American Recovery and Reinvestment Act of 2009
American Recovery and Reinvestment Act of 2009
H.R. 1, the American Recovery and Reinvestment Act of 2009, passed
the House on February 13, 2009, by a vote of 246 - 184. Later that
day, the Senate also passed the bill by a vote of 60 - 38. The
President signed the bill on February 17, 2009. The bill is a $780
billion package, with roughly 35% of the package devoted to tax cuts
(mostly for 2009) and the rest to spending intended to occur in 2009
and 2010. The mix of provisions of interest to REALTORS® changed
frequently throughout the legislative process, with changes
continuing to be made just hours before the measure was released
prior to the vote. In the end, the elements of NAR’s housing agenda
were included. Congress and the President have announced that a
finance and housing package (including tax provisions) will be the
next big initiative, so Congress has by no means finished its work
as it affects the housing industry and REALTORS®.
The bill includes the following provisions:
Homebuyer Tax Credit
FHA, Fannie Mae and Freddie Mac Loan Limits
Neighborhood Stabilization
Commercial Real Estate
Rural Housing Service
Low Income-Housing Grants
Tax Exempt Housing Bonds
Energy Efficient Housing Tax Credits & Grants
Transportation Investments
Broadband Deployment
Homebuyer Tax Credit – The bill provides for a $8,000 tax credit
that would be available to first-time home buyers for the purchase of
a principal residence on or after January 1, 2009 and before December
1, 2009. The credit does not require repayment. Most of the
mechanics of the credit will be the same as under the 2008 rules:
the credit will be claimed on a tax return to reduce the purchaser's
income tax liability. If any credit amount remains unused, then the
unused amount will be refunded as a check to the purchaser.
Chart Highlighting the Major Modifications to the First-Time
Homebuyer Tax Credit> (PDF: 309K)
NAR's Presentation: The 2009 First-Time Homebuyer Tax Credit (PDF:
319K)
FHA, Fannie Mae and Freddie Mac Loan Limits -The bill reinstates last
year's 2008 loan limits for FHA, Freddie Mac, and Fannie Mae loans.
These limits were equal to the greater of 125% of the 2008 local area
median home price or $271,050 for FHA and $417,000 for Fannie and
Freddie, with an overall maximum cap of $729,750. For the few areas
where the 2009 limits were higher, the higher limits will apply. In
addition, the bill includes language providing the HUD Secretary with
the discretion, if warranted, to increase the loan limit for any
“sub-area”, i.e.an area smaller than a county. The Secretary's
discretion is again limited by the $729,750 cap. These 2009 limits
will expire December 31, 2009.
The inclusion of these loan limit provisions in the final bill is a
victory for homeowners, buyers and Realtors. While these new limits
were included in version of the original stimulus bill approved by
the House, the bill first approved by the Senate did not. NAR's Call
for Action to both the House and the Senate prior to the final vote
advocated strongly for the provisions which were then included in the
final bill approved by both Chambers.
Estimated 2009 FHA, Fannie Mae and Freddie Mac Loan Limits> (PDF:
1.3M)
Neighborhood Stabilization – Division A, Title XII of the bill
provides $2,000,000,000 in additional funding for the Neighborhood
Stabilization Program (NSP). The NSP was created by the Housing and
Economic Recovery Act of 2009 (Public Law 110–289) to provide grants
through the Community Development Block Grant program (CDBG) to
states and localities to address the problems that can be created
when whole neighborhoods are decimated by foreclosures. The funds can
be used to purchase, manage, repair and resell foreclosed and
abandoned properties. In addition, the funds can also be used by
states and localities to establish financing methods for the purchase
and redevelopment of foreclosed properties. After purchase the homes
must be used to assist individuals and families with incomes at or
below 120% of area median income. Twenty-five percent of funds must
be used for households with incomes at or below 50% of area median
income. By leveraging their expertise in partnership with others
from both the public and private sector, Realtors® in many
communities have been making important contributions to their local
communities’ neighborhood stabilization programs.
Commercial Real Estate - Commercial real estate is impacted primarily
through those provisions of the bill focused on green building and
energy efficiency as well as business tax incentives. H.R. 1 provides
significant funds for state energy programs, which could be used to
support commerical property owners' investment in energy efficiency
upgrades while commercial property owners seeking to invest in
alternative energy systems for onsite power generation would benefit
from the Department of Energy Renewable Energy Loan Guarantees
Program. Of particular benefit to small businesses would be certain
provisions of the bill that provide tax relief in the area of bonus
depreciation and capital expenditures, as well as the 5-Year
carryback of net operating losses for small businesses.
Rural Housing Service Rural Housing Service – The bill provides an
additional $500 million to existing USDA Rural Housing programs. The
RHS provides both a guaranteed loan program and a direct housing loan
program for those meeting the program’s eligibility criteria. The
direct loan program will receive $270 million while $230 million will
be allocated for unsubsidized guaranteed loans. It has been reported
that this level of funding would provide for an additional 192,000
homeowners.
Low Income Housing Grants - Allow states to trade in a portion of
their 2009 low-income housing tax credits for Treasury grants to
finance the construction or acquisition and rehabilitation of
low-income housing, including those with or without tax credit
allocations.
Tax-Exempt Housing Bonds - Tax-exempt interest earned on specified
state and local bonds issued during 2009 and 2010 will not be subject
to the Alternative Minimum Tax (AMT). In addition, financial
institutions will have greater capacity to purchase tax-exempt state
and local bonds.
Energy Efficient Housing Tax Credits & Grants - To promote green jobs
and energy independence, ARRA invests significantly in efforts to
make homes and buildings more energy efficient. The bill provides
state and local governments with $6 billion in energy efficiency and
conservation grants for energy audits, retrofits and financial
incentives. Through 2010, homeowners will be able to claim a 30% tax
credit (up from 10%) for purchases of new furnaces, windows and
insulation. Another $5 billion will be available to modernize the
nation’s electricity grid and install smart meters on homes that help
to save consumers money. There is also $5 billion for weatherization
assistance for low income households and $2 billion for federally
assisted housing (section 8) efficiency efforts.
Transportation Investments - The bill provides $46.7 billion to
states and localities for capital investment for surface
transportation projects including highways, bridges, transit, and
rail projects. NAR policy supports increased spending on the types
of transportation infrastructure addressed in the bill with the
exception of Amtrak and high-speed inter-city rail where NAR has no
policy. These investments will tend to moderate traffic congestion
and support a variety of transportation alternatives which will
improve the quality of life of American communities and bolster the
value of real estate.
Broadband Deployment - The bill creates $7.2 billion in grants to
promote broadband deployment in unserved and underserved areas and
for mapping the availability of broadband service in the U.S. Any
entity is eligible to apply for a grant including municipalities,
public/private partnerships and private companies as long as they
comply with the grant conditions. The grants are subject to “network
neutrality” requirements to ensure that broadband networks be free of
restrictions on content, sites, or platforms, on the kinds of
equipment that may be attached, and on the modes of communication
allowed.
The bill also charges the FCC is with developing a national broadband
plan that shall seek to ensure that all Americans have access to
broadband capability and shall establish benchmarks for meeting that
goal.
These provisions are important victories for REALTORS because
increased broadband access promotes economic growth and expands
opportunities for home sales. A 2006 Commerce Department report
determined that property values are 6% higher in communities where
broadband is available.
For more info on the Austin market contact Craig Ellmaker at 512-784-1494 or at craig@ellmakerrealty.com