While the federal eviction moratorium is set to expire at the end of January, President-elect Biden is signaling it will be extended. Biden has released the American Rescue Plan, a multifaceted proposal designed to help alleviate some of the immediate financial pressure many Americans are feeling. The $1.9 trillion plan calls for $1,400 paid leave checks to be sent to workers across America, along with other initiatives. Let's take a look at a few of the proposals that could impact real estate investors.
As we've mentioned before, a widespread rollout of COVID-19 vaccines is necessary to revive the travel industry. The plan calls for a $20 billion national vaccination program that will work in tandem with state and local efforts. This includes creating community vaccination centers and widespread testing. Biden is also calling for a $50 billion investment in expanded rapid testing. The plan also mentions efforts to identify and contain new strains of COVID-19 that are starting to emerge.
The goal with all of these efforts is to reopen schools, get control of outbreaks, and gradually let the population get back to a sense of normalcy. An additional $130 billion will be used to help schools reopen, and there is also another $35 billion to be used for the expansion of the Higher Education Emergency Relief Fund. This will help colleges and universities reopen and may also be good news for real estate investors who are invested in student housing.
Another tranche of funding will support workers through emergency paid leave. A maximum paid leave benefit of $1,400 per week will be available for eligible workers. Employers with less than 500 employees will be reimbursed for the cost of this leave through extension of the refundable tax credit. Emergency paid leave measures will remain in place until September 30, 2021. The plan also calls for a minimum wage of $15 per hour.
Small businesses have been hit hardest by the pandemic. The plan supports more than 1 million of the hardest-hit small businesses through $15 billion in grants. The government plans to leverage $35 billion in government funds into $175 billion through low-interest loans and venture capital to help entrepreneurs.
Housing help for those in need
The most recent stimulus package passed in December provided $25 billion in rental assistance. However, that only matches the $25 billion Moody's Analytics (NYSE: MCO) estimates is owed in back rent. Data from the Center on Budget and Policy Priorities reflects that 1 in 5 renters is behind on rent, with 28% of Black households in this situation.
The new plan brings in another $30 billion in rental, energy, and water assistance, with an additional $5 billion to cover home energy and water costs in arrears. Biden also called for $5 billion to find housing for the approximately 200,000 individuals and families at risk of homelessness. These funds are designed to find housing options like purchasing hotels and motels and turning them into permanent housing.
President-elect Biden is requesting Congress extend the eviction and foreclosure moratoriums and continue applications for forbearance on federally guaranteed mortgages until September 30, 2021. Right now, approximately 1 in 10 homeowners is struggling to pay the mortgage.
In his speech about the plan, Biden also mentioned he will provide economic assistance to "mom-and-pop landlords" around the country. This is important because so far, most of the rental assistance programs haven't considered the role of small landlords. For more on this subject, check out our Millionacres podcast on eviction moratoriums and rent control.
Once the new administration is sworn in on Jan. 20, it's likely this proposal will be one of the first pieces of business. It will need to be agreed upon by both sides of Congress. As we saw with the last stimulus package, these programs can take weeks or even months to pass. With the eviction moratorium expiring at the end of January, there may not be time to wait.
Biden's next move will be to present the Build Back Better Recovery Plan, which will include plans for infrastructure, clean energy, and building the economy.