The National Association of Realtors has always been a lobbying powerhouse. The association currently ranks fourth on the Center for Responsive Government’s list of “Heavy Hitters,” coming in just behind AT&T. But over the last several years, it ramped up its spending to record amounts.
In 2006, when the housing market was booming, NAR spent $6.63 million on lobbying. A year later, that doubled to $13.86 million. In 2008, the year of the financial crisis, the association spent $17.34 million, which rose $19.48 million in 2009 before dropping slightly in 2010 to $17.58 million. NAR’s lobbying expenditures hit record-breaking numbers in 2011 with $22.36 million. As of its last filing on April 30, NAR had spent $6.08 million so far in 2012.
This spending ramp-up comes as NAR’s membership has seen reductions of more than 25% in the wake of a prolonged slump in housing. In 2006, the association had 1.36 million members, but membership has dropped every year since then, and now sits at 1.01 million.
But NAR said its spending is not explained by its need to pack a bigger punch on the national level. After all, it’s already pretty influential. Instead, NAR is focusing its efforts on state and local advocacy, said spokesman Sara Wiskerchen, in explaining the increased spending of recent years.
“NAR’s federal lobbying efforts are already adequate so the increase in lobbying dollars wasn’t solely for national efforts. The funds were largely provided to local and state Realtor associations in support of local candidates and issue campaigns, and for other political advocacy needs,” she said.
Wiskerchen was quick to point out the difference between “advocacy” and “lobbying,” saying that even though the funds are classified as lobbying funds, that is not (by definition) what NAR is doing with the money.
The line between advocacy and lobbying is thin, but it exists.
Wiskerchen explained that the Lobbying Disclosure Act allows entities subject to the LDA’s section 162(e) of the Internal Revenue Code, which bars taxpayers from taking business expense deductions for lobbying costs, to use the IRC definitions for reporting their LDA lobbying expenditures.
The IRC and the LDA do not define lobbying in the same way. Under the IRC’s rules, lobbying is direct communication to legislators (or urging the public to contact legislators) to promote specific legislation. Under these guidelines, advocacy is everything that does not involve direct communication with a legislator, or anything that advocates for general policy actions.
Due to the differences, the dollar figure reported by NAR under the LDA includes both lobbying and advocacy. NAR’s advocacy programs are the support offered to state and local associations through the My Realtor Party website, which Wiskerchen said “allows the state and local associations of Realtors to custom build their outreach programs.”
THE NEW DIRECTION
After the Supreme Court released its ruling in Citizens United, which made it possible for corporations and unions to make unlimited political expenditures, called “soft money,” NAR decided it needed to change its lobbying and advocacy tactics.
Bill Malkasian, vice president of political strategic planning for NAR, said this threatened the amount of clout Realtors would have in Washington and on a local level.
“We’re really good at raising personal money, which is hard money, and then all of a sudden this changed course and said we could start raising corporate money,” he said. “We weren’t very good at that at the time.”
To address its limitations, the organization launched the “Political Survival Initiative” in March 2011. This called for a mandatory membership dues increase of $40 for 2012 to fund political advocacy. With a base of more than 1 million members, the added fee raised $40.4 million with 50% going to state boards and 50% to local associations.
A presentation introducing the plan at the 2011 Association Executives Institute meeting in Dallas called for more attention paid to local and state races by combining NAR funds with local and state lobbying funds to create early relationships with politicians in order to “shape the political make-up of state or local governing bodies.”
This program eventually morphed into the “My Realtor Party,” a website that launched on Aug. 30 of last year. Malkasian was placed in charge of the program, and said it was “a long time coming.”
Describing it as a “supersize” of programs that were already in place, Malkasian said the program was meant to give tools to local and state organizations in order to assist in advocacy efforts.
These include research and targeting tools, such as opinion polling, focus groups and modeling; methods for collecting data, such as voter lists; and outreach tools such as direct mail, phone banking and email lists. All of these are now provided at no cost or reduced cost to Realtor associations at a state and local level.
While these tools are used to “educate the public,” said Malkasian, the new program also allows for independent expenditures from the new funds. These expenditures allow My Realtor Party to conduct operations in support of or against a candidate without the candidate’s knowledge.
