Since the COVID-19 pandemic shutdown, the US government has enacted three stimulus packages into law, the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) in March 2020; the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSA” / “Consolidated Appropriations Act, 2021”) in December 2020; and the American Rescue Plan Act (“ARP”) in March 2021. These packages provide financial aid and tax savings for K-12 schools, child care facilities, small businesses, and entertainment venues and restaurants to make capital improvements to their buildings and help reduce the risk of SARS-CoV-2 transmission between students, teachers, employees, clients and customers.
Schools and business owners are under pressure and are facing important decisions to effectively use the stimulus funding to reduce the risk of COVID-19 transmission. Science has evolved to show the focus on fomite transmission (surface cleaning and disinfection) and off the shelf and “air purifying” devices and filtration may not be effective in reducing the spread of COVID-19 and are often costly in time and resources.
The American Industrial Hygiene Associate (AIHA) and other leading scientific organizations, in a Joint Consensus Statement on Addressing the Aerosol Transmission of SARS CoV-2 and Recommendations for Preventing Occupational Exposures, report that none of the modes, contact, droplet, airborne, and aerosol should be excluded in your measures to prevent the transmission of SARS-CoV-2 and the outbreaks of COVID-19. With evidence that SARS-CoV-2 can most rapidly and effectively transmit from respiratory droplets and airborne particles in the indoor environment, the CDC and EPA recommended improvements in engineering controls using building ventilation, schools and businesses. Engineering controls to be considered include evaluating the performance of current building ventilation systems, implementing supplemental ventilation engineering controls to further reduce the risk of indoor COVID-19 transmission, and validate the efficacy of new control measures. To reduce the indoor SARS-CoV-2 transmission and risk of COVID-19, building ventilation systems should be maintained regularly (filter replacement, clean dampers, inspect fans, bearings and belts) , outfitted with the best-performing air filters compatible with the current system (e.g., MERV 13 or higher), and control-logic systems reprogrammed to increase the delivery rate of fresh outside air. Improving engineering controls to reduce SARS-CoV-2 transmission and COVID-19 disease risk is an important step that should be addressed within any schools, commercial buildings, and healthcare facilities opening or continuing operations. And finally, validating effectiveness of engineering measures provides comfort and wellbeing to employees, staff, students, parents, and occupants.
Below is a summary of funding provided by the Coronavirus Air, Relief, and Economic Security Act (“CARES”); the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (“CRRSA” / “Consolidated Appropriations Act, 2021”); and the American Rescue Plan Act (“ARP”) for K-12 Schools, child care, small business venues, entertainment, and restaurants.
RHP Risk Management’s Certified Industrial Hygienists (CIH), public health scientists and certified safety professionals can assist building engineers and building maintenance staff in assessing current ventilation system configuration and navigating straight forward or complex projects with services including measuring ambient temperature and relative humidity, measuring and calculating air exchange rate (air changes per hour (ACH)), monitoring for indoor air pollutants, and reviewing air filtration performance and efficiency. A well-designed and validated indoor air quality and ventilation management plan yields substantial benefits to students, teachers, employees, clients and customers and can reduce the risk of COVID-19 transmission. A case study of the RHP process in schools can be seen in “Assessment of Existing Ventilation Conditions and Comparison to Recommendations for Reducing Risk of Virus Transmission”.
The American Rescue Plan dedicates $126 billion to K-12 schools and charter schools that are considered school districts for capital improvements including purchases such as personal protective equipment (PPE) and facility enhancements. Improvements, such as ventilation assessments and upgrades, will help ensure healthier school buildings in the long-term, while providing an immediate risk reduction of infectious disease for students, teachers and staff.
Funding for K-12 schools will be available until September 2023 and must be distributed by individual state governments.
The Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA) provides an additional $54.3 billion for the Elementary and Secondary Emergency Relief Fund (“ESSER II”). ESSER II Fund awards to State education agencies are in the same proportion as each State received funds under Part A of Title I of the Elementary and Secondary Education Act of 1965, as amended, in fiscal year 2020. Uses of ESSER II funds include preparing schools for reopening, and testing, repairing, and upgrading projects to improve air quality in school buildings.
Funds may be used for pre-award costs dating back to March 13, 2020, when the national emergency was declared and are available for obligation by State education agencies (SEAs) and subrecipients through September 30, 2023.
ESSER II fact sheet: https://oese.ed.gov/files/2021/01/Final_ESSERII_Factsheet_1.5.21.pdf
The American Rescue Plan allocates $39 billion to the child care sector in addition to the relief from the Coronavirus Aid, Relief, and Economic Security Act (CARES) and the Coronavirus Response and Relief Supplemental Appropriations Act, 2021 (CRRSA).
Nearly $24 billion of the ARP Act funds is a dedicated stabilization fund for eligible child care providers, distributed by state lead agencies. These funds can support child care providers who are currently operating or are closed for COVID-related reasons, as well as supply-building activities. These funds can stabilize child care programs by covering a range of expenses including personal protective equipment (PPE) and COVID-related supplies and facility improvements (undefined).
