimum distribution rules from certain tax-favored retirement plans for 2020.
    • Deduction for Charitable Contributions: The Act provides taxpayers who do not itemize deductions the ability to deduct up to $300 in charitable contributions in 2020. It also waives certain limitations applicable to deductions claimed by individuals and corporations. For individuals, the 50 percent of adjusted gross income limitation is suspended for 2020.  For corporations, the 10 percent limitation is increased to 25 percent of taxable income.
    • Exclusion of Certain Student Loan Payments: The Act excludes up to $5,250 from employee income for student loans repaid by an employer after the date of enactment and through 2020.

Small Business Loans/Grants

Paycheck Protection Program

Provides $349 billion for Small Business Interruption Loans for companies of not more than 500 employees. Allowable Uses—payroll costs; health care costs/premiums; salaries; mortgage payments; rent; utilities; interest on other debt obligations.

Increases the maximum 7(a) loan amount to $10 million through December 31, 2020 and provides a formula by which the loan amount is tied to payroll costs incurred by the business to determine the size of the loan, not to exceed $10 million.

Average total monthly payroll costs x 2.5= loan size; where payroll costs include salary, vacation, insurance, retirement, leave, and state\local payroll taxes

Although the uses are broader than just payroll, see above, there will likely be no excess funds once payroll costs have been paid to pay the other obligations such as mortgage or rent payments.

SBA Loan Forgiveness

Establishes that the borrower shall be eligible for loan forgiveness equal to the amount spent by the borrower during an 8-week period after the origination date of the loan on payroll costs, interest payment on any mortgage incurred prior to February 15, 2020, payment of rent on any lease in force prior to February 15, 2020, and payment on any utility for which service began before February 15, 2020.

The amount forgiven will be reduced proportionally by any reduction in employees retained compared to the prior year and reduced by the reduction in pay of any employee beyond 25 percent of their prior year compensation. Borrowers that re-hire workers previously laid off will not be penalized for having a reduced payroll at the beginning of the period.

Consumer Reporting

Credit Protection During Covid-19:

Furnishers to credit reporting agencies (like apartment firms, credit card companies, etc.) who agree to modified (rental) payments with respect to an obligation or account of a consumer that has been impacted by COVID-19, must report such obligation or account as “current” or as the status reported prior to the accommodation during the period of accommodation unless the consumer becomes current. Such credit protection ends at the later of 120 days after enactment of the legislation or 120 days after the date the national emergency declaration related to the coronavirus is terminated.



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