A November sweep of Congress and the White House by Democrats would have dramatic effects on affordable housing and community development, according to a special report by national public accounting and consulting firm Novogradac.
“Blue Wave Effects: What a Democratic Sweep Could Mean for Affordable Housing, Community Development, Renewable Energy and Historic Preservation” examines the 2020 general election and the likely effects in 2021 and beyond if Democrats take control of the House, Senate, and White House.
“It’s clear that an electoral sweep by the Democratic Party would make it far more likely that community development tax incentives could be enhanced and expanded,” says Michael J. Novogradac, managing partner of Novogradac and the report’s lead author. “However, there are complicating factors. Which Democrats make up a Senate majority would have an impact on what type of legislation could pass. Significant regulatory policies and appropriations levels would change if Democrats controlled the House, Senate, and White House. This report examines what we might expect and looks at many of the factors that would play a role in that scenario.”
Provisions relating to the low-income housing tax credit, New Markets Tax Credit, and other tax incentives could be attached to early Democratic legislation if there is a sweep, with expansion or enactment of new provisions coming as early as 2021, according to Novogradac in a blog post.
“However, a push by Biden and the Democrats on the Supreme Court could result in tremendous Republican resistance, possibly delaying legislative action,” he says.
Novogradac notes that there are 12 close Senate races, of which Democrats need to win six for a majority. Of those 12 seats, 10 are currently held by Republicans.
“The outcome of those races would determine some tipping-point Democratic senators,” he writes. “There are also five more incumbents (Joe Manchin, D-W.Va., Kyrsten Sinema, D-Ariz., Mark Warner, D-Va., John Tester, D-Mont., and Angus King, I-Maine) who would be crucial for Biden to keep on his side to pass difficult legislation.”
In addition, Democratic presidential candidate Joe Biden has called for increasing the corporate tax rate, a move that could potentially lead to higher tax credit equity pricing.