How the  Covid-19 Relief Package Will Help the Construction Industry

new covid-19 relief package will help construction industry

The new relief package was half the size of the initial $2.2 trillion Coronavirus Aid, Relief and Economic Security Act but there is still plenty in the bill for contractors to be happy about. The package includes coronavirus relief and government spending for this fiscal year.

According to an article in Construction Dive, construction advocates said the new pandemic relief package should be viewed as a win.


"This bill for the construction industry has a lot of good things overall. I would say on the list of the many things we were asking for, we probably got 80%."

Vice president of government relations at Associated General Contractors of America | Jimmy Christianson


One regret, however, is that the package doesn't include liability protection for employers against lawsuits from employees who were exposed to or became infected with COVID-19 at work.

The following are a few of the provisions that should help contractors this year:


1. Paycheck Protection Program

There is a provision to ensure expenses paid for with forgiven PPP loans that will be tax deductible which was an issue that many contractors were very concerned about last fall.

A related benefit is the expansion of the Employee Retention Tax Credit which gives qualifying employers a $5,000 credit per worker for employees not paid with PPP funds in 2020, as well as a $7,000 credit per worker per quarter in the first half of 2021. Jimmy Christianson stated that this was a huge deal for construction companies and employees to help manage the continuing uncertainty that is still happening.


2. State transportation funding

This includes $10 billion earmarked for state DOT's, many of which saw their funding decline in 2020. This will provide relief for road and other civil builders who have increasingly felt the impact of stalled projects.


"It will help mitigate the impact of bid-letting delays and project cancellations that we saw in 2020 throughout the country. And the fact that it's dedicated funding means that states can't use it for other things."

Vice president of government relations at AGCA | Jimmy Christianson


3. School Construction

The package includes $82 billion for education, at least some of which can be used for construction and renovations post-COVID-19, when students return en masse to classrooms.

Christianson stated that in the more significant construction category, this pertains to HVAC replacement and expansion also. Bigger classrooms will be needed to have more spacing between kids, more classrooms and auxiliary facilities will need to be set up to deal with social distancing issues.


4. Waterfront infrastructure construction

The $10 billion Water Resources Development Act, which is in the package authorizes federal funding for infrastructure projects to improve America's ports, harbors and inland waterways and will be implemented via the U.S. Army Corp of Engineers.

Christianson stated that this will help ports expand their operations and help with harbor maintenance and dredging, as well as construction in and around ports. 


5. Broadband infrastructure

This includes $7 billion dedicated to expanding broadband internet infrastructure and access, particularly to rural communities. About $3.3 billion of that is earmarked for programs that are actually turning dirt. This is a good opportunity for utility contractors according to Christianson.


6. Clean energy

$35 billion will be given to fund wind, solar and other clean energy projects according to the New York Times. AECOM, Fluor and Jacobs all mentioned environmental initiatives or expanded practices on recent earnings calls, as well as increased interest from clients. Christianson said market forces have led to a heightened focus on environmental projects recently.


"A lot of our members do utility-scale solar, and this legislation brings a lot more certainty to the renewable energy market that we've been hoping for. You're also seeing an interest from owners, public and private, who want to do their part on environmentally conscious construction, as well as from the shareholders of these companies."

Vice president of government relations at AGCA | Jimmy Christianson


7. Military housing

The National Defense Authorization Act includes about $11.8 billion for military construction, military family housing and work associated with base realignment and closure rounds. 


8. Tax credits and other incentives

This includes a five year extension of the $25 billion New Markets Tax Credit which incentivizes community development and economic growth through the use of tax credits that attract private investment to distressed communities.

It also expands the Low-Income Housing Tax Credit, as well as the 179D Energy Efficiency Tax Deduction, which allows owners of new or existing buildings to deduct $180 per square foot for energy-efficient components or improvements. This should give a lot of good incentives for public and private construction.



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