Not So Realfast

Realfast, Inc., one of NCAR's for-profit subsidiaries, hit a snag in corporate filings with the NC Secretary of State's Office. The most recent Annual Report submitted 8/12/2009 signed by Tim Kent as CEO of the company was rejected 9/21/2009. Previous filed reports had been signed by William DePriest as CEO of the company, most recently on 3/11/08. The likely explanation for the rejection is that no amended report was filed confirming Kent's replacement of DePriest as CEO of Realfast. With Kent's imminent departure from NCAR the filing status will likely await the appointment of yet another CEO.

NCAR Numbers Update

NCAR membership numbers are on the decline again after a brief but mediocre summer rally since the 2009 low of 36,696 in March. Membership for November stood at 36,895 down 194 since October and, down 4,149 since the November 2008 roll of 41,044. If the same monthly drop occurs in December the year-end membership will reach a new 2009 low of 36,701. Membership in NCAR peaked in November 2007 at 43,569 which is 6,674 higher than in November 2009.

NCAR had expected to shed some members in 2009 due to the imposition of a mandatory special assessment for its Issues Mobilization Fund. NCAR projected a leaner roll of about 39,000 members in early 2009 but did not anticipate a drop to below 37,000. NCAR responded to the revenue loss of approximately $200,000 earlier in the year with about $300,000 in budget cuts including a salary freeze and the elimination of 3.5 full time positions.

RPAC fundraising has been down, and not just because of the decline in membership. The mandatory assessment seems to have supressed the PAC revenue. The NC RPAC mid-year 2009 contribution rate averages about $4.99 per member compared to about $6.60 per member in the same period in 2007
The mid-year total for individual contributions in 2009 was $184,026
The mid-year total for individual contributions in 2007 was $280,788 (a comparable period)

By mid year 2009 RPAC had $598,570 cash on hand. Meanwhile other numbers for FY2008 gathered from various sources appear to be:

NC Homeowners Alliance (527) / Issues Mobilization Fund FY2008 report
$1,846,876 Special Assessment revenue
     $217,964 Issues Mobilization fee revenue
$2,064,840 Total Issues Mobilization Fund revenue
     $569,769 Total Expenses (includes apparent prior debt of $151,857))
$1,495,071 Seems to be the account balance for FY2008 for IMF

NCAR Governmental Affairs FY2008 report
$788,270 Total Expenses (includes $608,464 Lobbying Expense)

Realtors Gloat on Demise of Union County School Funding

The NC Court of Appeals ruled last week that Union County's Adequate Public Facilities Ordinance (APFO) was in effect imposing unauthorized Impact Fees.

Defendant may not use the APFO to obtain indirectly the payment of what amounts to an impact fee given that defendant lacks the authority to impose school impact fees directly. Therefore, because our Constitution places the duty to fund public schools on the General Assembly and local governments and because the General Assembly has neither expressly nor impliedly authorized defendant to shift that duty using subdivision ordinances that impose fees or use similar devices upon developers of new construction, we hold that defendant’s adoption of an APFO that includes a VMP and similar measures was in excess of its statutory authority.

NC Realtors are taking credit for a "great victory for the real estate community" but don't really have any better ways to fund the construction of schools to maintain and improve property values in the communities they serve.

Leading Builders of America

This just in:

Leading Builders is a new trade association of builders (independent from NAHB). Members include: Beazer Homes, The Drees Companies, K. Hovnanian Homes, K B Home, Lennar, M/I Homes, MDC, Meritage Homes, Pulte Homes, Ryland Homes, Shea Homes, Taylor Morrison, Toll Brothers, David Weekley Homes and Weyerhaeuser Realty.

Big Builders Split from NAHB

According to Roll Call:

After a bitter fight with the National Association of Home Builders, a breakaway group of 16 of the industry’s largest builders has decided to form its own trade association. The new entity, called Leading Builders of America, is still in the early stages of formation.

