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AGC Optimistic with COVID-19 Relief Package

Tuesday, January 5, 2021

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Stephen E. Sandherr, CEO of the Associated General Contractors of America, released a statement last month as the COVID-19 relief legislation passed through the United States House and Senate, noting that the measure should provide some help to the construction industry.

“The new coronavirus recovery measure announced today should provide some needed relief for a construction industry that is coping with project cancellations and job losses in most parts of the country,” he said.

“Most notably, the measure includes $10 billion in needed funding to help address the pandemic-induced shortfalls in state transportation revenues. This new funding should keep a number of road projects from getting canceled or delayed over the coming months. The measure also includes new funding for waterways, ports and other maritime facilities.”

In addition to the funding, though, the measure also reaffirmed the original Congressional intent that employers who utilized the Paycheck Protection Program loans will not be forced to pay more taxes as a result.

JTSorrell / Getty Images

Stephen E. Sandherr, CEO of the Associated General Contractors of America, released a statement last month as the COVID-19 relief legislation passed through the United States House and Senate, noting that the measure should provide some help to the construction industry.

“Given that demand for many types of commercial construction projects is likely to remain soft in 2021, the administration’s plan to tax firms for their forgiven loan amount would have cost many construction jobs. Instead, the new recovery measure will preserve many of the original benefits of the Paycheck Protection Program, something our association has worked aggressively to ensure.”

AGC and PPP

Sandherr and the AGC have been vocal critics of the Small Business Administration and the PPP.

In April, the U.S. Treasury Department released a clarification on the program just days after AGC wrote a letter noting that the loan guidance had appeared to exclude many construction firms.

The Administration released an interim final rule on April 2 for the PPP, that stated that to qualify, businesses must have 500 or fewer employees and fall below the agency’s small business size standards to qualify.

The standard in question revolves around small size standards (as defined in section 3 of the Small Business Act, 15 U.S.C. 632). For construction businesses, this is generally determined by an average annual income threshold, not a number of employees threshold.

The AGC responded with the initial guidelines on April 5, with Sandherr saying:

“This error appears to severely undermine the purpose of the new loan program by endangering the survival of many construction firms—the vast majority of which are family-owned businesses—that Congress intended to qualify for the program. As a result, tens of thousands of construction professionals will be forced to suffer new economic hardships because agency officials are misstating the law and subsequent eligibility guidance from the U.S. Department of the Treasury.”

On April 8, the Treasury issued a clarification in the form of a Q&A. The items listed included:

  • Question: Does my business have to qualify as a small business concern (as defined in section 3 of the Small Business Act, 15 U.S.C. 632) in order to participate in the PPP?
  • Answer: No. In addition to small business concerns, a business is eligible for a PPP loan if the business has 500 or fewer employees whose principal place of residence is in the United States, or the business meets the SBA employee-based size standards for the industry in which it operates (if applicable).

Sandherr appeared pleased with the result at the time saying that administration officials “did the right thing.”

More recently, at the beginning of December, the AGC announced that it had filed a lawsuit against the Small Business Administration and the Office of Management and Budget in order to block a questionnaire that’s now being used to reassess whether companies were eligible for PPP loans.

In addition to suggesting that the questionnaire is unlawful to begin with, the AGC is also asking for the courts to restrict the use of the information that the questionnaire generates until the SBA makes it available to the public and publishes revisions.

The suit was filed Dec. 8 in the United States District Court for the District of Columbia.

“The administration has every right, and obligation, to ensure businesses were eligible to apply for and receive the relief loans,” said Sandherr at the time. “But they do not have the right to use a secretly crafted form to gather unprecedented amounts of proprietary information that has little or nothing to do with the economic uncertainty that led businesses to apply for the loans in the first place.”

In the complaint, the AGC charges that the way the form was created violates the Paperwork Reduction Act and the Administrative Procedures Act. The AGC is “requesting the court to declare that the questionnaire is arbitrary and capricious, and to declare that the SBA cannot lawfully use the information that the form generates to find a company ineligible for a PPP loan or deny a company’s application for forgiveness of its loan.”

AGC says that the two agencies disregarded the legally mandated process for developing such a questionnaire, mainly that it wasn’t released for a 60-day public comment period and that the two arbitrarily put an emergency label on the survey to bypass the collection process.

The association also noted that the CARES Act (which established the PPP program) only required loan applicants to make a “good faith certification that the uncertainty of current economic conditions makes necessary the loan request….”

The new form attempts to set a means test, a revenue reduction test and a liquidity test that Congress never contemplated, and it focuses on later events that few companies could have predicted when applying, according to AGC.

“Resorting to a secret form that disregards Congressional intent and retroactively changes the criteria for a loan is not due diligence; it is unlawful and needs to stop before employers are irrevocably harmed,” Sandherr added.

AGC and Industry

Throughout the COVID-19 pandemic, the AGC has been releasing employment reports every few weeks, reporting a modest increase of 27,000 jobs for November numbers (released last month).

Officials said that the gains are continuing in the residential categories, trailed by nonresidential. While employment climbed to 7.36 million (an increase of .4% over October), the AGC warned that pandemic-induced cancellations and looming bills for the Paycheck Protection Program could put a halt to progress.

“The construction industry recovered a bit in November, but the future is far from certain for the industry,” said Ken Simonson, the association’s Chief Economist. “The nonresidential building and infrastructure segments are likely to shed jobs again amid an increase in coronavirus case counts unless Congress acts quickly to provide needed relief.”

However, employment in the sector remains down by 279,000 or 3.7% since the most recent peak in February. The pandemic initially triggered widespread project cancellations and interruptions that resulted in the loss of 1.1 million construction jobs in March and April.

   

Tagged categories: Associated General Contractors (AGC); Business matters; COVID-19; Good Technical Practice; Government; NA; North America; Small Business Administration

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