After months of negotiations, Congressional leaders finally reached an agreement on the next COVID-19 relief bill to follow the CARES Act. The news came before the break for the holidays and was announced ahead of the release of the legislative text of the bill. Lawmakers will have just a few hours to read the text of the bill before voting.
Once passed, it will be the second-largest stimulus package in the country's history after the CARES Act, and the amount of funding that Congress has voted on in the wake of the pandemic will be over $3 trillion in one year, another record.
The new bill allocates $900 billion for a variety of programs, including $25 billion in emergency rental assistance. The CDC federal eviction moratorium has been extended through January 31. This is good news for many renters who are struggling to stay in their homes, but it's also concerning news for landlords who are wondering how they will be able to pay their mortgages and expenses without rent coming in.
One piece of news that could help some landlords with tenants who were laid off is that the $300 enhanced unemployment benefits will continue until March and benefits for the long-term unemployed will also be extended. The plan will also include a $600 stimulus check for each qualifying adult and $600 per child.
The new stimulus will also add another tranche of funding to the Paycheck Protection Program to support small businesses that have been hit particularly hard by the pandemic. The package would add $20 billion to the small business grants program. A separate $15 billion will support live event venues to keep them going until vaccines are widely distributed. Another $30 billion will be devoted to the distribution and procurement of vaccines. To help aid the airline industry, the bill will provide $16 billion to help save jobs. Supplemental Nutrition Assistance Program benefits will receive another $13 billion to help feed more people in need.
In remarks on the Senate floor, Senator Chuck Schumer, D-N.Y., described the bill as being "far from perfect" but said it would provide relief to millions of Americans. He noted that the bill will not provide direct aid to state and local governments and defined the new bill as a "floor not a ceiling" for coronavirus relief.
What happens next?
The federal government is also working on a full-year omnibus government spending bill expected to top $2 trillion. The legislation will be voted on in the House and Senate before heading to the president's desk.
The news comes as the number of cases and COVID-19-related deaths are hitting record numbers. It's likely that another relief package will be necessary. Negotiations on that next round will probably begin after the presidential inauguration.
The extension of the federal eviction moratorium may encourage some cities and states to extend their individual moratorium and rental assistance packages. California is already said to be considering an extension to eviction bans that could stretch into 2022. What is disappointing for many smaller landlords is that there is no direct support program for them on the federal level. Some critics of moratoriums say that the bans are just kicking the problem down the road and will end up causing more foreclosures and short sales.
While many people say that $600 doesn't go far enough, the program may help boost consumer confidence and spending, which could be good news for many retail real estate investment trusts (REITs). The commitment to moving forward with a bill that recognizes the crucial role of small businesses, restaurants, and live entertainment venues in at least some capacity is also a positive sign.
The economy is still fragile, and there is much to consider in the new year. However, this bill will likely be taken as a sign of the potential for more bipartisan collaboration at the federal level. On the whole, that should be good news for real estate.