Housing and Infrastructure Provisions in the CARES Act

What the CARES Act Will Do

The CARES Act includes direct cash payments to most Americans, expanded unemployment benefits, a rescue fund for state and local governments, loans and tax credits to keep businesses afloat, and about $340 billion in supplemental emergency appropriations to federal agencies. When it comes to delivering on key housing and infrastructure priorities, the legislation will:

Keep more Americans stably housed through the crisis.

Heading into this pandemic, many Americans were already homeless, housing insecure, rent burdened, or economically vulnerable. As we outlined in a previous blog, with the success of virus mitigation efforts dependent on keeping Americans at home, Congress faced an urgent need to increase funding to meet the health and housing needs of those experiencing homelessness, create an emergency rental assistance fund to keep people in their homes, and engage the Department of Housing and Urban Development and the Federal Housing Finance Agency to prioritize flexible payment options for renters and homeowners facing health and economic hardships. The CARES Act advances these priorities in several ways:

1. It provides HUD with an additional $17.4 billion in funding, including $5 billion for the flexible Community Development Block Grant (CDBG) program, $4 billion in homeless assistance grants, and additional funding for housing vouchers, public housing, and HUD’s Section 202 housing program for the elderly, among others. Researchers have estimated that about $11.5 billion is needed for the current year to meet the nation’s expected emergency and observational/quarantine shelter bed need.
2. It expands unemployment insurance and helps Americans pay for rent and other necessities. In particular, the legislation would provide checks of up to $1,200 for single taxpayers, $2,400 for married joint filers, and $500 for each dependent child, with rebates phasing out for higher income taxpayers; expand unemployment insurance benefits and coverage; and provide a refundable payroll tax credit to help businesses retain employees. The extension and expansion of unemployment will help many low-income renters continue to pay their rent, although those who struggled to make ends meet before the pandemic will continue to be vulnerable.
3. The legislation institutes a temporary moratorium on evictions for renters in federally subsidized apartments and on foreclosures for homeowners with federally backed mortgages. However, it does not provide relief for mortgage servicers, who are anticipating a wave of missed mortgage payments but must continue to pay investors who own loans in mortgage-backed securities. Without a fix, this could ultimately destabilize the nation’s housing finance system.

The ability to continue paying rent or mortgage payments largely depends on having a job and a stable income. These provisions will help to keep more Americans employed as businesses close their doors and help those faced with lay-offs. However, some provisions–particularly the rebate payments—will be difficult to distribute quickly and efficiently to those with the very lowest incomes.

Direct billions of dollars to states and local governments facing fiscal headwinds.

As part of a new “Coronavirus Relief Fund,” the CARES Act would provide $150 billion to states, territories, and tribal governments to use for expenditures incurred due to COVID-19. With weekly unemployment claims skyrocketing to about 3.3 million in the week of March 16, this funding will likely not be sufficient for states running out of money to fulfill these claims and address other budget needs in the coming weeks and months. Discussions on the next relief package already suggest additional aid to states and local governments may be needed.

Take advantage of federal disaster relief programs to speed up the delivery of emergency aid.

The United States has a sophisticated and time-tested disaster relief and recovery framework, wherein the Federal Emergency Management Agency coordinates among federal agencies, states, and local governments to move federally appropriated aid quickly to families, businesses, and communities with emergency needs. The CARES Act has added $30 billion to FEMA’s Disaster Relief Fund, bringing its coffers to over $70 billion. By declaring the most affected states and communities “major disaster” areas (as has been done already in California, New York, Washington, Louisiana, Iowa, Florida, Texas, New Jersey, and North Carolina), FEMA can help states hard hit by COVID-19 more quickly receive financial and technical assistance for a variety of pressing needs.

Throw airlines and airports a lifeline.

The CARES Act provides about $29 billion for grants to airlines, to be directed toward payroll costs, and $29 billion for loans and loan guarantees, while also suspending aviation related excise taxes. Access to this emergency relief does include a few strings attached—namely, restrictions on executive compensation and stock buybacks. Together, this assistance amounts to what airline industry groups and unions said was necessary to stave off bankruptcies.

The legislation also provides $10 billion for grants to airports, which similarly face the need for emergency assistance as their traditional revenues sources decline—namely, fees on passenger tickets and income from airport tenants, concessions, and parking.

Provide emergency relief funding to struggling transit systems.

Transit systems rely heavily on ridership fare and sales tax revenues, which have tanked as commuters follow public health directives to remain home. In many cities, these declines have put transit systems at risk of insolvency. Many had massive backlogs of deferred maintenance heading into this pandemic too. Now, with the sudden loss of ridership, an at-risk workforce, and worsening financial conditions, systems may struggle to service bond debt, finance needed projects, and even meet day-to-day operational needs. The CARES Act directs $25 billion to the Federal Transit Administration for grants to transit agencies to address these mounting concerns. Along with other, more flexible sources of funding like the $150 billion in aid being given to states and local communities, if disbursed quickly and equitably, transit systems will be able to better provide a base level of service to ensure frontline health care and other “essential” workers can still commute between home and work.

Next Steps for Congress

Many economists anticipate a severe economic contraction as a result COVID-19. While this $2 trillion bill will provide critically needed resources to mitigate COVID-19’s impact on both public health and the economy, it provides mostly emergency relief needed to help households and businesses weather the worst of the crisis. More will need to be done in the coming days, weeks, and months to ensure that the economy can quickly bounce back. For example, this has led some in Congress to call for an increase in federal infrastructure spending, and others to call for measures to boost housing supply by expanding tools like the Low Income Housing Tax Credit, to stimulate economic growth following these initial steps to protect public health and aid struggling families.