By Derrick M. Valkenburg of Shutts & Bowen LLP
Published March 8, 2021
The $908 billion stimulus package (COVID-19 Relief Package 2.0) that was signed into law on December 27, 2020, which was attached to a $1.4 trillion spending bill to fund the federal government through September, was an overall triumph for contractors and industry leaders hoping for renewed benefits and relief measures aimed at the construction sector. The second coronavirus recovery package addressed shortfalls in revenue and project cancellations brought on by the pandemic, providing relief for the industry and funding for previously scheduled public works projects and infrastructure improvements.
Among COVID-19 Relief Package 2.0 were numerous provisions that directly and indirectly provided much needed relief for the construction industry. As President Biden’s $1.9 trillion coronavirus relief plan is pending final approval, the industry remains hopeful for further relief and provisions addressing the shortcomings of previous legislation.
COVID-19 Relief Package 2.0, a 5,593-page omnibus bill, included a number of provisions meant to not only bolster business for contractors, but the construction industry as a whole. Included among those provisions were the following:
Changes to the Paycheck Protection Program (PPP):
The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, among other things, extended PPP under the CARES Act through March 31, 2021 for entities that have not previously received a PPP Loan, and also created a program for borrowers seeking to apply for a second PPP Loan. In addition to an extension and opportunities for second draw loans, industry-specific and noteworthy changes to PPP included:
- Construction companies can also celebrate a provision under the renewed program ensuring tax deductibilityfor expenses paid for with forgiven PPP loans.
- An expansion of the Employee Retention Tax Credit through the first half of 2021, giving qualified employers a per-worker credit for employees not paid in PPP funds, is also a benefit for companies in the construction industry.
- Additionally, the list of allowable and forgivable uses of a PPP Loan now includes new types of uses, such as costs related to operations, supplier costs and worker protection expenditures. These retroactive expense modifications include the coverage of personal protection equipment and expenses related to remote work, such as software and cloud services.
Infrastructure and Other Project Provisions:
- Clean Energy
- The legislation included about $35 billion in funding for wind, solar and other clean energy projects – an area of heightened focus from public and private owners looking for environmentally-friendly construction options and contractors.
- With a particular focus on rural communities, a $7 billion provision is dedicated to expanding broadband internet infrastructure and access.
- Waterfront Construction
- Also included in the package is the Water Resources Development Act, a $10 billion federal funding provision to be implemented by the U.S. Army Corps of Engineers for infrastructure projects related to improving ports, harbors and inland waterways. There was also $14 million dedicated to the Water Infrastructure Finance and Innovations Act, enabling low interest federal loans for water projects.
- Military Housing
- The National Defense Authorization Act included approximately $11.8 billion for military construction, military family housing and work associated with base realignment and closure rounds.
- School Construction
- Another provision among the package related to construction spending was a $82 billion earmarked for education, some of which is anticipated to be directed at construction and renovation efforts for students returning to classrooms.
- Federal Buildings
- Elsewhere in the legislation, the General Services Administration's federal buildings construction budget would double to $230 million for 2021.
State Transportation and Highway Funding:
- One of the most noteworthy benefits among the legislation for contractors is a $10 billion provision allocated for state DOT spending. The dedicated funding will present a number of contracting opportunities, as well as relief for state DOTs who saw losses in state fuel taxes and other revenue, as well as road and other projects stalled or cancelled in 2020.
Shortcomings of Relief Package 2.0 and Looking Ahead:
Although the measures included in COVID-19 Relief Package 2.0 were an overwhelming win for the construction industry, businesses were quick to note that the package did not include liability protection for employers against COVID-19 employee exposure lawsuits.
Liability reform and the inclusion of a liability shield for employers were big issues considered by lawmakers, however the legislation ultimately did not include distinct legal language protecting contractors or employers from such lawsuits.
Provisions addressing liability reform in future legislation would provide significant relief to the construction industry among many others. Although the third stimulus package is not expected to address liability immunity, provisions for state and local government aid, optional paid sick and family leave, tax credits and money for small businesses should indirectly support construction businesses and employees.
Derrick M. Valkenburg is a partner in Shutts & Bowen LLP’s Orlando office, where he is a member of the Construction Litigation Practice Group. Derrick's practice focuses on construction, commercial and real property litigation. He often represents developers, contractors, material suppliers, and design professionals in disputes involving construction defect claims, delay claims, construction lien issues, contract disputes, and insurance coverage issues. Derrick also represents clients in the areas of commercial landlord-tenant disputes, real property litigation, insurance litigation, employment law, probate and trust litigation, and e-discovery. Derrick is also a Certified Public Accountant licensed in the State of Florida. He can be reached by email at DValkenburg@shutts.com.