Update: This rift had been building for some time according to the Housing Chronicles blog. It last came to a head back in March 2009 when large builders threatened to split from NAHB which they felt was not lobbying in their best interests especially with respect to tax treatment of net operating losses. This drama, which temporarily abated, was documented by the HousingCrisis.com website in a series of posts in March:
• When the Dust-up Settles
• Won't You Please Come to Chicago?
• Big Home Builders vs. NAHB Brush-up Update
• Home Builder Trade Group Goes Public, or Rather, Goes at Its Public Members

Year in pReview

When the narrative of NCAR 2009 is written watch for the following clues:

The time has never been better to be a federal lobbyist. http://bit.ly/1lC2ZR

Source: Twitter

Financial crises created by the mismanagement at NCAR necessitating more member involvement in the Service Corp and Realfast

Source: WRAR/MLS

“Negative Campaigning: Is Negative the New Positive?” This session will focus on the delicate art of going negative.

Source: PRLog

Kent Leaving NCAR

According to the Raleigh News&Observer's Under the Dome, Tim Kent, Executive Director of NCAR is leaving the organization at the end of this year. Story: Kent to leave Realtor group

Shall We Gdansk? A Tale of Renewal

Remember Renew Raleigh, the real estate and home building Astroturf outfit? Seems that Renew Raleigh didn't renew RenewRaleigh.org and the URL now displays the content of a Polish blog.

Biting The Hand That Feeds

Not content with government help in the form of an $8,000 first-time homebuyers tax credit and a property tax break for homebuilders' unsold inventory which will have a negative impact of $40-45 million on local government revenues, the Triangle Community Coalition (an organization of realtors and homebuilders) is begging for funds in order to bite the hand that feeds, according to a recent letter to supporters:

Dear Friends of the Triangle Community Coalition,

I am coming to you today with hat in hand. The TCC is in great need. As our political environment is showing the need for our organization every single day, our reserves are dwindling. I do not want to waste your time with a recollection of how hard times are right now. As a business leader in this community, you know what it is like better than anyone. Unfortunately, politics carry on even in the most difficult of economic times and right now we need to be more vigilant than ever.

We cannot afford to ignore politics while we try and stay in business. If we do, then we are increasing our chances of being out of business tomorrow. Every governmental agency is out there is looking for ways to raise revenues while we spend countless nights trying to figure out where to put the few dollars we have to spend.

I'd like you to add the TCC as one of your choices for advertising. Sponsorship of one of the upcoming TCC programs will help your business in more ways than one. You will get all the advertising we can possibly get for your money and it will help our organization help take care of the politics, while you take care of your business.

With sponsorship money tight for everyone, TCC has taken a huge hit. We are committed to being relevant to your business and politics in the Triangle. We are planning on holding our two signature events: the Candidate School (July 30) and the Political Pig Pickin'(August 27). We also have a strong programs committee that has been coordinating well attended Lunch & Learn events.

If you can commit to a sponsorship for any of these events, please contact Charlene at ********@tricc.org or visit our website at www.tricc.org for more information. Some events are time sensitive, so please pledge a sponsorship as soon as possible so that we can provide you maximum exposure.

Thank you for your time and considerations,

Laurie Donofrio
2009 TCC Chairman

Update: The sponsorship solicitation email was sent to multiple TCC Members and "Triangle Business Leaders". The email was shared by a non-member "Triangle Business Leader" recipient.

To: undisclosed-recipients
Subject: TCC- Request to Members/Triangle Business Leaders

Builders Make Great Case For Transfer Tax

It is generally accepted that the housing bubble precipitated the current recession. Easy access to money and low interest rates fueled housing inflation that made housing speculation profitable without growth in the underlying economy. In 2007 the Chief Executive of the National Association of Homebuilders acknowledged that overbuilding during the boom years was a factor in the housing meltdown.

That same year NC Realtors and Homebuilders fought tooth and nail at the Legislature to prevent counties from having a transfer tax option to pay for the infrastructure demanded by housing growth. Although unsuccessful at the Legislature in 2007 they have since spent millions to defeat transfer tax proposals at the polls in local referendums.

Proponents of the transfer tax argue that it relieves some of the burden of property tax by deferring it until a sale when cash flow is available, especially for existing homeowners on fixed incomes with over-inflated home values. Realtors and Homebuilders argued against it saying "Fight the Home Tax - It's a Bad Idea". Now faced with unsold inventories of speculatively built houses NC Homebuilders have turned to the Legislature for relief from "some of the burden of property tax by deferring it until a sale when cash flow is available."

