WASHINGTON, DC-To hear the political pundits tell it, the nationalmost doesn’t have to go to the polls today, at least as faras the House of Representatives is concerned. That, without adoubt, will be shifting to Republican rule--the only question beingby how wide of a margin. The Senate is less set in stone, with acautious consensus believing it will very narrowly stay underDemocrat control.

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Even if it does, though, the practical effect is still the same:political gridlock for the next two years. Even if Republicans canpass thelegislation they are seeking, President Barack Obamawill veto the laws he finds most offensive.

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Still, for the commercial real estate space it is a mistake todismiss the political factor until the next presidential election.There is much that the Republicans--as well as theadministration--can do outside a straightforward piece oflegislation, starting with the lame duck session of Congress.

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If carried interest is going to squeak by into law, it will beduring the lame duck session, says Real Estate Roundtable CEO JeffDeBoer. “We plan to be very vigilant in talking with members ofCongress and continuing to explain why this is a bad policy,” hetells GlobeSt.com.

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Once the next Congress starts, DeBoer says, it is less likelythat carried interest will be passed into law. “But we don’t thinkthe issue will be completely off the table in January,” he adds.“In fact, the entire tax code will be up for review over the nextfew years.”

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On the other hand, DeBoer says, some tax provisions the industry has been lobbying formight well come to pass during the lame duck session, such as theForeign Investment in Real Property Tax Act. “We could seeburdens on local financial institutions eased and positive benefitsfor the economy pushed forward if something like this were movedacross the finish line,” he says.

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The biggest--and perhaps most subtle--impact shift to Republicanrule will be in their influence over rule making andappropriations. Unable to outright recall legislation that has beenpassed in this Congress--namely the Dodd-Frank financial overhauland the healthcare act--they will instead work to limit theirreach. “Most of Dodd-Frank allows for a tremendous amount offlexibility by regulators, so you can see how big the impact of anew Congress will be,” says one industry executive who did not wishto be identified.

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One area that is likely to see a revisit is the 5%loan-retention provision in the new securitization rules, thisperson tells
GlobeSt.com. “Most of the Republicans werepushing for more direct underwriting standards as opposed to theskin in the game provision. So we will see pressure off the 5%retention.”

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Finally, Republicans are likely to stem the flow of additionalfunding to many business initiatives, predicts Mario Iglesias, acommercial real estate attorney and a partner at Roetzel &Andress in Ft. Lauderdale, FL. “Thus far, there have beensignificant federal stimulus funds made available toward certainactivities that lead to improvement in commercial real estate, suchas funds for green construction,” he says. “This type of stimulusfunding will slow to a trickle if the House changes hands.”

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