“This is the huge shift here,” said Malkasian. “The biggest shift of what this program is all about the substantial amount of money directed toward issue advocacy or candidate advocacy.”
Malkasian said the advocacy funds get forwarded automatically but additional funding and outreach tools available are on request.
“They can have access to the rest of the programs that (their dues) are paying for, but they have to be aware and be aggressive and ask,” Malkasian said. “The goal of this program was to put out more resources across the country to raise all the boats.”
TWO DIFFERENT TAKES
Malkasian is going from state to state implementing the program, and at the time this article was written the program had rolled out in 46 states. Two of those states, Texas and Michigan, had very different impressions of the program and its potential outcomes.
Mike Barnett, director of political affairs for the Texas Association of Realtors, said the Texas group plans to use every tool available to it under the new program.
“We plan to use some of that funding to communicate with elected officials about the importance of affordable housing,” he said. “If indeed our state is going to double in population in the next 30 or 40 years as the demographers say, then not only do we have to have core structures available, people also have to have a place to live.”
He said the new tools available to the Texas association will help it be more effective in campaigning for candidates on a local and state level.
“This time around we are using some of that funding to be able to push out to our membership what we call opportunity races. We’ll use some of that money to ensure that Realtors know that the association is supporting a particular candidate in that race,” he said.
State and local NAR political support will range from assisting local Realtor associations in city council races to supporting candidates in state legislative races. Barnett said the added funds will help the association advocate on behalf of private property rights and homeowners across all levels of government.
Michigan, on the other hand, hasn’t seen that much of a change since the program rolled out there, said Robert Campau, vice president of public policy and legal affairs for the Michigan Association of Realtors.
“I see the possibility of it but no one has called me and offered a lot of money,” he said, noting that he doesn’t know how much more money Michigan will be given to support local candidates. He said much of what is being offered already existed and is now simply being “remarked and offered again.”
If and when the programs do become available in full, Campau said the association would use them to ensure that Michigan was moving forward in a positive direction for business.
“We’re coming out of a very difficult time in Michigan economically, so most of our issues are about tax issues and trying to make Michigan more competitive from a business standpoint,” he said. “We have to make Michigan more competitive in business in order to get people moving here.”
MANDATORY FEES
The $40 increase was the first time NAR made contributions to political action mandatory. Previously, all money given to NAR’s political fund had been voluntary. The rise in dues created a stir after the announcement, with Realtors like John Wake of HomeSmart Realty in Scottsdale, Ariz., speaking out against it.
“My immediate reaction was that the lobbyists are in control of NAR,” said Wake, who said he thinks NAR’s lobbyists have done a lot to hurt the market, rather than help it.
Wake said he resents the idea that the states can’t lobby by themselves without the help of the national organization.
“For example in Arizona, these guys do a spectacular job on lobbying, they don’t need the money,” he said. “Why do we need the national association getting involved in local issues?”
Wake said he is happy to donate voluntarily to issues he agrees with, but is concerned about the association donating in support of a candidate he may not support himself.
“You’re out of business if you aren’t a (NAR-sanctioned) Realtor. I had no choice but to pay my dues, even if I disagreed with the increase,” he said, calling the move a “heavy-handed” act by NAR.
Other Realtors, like Toby Boyce of Triumph Realty in Delaware, Ohio, think the increase was necessary. Boyce said Citizens United “forced NAR’s hand” with the increase, and said he supports the move.
“Bluntly put, am I happy about it personally? Of course not. Nobody wants to outlay more money from a personal standpoint,” said Boyce. “It’s a lobbyist organization, and people don’t like to say that, but that’s what I want them to do. I want them to make this a better market for people to buy and sell a house.”
REVIEWING EXPENDITURES
While NAR attributes the jump in spending to state and local advocacy, Wiskerchen said it “isn’t possible to provide any breakdowns” of how much money has been spent. The program was only officially formalized last year, and so none of the money was flagged as part of the program. Additionally, the components of the program were not posted as a single line item in the budget, and were paid out of the budgets of multiple NAR divisions.