Small Retail Businesses, Entertainment Venues & Restaurants
The CARES Act amends the existing Internal Revenue Code (Section 168) to retroactively include qualified improvement property (QIP), providing tax benefits for facility improvements. A qualified improvement property is defined as an improvement made by the taxpayer to an interior portion of a nonresidential building if the improvement is placed in service after the building was first placed in service. The Act includes a tax savings measure for non-residential property owners who invest in certain improvements to their property, making depreciation rules more favorable by creating possible tax savings.
Under Section 168 of the tax code, the cost of all equipment and components of the “heating, ventilating, and air conditioning system” can be fully deducted for tax purposes in the first year it is place in service versus over a 39-year period. For commercial buildings, the cost of HVAC equipment placed into service in 2020 may be fully deducted as a business expense.
Taxpayers may claim 100% bonus depreciation for qualified property acquired and placed in service after September 27, 2017, and before January 1, 2023. Because of the new technical amendments, taxpayers that make or have made improvements to their facilities may now take appropriate steps to claim the missed 2018 100% bonus depreciation.
The tax savings is realized through a bonus depreciation for certain qualified improvements made to the interior portion of commercial buildings that could help reduce the risk of aerosol transmission of the SARS-CoV-2 virus by making such improvements as:
- Heating and air conditioning equipment upgrades and replacements;
- Interior mechanical and electrical system installations and/or upgrades;
- Other non-structural interior upgrades and replacements including both equipment and installation costs.
Section 168 may help improve the financial return on investment for clients who install new HVAC components:
- Allows a tax deduction for the full amount of equipment and labor costs that are considered improvements to the interior of a non-residential or commercial building (new construction does not qualify).
- No limitation on the cost of equipment that can be purchased.
- Available for leased or purchased equipment, including installation labor.
- Combine with utility rebates to offset equipment cost.
- Retroactive for costs incurred back to January 1, 2018.
The American Rescue Plan Act (ARP) enables the U.S. Small Business Administration (SBA) to provide additional relief for the nation’s small businesses and hard-hit industries for programs the SBA is currently administering and adds new efforts, including the Restaurant Revitalization Fund (RRF). The ARP also provides funding for shuttered venue operators.
The Paycheck Protection Program (PPP) is a loan designed to provide a direct incentive for small businesses to keep their workers on payroll. The CRRSA relief package signed in December 2020 made it possible for small business owners to use loans from the PPP to pay for personal protective equipment for employees and a host of COVID-19 related renovations and upgrades to their business’ buildings, something that was not covered under the first round of PPP loans. The PPP funds may now be used for any operating or capital expenditure that is required to adapt the business and comply with the guidance and rules issued by state, local and federal agencies related to personal protection equipment, sanitation, or worker safety requirements and includes (but are not limited to) indoor or outdoor air air-pressure ventilation or filtration system and PPE, including respirators.
A borrower is generally eligible for a Second Draw PPP Loan if the borrower 1) previously received a First Draw PPP Loan and will or has used the full amount only for authorized uses; 2) has no more than 300 employees; and 3) can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.
The Paycheck Protection Program ends on March 31, 2021.
FAQs – Paycheck Protection Program Loans: https://home.treasury.gov/system/files/136/Paycheck-Protection-Program-Frequently-Asked-Questions.pdf
The Shuttered Venue Operators Grant (SVOG) program was established by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, and amended by the American Rescue Plan Act. The program includes over $16 billion in grants to shuttered venues, to be administered by the U.S. Small Business Administration’s Office of Disaster Assistance. Eligible entities include music venue operators, theater producers, live performing arts organization operators, relevant museum operators, motion picture theater operators.
SVOG funds may be used for specific expenses, including “Worker Protection Expenditures”, which include “covered materials” (surgical N95 Filtering Facepiece Respirators, including devices that are disposable half-face-piece non-powered air-purifying particulate respirators intended for use to cover the nose and mouth of the wearer to help reduce wearer exposure to pathogenic biological airborne particulates).
Worker protection expenditures also cover the expansion of additional indoor, outdoor, or combined business space(s), and other assets relating to compliance with the requirements or guidance related to the maintenance standards for any other worker or customer safety requirement related to COVID-19, as determined by the administrator of SBA in consultation with the secretary of health and human services and the secretary of labor.
The eligible participants may qualify for grants equal to 45% of their gross earned revenue, with the maximum amount available for a single grant award of $10 million. $2 billion is reserved for eligible applicants with up to 50 full-time employees. Entities must have been in operation as of February 29, 2020 and the venue or promotor who received a PPP loan on or after December 27, 2020, will have the SVOG reduced by the PPP loan amount.
Restaurant Revitalization Fund (RRF)
The ARP includes $28.6 billion to eligible restaurants in the “Restaurant Revitalization Fund (RRF)” within the U.S. Small Business Administration (SBA). Restaurant owners can use the RRF funds on personal protective equipment and building maintenance including construction to accommodate outdoor seating.
The RRF will create a new federal program for restaurant owners with 20 or fewer locations. Operations can apply for tax-free grants of up to $5 million per location, or up to $10 million for multi-location operations. The grant amount is determined by subtracting revenues from 2020 from 2019 revenues.
The SBA has not announced when they will begin taking RRF applications. More information on the SBA’s current relief efforts can be found at https://www.sba.gov/funding-programs/loans/coronavirus-relief-options.