House Bill 852, "Defer Tax on Builders' Inventory", has sailed quietly through the House, 106 votes to 8, and through committees, and is calendered for a Senate vote Wednesday July 8th, with little opposition expected. In fiscal years 2010-11 and 2011-12 combined this bill is projected to have a negative effect on county and municipal revenues of $40-$45 million.

"A builder may defer the portion of tax imposed on real property that represents the increase in value of the property attributable solely to improvements resulting from the construction by the builder of a residence on the property."

Homeowners will find no such relief and local governments will have to cut services or raise revenues to make up the $40-$45 million shortfall. Realtors and Homebuilders have argued that taxing the equity in homes is a bad idea but now they argue that "It's a Good Idea" when it comes to builders who overbuilt in the boom years straining infrastructure and local revenue streams. The NC Homebuilders make a great case for the transfer tax.

NCAR Loses 6,873 Members Since 2007

Enrollment in the North Carolina Association of Realtors (NCAR) continued to dive in March 2009, as 1,062 members dropped out during the month, according to data from the National Association of Realtors (NAR). 23 states/territories saw a slight increase in membership. While five of the 10 largest chapters saw an increase in membership, North Carolina, eight in size, saw a decrease of 2.81% in March

Virginia, Georgia and South Carolina all added members in January 2009. The NCAR membership roll as of 2/28/2009, is 36,696 - the lowest since April 2006. This is 2.81% below the February enrollment of 37,758 and 11.67% below the 2/29/2008 enrollment of 41,542 making for a 12 month loss of 4,846 members.

Membership in NCAR peaked in November 2007 at 43,569 and the current roll of 36,696 represents a loss of 6,873 members or a 15.77% decline since then.

NCAR Loses 857 Members in February

Enrollment in the North Carolina Association of Realtors (NCAR) took another dive in February 2009, shedding 857 members, according to data from the National Association of Realtors (NAR). Virginia, Georgia and South Carolina all added members in January 2009. The NCAR membership roll of 37,758 as of 2/28/2009, is the lowest since June 2006. This is 2.22% below the January enrollment of 38,615 and 10.04% below the 2/29/2008 enrollment of 41,970 making for a 12 month loss of 4,212 members. Membership in NCAR peaked in November 2007 at 43,569 and the current roll of 37,758 represents a loss of 5,811 members or a 13.34% decline since then.

Gimme Gimme Gimme

In a letter last month to the Raleigh News & Observer, Julie Woodson of the NC Association of Realtors comes with Lexus cupholder in hand for a government handout of $15,000 per home sale which, by strange coincidence, is also the amount of a 6.0% commission on an average home price of $250,000.

NC Realtors have spent millions to stop a 0.4% transfer tax which would help local governments deal with growth by providing communities with services that add real value to real property, not the Ponzi style value of the housing bubble that got us into this economic mess.

It takes some nerve to ask for 15 times more than you’re willing to concede. If NC Realtors want government assistance and for "all parties to work together" they might stop wasting their members’ money attacking government in the first place.

NCAR Loses 1,573 Members in January

Enrollment in the North Carolina Association of Realtors (NCAR) took a steep dive in January 2009, shedding 1,573 members, according to data from the National Association of Realtors (NAR). The membership roll of 38,615 as of 1/31/2009, is the lowest since June 2006. This is 3.91% below the 2008 year end enrollment of 40,188 and 9.7% below the 1/31/2008 enrollment of 42,765 making for a 12 month loss of 4,150 members. Membership in NCAR peaked in November 2007 at 43,569 and the current roll of 38,615 represents a loss of 4,954 members or an 11.37% decline since then.

The decline in membership also represents a shrinking of the market for the products of NCAR's for-profit subsidiaries RealFast and RealServ.

Avery Recount Pending

Reports from Avery County suggest that official results from the 19 precincts may differ from the polled results on election night. Some numbers may have been misread sufficient to change the result. A recount has been expected given the slim margin in unofficial results in favor of the transfer tax. Official results to be released Tuesday may show majority with a slimmer margin opposed to the transfer tax. Either way a contentious recount is expected.

