RALEIGH — The State Board of Elections dismissed Thursday a complaint against one of the most powerful interest groups in North Carolina politics over requiring its members to give extra dues while they fought local votes over raising the land sales tax.
Following more than two hours of arguments and testimony, board members determined the 38,000-member North Carolina Association of Realtors didn’t break the law when it required up to $75 extra from each member in 2008.
The proceeds went to an “Issues Mobilization Fund” to extend the association’s efforts to oppose county referenda to raise the land transfer tax. All of the more than 20 county ballot measures have failed.
Becky Harper, a Wake County real estate agent who filed the complaint, argued it was unlawful for the association to demand extra dues from her and other Realtors to oppose the land transaction tax. Her lawyer cited a law preventing referendum committees from seeking money by threat of “job discrimination or financial reprisals.”
The board determined the law didn’t apply to the association in part because defeating the referenda isn’t the association’s main purpose. But board Chairman Larry Leake criticized the association for denying people access to a key home buying and selling database if they didn’t pay the special assessment because they would lose their association membership.
“If in fact you were going to kick this woman out for not making an assessment payment for this one issue, that’s morally wrong,” Leake said, but “I’m not sure that we have under this specific fact situation a legal peg to hang our hat to address this moral wrong.”
The dues collected from the special assessment helped replenish the association’s mobilization fund that had already spent more than $1 million since fall 2007 opposing the referenda. Four counties held votes after the assessment notice was filed in July 2008.
According to records it filed, the association also spent nearly $900,000 earlier in 2007 as it lobbied and generated grass-roots opposition to the Legislature’s proposal to give counties the authority, with local voter approval, to raise the transfer tax on land transactions from the current 0.2 percent of the land’s value to 0.6 percent. The change would increase the transfer tax by $800 on a $200,000 home. Counties would keep the extra revenues.
When that effort failed, the association focused on the county-by-county votes.
John Wallace, an attorney for the Realtors, said the Issues Mobilization Fund had been around for nearly 20 years, and had been used for many other advocacy efforts beside spending money on land transfer tax opposition.
He said the association’s giving to local referenda committees during 2007 and 2008 comprised about 5 percent of the group’s total financial activity during the period, hardly enough to identify the association as solely focused on referenda.
The Realtors group is a trade association formed under a section of the federal tax code that depends on membership dues to operate, Wallace said.
“Those dues were used to advocate in the interest of the membership as the membership had determined its interest to be,” he said.
Michael Weisel, Harper’s attorney, said it was clear that the 2008 assessment was designed to pay for the fund’s primary goal at the time — to pay for local referendum efforts. Harper testified that if she didn’t pay the extra dues she would have been denied access to the “Multiple Listing Service,” a local database that allows Realtors to share information between potential buyers and sellers.
“I can’t make a living without being a member of this association,” Harper said. She argued the rank-and-file members didn’t know about the assessment until after the state leadership decided to approve it.
Rick Zechini, the association’s director of government relations, disagreed, saying the “decisions were made through a process that was very open, deliberate and time-consuming.”
Leake suggested that the state Realtors’ board reconsider whether to force members to give to this kind of advocacy. Zechini said it was too early to comment on how the group would respond.
Harper, who has since been elected to the Raleigh Realtors’ board, said she was pleased with Leake’s words and believes dues for efforts like defeating referenda should be voluntary.
The association also flexed its political muscles during the 2007-08 election cycle by giving more than $830,000 in contributions to candidates through its political action committee, according to Weisel.