“Therefore, sifting through hundreds of line items could take hours, and maybe days, and just isn’t possible,” Wiskerchen said.
One place the money can be tracked back to, however, is NAR’s donations to its own super political action committee, the National Association of Realtors Congressional Fund. Since the super PAC was started last year, NAR has donated more than $2 million.
According to Wiskerchen, the Super PAC is funded only by NAR and is not accepting donations from other entities, although it could in the future.
Because the Citizens United ruling allowed for unlimited corporate spending on indirect support of candidates, NAR can donate money — including money that comes from dues — to its own Super PAC. Super PACs can only give money in support of or against candidates without their knowledge, and cannot make direct campaign donations.
So, Realtors like Wake, who are concerned their dues might go to support candidates they don’t support, may not be that far off.
At the time this article was written, the NAR Congressional Fund had only given money to one candidate — Gary Miller, a Republican House member serving California’s 42nd district. To date, the Super PAC has donated just shy of $322,000 to his campaign.
Chris Marsh, Miller’s campaign director, said he could not comment on the motive of NAR’s contribution because the donations were given as independent expenditures and the campaign had no knowledge of how the money was being spent, though he sad NAR was one of the first endorsements Miller had received.
Miller’s relationship with NAR, however, is well documented.
In May, Miller introduced a bill called “Saving Taxpayers from Unnecessary GSE Bulk Sale Programs Act of 2012,” which would stop the Federal Housing Finance Agency from implementing its pilot REO-to-rental program in California, something that NAR opposes because it would lessen the amount of the for-sale inventory for homebuyers, as these homes would be transitioned into rentals.
“Rep. Miller has been a great supporter of Realtors and a champion of homeownership over the years, and he has a strong voting record on private property rights and real estate issues, which is why we are supporting him in his re-election race,” said Wiskerchen, who said she “couldn’t say for certain” whether the Super PAC’s money would be used in support of any other candidates, noting that it was still early in the election cycle.
While the new programs and the Super PAC are supporting candidates through direct expenditures, NAR does have an outlet to give directly to campaigns — the National Association of Realtors Political Action Committee.
Wiskerchen said that no dues paid by Realtors go to R-PAC, and all donations by Realtors are voluntary. Voluntary donations are the only donations that can legally be given to PACs under federal election law.
While the PAC can make donations of up to $5,000 to individual campaigns, it can also participate in independent expenditures. And it has, according to the Sunlight Foundation, an organization dedicated to government transparency through the digitizing of government records.
So far, R-PAC has given more than $883,000 in support of Gary Miller’s campaign, bringing the indirect funding of his campaign by the PAC and the Super PAC to more than $1.2 million through indirect and direct expenditures.
PARSING THE DIFFERENCES
Kathy Kiely, managing editor at the Sunlight Foundation, doesn’t see advocacy as being much different from lobbying.
“Most people would say if it looks like a duck, if it walks like a duck. For most people it’s one in the same,” she said. “They may have some technical distinction, but to me if you are going up to a state legislature and talking to lawmakers or their aides, that’s a way of exercising influence. To me, influence is influence.”
The portion of the law that differentiates advocacy from lobbying was written in 1995. Howard Marlowe, president of the American League of Lobbyists, said even though it doesn’t seem like 1995 was that long ago, the law needs updating.
“Back then, grassroots and grasstops movements were just getting started. We didn’t have social media, or much of anything that most organizations use to do their advocacy, so times have changed and the law is outdated,” he said.
The ALL, though a lobbying organization, exists to create a single definition of lobbying, which Marlowe said would include the type of advocacy singled out by NAR.
Wiskerchen reiterated that the advocacy done by NAR is not lobbying by definition, and said that the decision was made to go forward with the program because “legislators and regulators at all levels of government are introducing proposals that could have far-reaching negative impact on the business of Realtors and threaten to transform, for generations, Americans’ ability to buy property,” she said.
“NAR’s 800+ member board of directors voted in favor of the Realtor Party Initiative because they believed it’s more important than ever that Realtors speak up and ensure that public policies, and our elected and appointed officials, support the recovery of the housing market and economy,” Wiskerchen said, “and make sure that the American Dream of homeownership is protected for current and future generations.”