Update:

According to unofficial results revised today 2/9/09 by the State Board of Elections, with 19 of 19 precincts reporting the votes were 1,405 for and 1,437 against (49.44% for and 50.56% against). A total of 2,842 votes were counted out of 2,844 cast. Turnout was 22.39% of 12,700 registered voters.

On election night unofficial results by the State Board of Elections, with 19 of 19 precincts reported that votes were 1,434 for and 1,409 against (50.44% for and 49.56% against). A total of 2,843 votes were counted out of 2,845 cast. Turnout was 22.40% of 12,700 registered voters.

Update 2/10/09:

The numbers keep changing. The most recent revision shows 1,414 for 1,449 against, which is a margin of 35 to defeat the transfer tax. At 49.39% for 50.61% against the margin is still less than 1%

Avery County Transfer Tax Succeeds

It looks like the transfer tax referendum was approved in Avery County today.

According to the State Board of Elections, with 19 of 19 precincts reporting the votes were 1,434 for and 1,409 against (50.44% for and 49.56% against). A total of 2,843 votes were counted out of 2,845 cast. Turnout was 22.40% of 12,700 registered voters.

As the County Commissioners appear to have wanted this authority it is likely to be put into effect.

From the statutes authorizing the tax:

If the majority of those voting in a referendum held pursuant to this Article vote for the levy of the tax, the board of county commissioners may, by resolution and after 10 days' public notice, levy a local land transfer tax on instruments conveying interests in real property located in the county, up to a rate of four-tenths percent (0.4%), in increments of one-tenth percent (0.1%).

Realtor Political Stimulus Package

The North Carolina Association of Realtors (NCAR) reported spending $373,155 through the North Carolina Homeowners Alliance (NCHA) for direct mail services for 4 NC House seats, 4 NC Senate seats and 2 County Commissioner races in the 2008 election. The money went to Cornerstone Solutions & Communications according to a post-election report filed with the IRS.

Separate reports filed with the NC State Board of Elections (SBOE) by the NCHA show spending on direct mail services and on phone calls for for 4 NC Senate seats and only 3 House seats totalling $228,834. In one House race, District 41 in Wake County, NCHA spent $52,578 in negative campaigning against incumbent Ty Harrell and $4,995 in calls for his opponent Brian Gossage, a total of $57,574 for that seat.

It would appear that the balance of $144,321 was spent by the NCHA on County Commissioner races. However, the only known county (and referenced in IRS filings) was Wake County and the race known to have been targeted was in County District 4 where, despite the realtors' opposition, challenger Stan Norwalk successfully ran against incumbent Kenn Gardner.

The spending through NCHA was complemented by spending through other entities. In addition to direct contributions to candidates, the NC Realtors PAC reported to the SBOE a payment of $209,640 to Cornerstone Solutions & Communications 10/3/08 for "mail pieces". The Third Quarter report only shows spending through 10/18/08 which, for the 2007-08 election cycle, had amounted to $1,033,966. Spending through November 4th, election day, will not be known until 4th Quarter reports are filed at the end of this month.

NCAR Loses 3,154 Members in 2008

Membership in the North Carolina Association of Realtors (NCAR) continued to decline through the end of 2008, having peaked in 2007, according to data from the National Association of Realtors (NAR). The current membership roll of 40,188 as of 12/31/2008, is the lowest since October 2006. This is 7.28% below the 2007 year end enrollment of 43,342 and shows a loss of 3,154 members.

This is reflects a national decline in NAR membership which saw an average drop of 10.50% from 1,338,001 members to 1,197,529 being the lowest since July 2005 and showing a loss of 140,472 members since 12/31/2007. Membership in NAR peaked in October 2006 at 1,370,758. The only three territories that saw an increase in membership since 12/31/2007 were South Dakota (+2 members), North Dakota (+50) and Guam (+17).

The rate of growth in NCAR membership peaked in 2006 at 17% slowing to 5% in 2007 before turning negative for the first time in about 15 years. NCAR's membership decline of 7.28% closely matches Virginia's membership decline of 7.84%, and outperforms neighboring states: Tennessee declined 10.63%, South Carolina 10.72%, Georgia 20.06% (the greatest of any state) and Florida membership declined 15.14% since 12/31/2007.