It was a case out of time. Cary real estate agent Becky Harper's complaint about the electioneering tactics of the N.C. Association of Realtors was filed in 2008, when property sales were booming and NCAR was throwing its weight around. In 2010, when the State Board of Elections finally got around to hearing Harper's case, real estate is in free fall, and thanks to the U.S. Supreme Court, so is any confidence in state laws as a curb on business spending in political campaigns.
In January, the Supreme Court ruled 5-4 that laws interfering with corporate political spending violate the free speech clause of the First Amendment. The ruling, in the case known as Citizens United, would appear to gut the North Carolina laws prohibiting corporate contributions to political candidates, though its exact effects are hotly debated.
Even before Citizens United, however, the spigot was open for business money to flow into North Carolina campaigns, as the NCAR case demonstrated. Testimony before the elections board Friday made it clear that the real estate industry conducted a statewide campaign against the land-transfer tax in 2007 and 2008. Every residential real estate agent in the state was required to contribute—the contributions were called dues—or be shut out of the industry.
Harper complained, saying political contributions should be voluntary, not mandated as a condition of her employment.
What NCAR did was "morally wrong," SBOE Chairman Larry Leake declared at Friday's hearing as fellow board members nodded. Wrong or not, the board voted 5-0 to dismiss Harper's complaint because state laws didn't protect her.
From the way Harper's hearing was conducted, it seemed Leake was trying to make a point to state lawmakers that, if Harper was unprotected before, after the Citizens United case, they are next.
In questioning John Wallace, NCAR's lawyer and a leading expert on elections law in the state, Leake underscored how the real estate industry pounded the transfer tax to death in 24 consecutive county referendum campaigns. What would happen, he asked, if in the 2012 campaign, NCAR set out to defeat a candidate for governor using mandatory "contributions"?
Wallace, at first, talked around the subject. "You don't want to answer," Leake said, smiling.
Wallace responded that Leake's question isn't answered by the existing statutes. "Citizens United," Wallace added, "raises the issue that it's no longer a question."
The parallels between NCAR's tactics and what a corporation might do in the post-Citizens United era are alarming, if less than direct.
NCAR, in theory, is a voluntary association for real estate agents. But because NCAR and its local affiliates own the Multiple Listing Service on which every residential agent (but not commercial agents) depends, not joining it is tantamount to losing your job.
MLS, Harper testified, "is like a hammer to a carpenter. You can't make a living without the MLS."
In 2007, when the General Assembly passed legislation allowing counties to levy a 0.4 percent tax on land sales, NCAR went to war against it, arguing that the tax would be added to the price of home sales.
Advocates of the transfer tax countered that, especially in fast-growing areas like the Triangle, real estate developers should help pay for the cost of growth, especially the new schools that are needed. At the time, Wake County, for example, stood to collect some $44 million annually in new taxes, which advocates said would offset higher property taxes for schools.
The '07 law required the counties to win voter approval, however. NCAR, according to the testimony last week, spent upward of $3.5 million over the next two years in the 24 local campaigns—including those in Orange and Chatham counties.
In all 24, the transfer-tax levy was defeated. Other counties, including Wake, watched the string of defeats and backed away. None of North Carolina's 100 counties enacted it.
To finance its campaign, NCAR hit its 40,000 members with a "special dues assessment" of $70 on top of their regular tithes, which, including MLS fees, came to about $800 a year. This was in addition to money members contributed voluntarily to the NCAR's political action committee.
Harper was not alone in complaining about it—hundreds of other agents did as well. Indeed, despite NCAR doing everything it could to stop her, including barring her from entering association offices, Harper was elected by her fellow Raleigh-area agents to the local Realtors board.
However, with their livelihood linked to their association memberships, dissident agents balked, but they couldn't quit.
With the dues payments, NCAR contributed funds to 24 separate campaign committees, one in each county that held a referendum. But Michael Weisel, Harper's attorney and, like Wallace, an elections law expert, established that the 24 committees were managed, and may have been totally controlled, from NCAR headquarters in Greensboro.
Local record keeping was too sketchy to prove NCAR's control, Weisel said, and NCAR wasn't required to file reports at the State Board of Elections office. But local committees often spent money before receiving it, he discovered, covering it with NCAR "loans" that were later replaced by contributions.
After Weisel displayed a chart of the money flows back and forth from Greensboro to the local committees (and to a "grassroots" organization, the "N.C. Homeowners Alliance," through which NCAR spent $909,770), the Board of Elections voted 5-0 to require that such local spending also be reported to the state board.
In four states, Weisel said, courts have determined that to tie "voluntary" association dues and access to MLS is an illegal restraint of trade. Harper said she'd be happy if similar rulings occurred in North Carolina but doesn't have the money to fight the issue in the courts.
It may not be necessary. In 2008, NCAR's leaders announced a plan to keep hitting the members with special dues assessments until its "issues fund" reached $10 million. But with the real estate collapse, those leaders have departed, and there have been no more assessments.
Following the hearing, NCAR's director of government relations, Rick Zechini, said the association's board will consider the outcome, and Leake's comment that what NCAR did was morally wrong, at its next meeting. He declined to predict what the board will do.
Corporations, too, are theoretically voluntary, for shareholders and employees. If they don't like the corporation's politics, the causes or candidates it supports or opposes, shareholders can sell; employees can quit.
But Citizens United underscores the financial power held by a handful of corporate officers and board members. That power is derived from the efforts of their shareholders and employees, who may—in the case of a multinational firm—number in the millions.
The officers make business decisions on their behalf every day. Now, they'll make political decisions for them too—just like NCAR did for Becky Harper.