The Capitol

WASHINGTON, DC–It was a long night but the results of the midterm elections are clear: the Democrats have retaken the House of Representatives while the Republicans have expanded their hold on the Senate. We have, in short, a divided government in Washington, DC, with all its benefits and drawbacks.

The bottom line: a Democratic House and a Republican Senate probably means little major legislation will occur.

A Good Run So Far

It should be noted that real estate has had a successful run in Congress, especially in the last couple of years. The Tax Cuts and Jobs Act of 2017 is a case in point: among other things, it preserved the deduction for business interest, like kind exchanges and low income housing tax credits. It also established the new pass thru tax regime as well as the new Opportunity Zone program.

Deregulation Will Slow

That said, there was more the industry was hoping would be accomplished on the Hill that will likely not happen now, namely continued deregulation. Further loosening of Dodd Frank, environmental laws and tax cleanup issues had all been on the table before the election.

Testing Lab For Next Campaign

The House will probably become the center of anti-Trump activity–a sort of testing lab for the next campaign–which will mean major legislation is likely to be proposed that has little chance of going anywhere. One possibility: an attempt at GSE reform in the House Financial Services Committee. However the groundwork for action on this issue has not yet been done.

TRIA Needs to be Extended

There is one piece of must-pass legislation for the CRE industry that will require bipartisan support, though–the Terrorism Risk Insurance Act, which is set to expire at the end of 2020. This law impacts most business properties and is a key to transactions and refinancing. Without a doubt it has to be extended.