Real estate industry anticipated battle

It planned defeat of tax for years

RALEIGH -- The real estate industry spent hundreds of thousands of dollars last year to oppose a proposed tax on the sale of property, what it called the "home tax." As it turns out, the industry had been saving up money for the expected battle for at least a decade.

"Our organization had the foresight years ago," said Mike Carpenter, executive vice president of the N.C. Home Builders Association. The real estate industry knew, he said, that when the time came to vote on such a tax, "we didn't have the time to raise the money we would have needed."

In a candid discussion Friday, Carpenter and Tim Kent, executive vice president of the N.C. Association of Realtors, discussed how a coalition of interests turned public sentiment against the idea. The keys, they said, were the money they saved up, the consultants they hired and a message they developed that resonated with would-be taxpayers.

The debate focused attention on the best way to pay for new schools, roads and other costs associated with the state's rapid growth.

There is already a 0.2 percent statewide tax on the sale of real estate, including homes and businesses. In July, the General Assembly agreed to let counties, with voter approval, either raise the tax 0.4 percent more or raise the sales tax by a quarter-penny.

Voters in Union County and 15 other counties resoundingly rejected the real estate tax in November. Three counties -- Gates, Pamlico and Polk -- are poised to consider the idea May 6, according to the N.C. Association of County Commissioners.

Todd McGee, a spokesman for the commissioners' association, said in an interview Friday that the real estate industry benefited last year from more experience and resources.

"It's easy to win the battle for public opinion when you're the only one out there spouting an opinion," McGee said.

Trying to reverse that, commissioners held a training session Thursday for advocates of the tax.

Carpenter and Kent, speaking at the Raleigh headquarters of N.C. FREE, a business-backed group that analyzes election trends, said the real estate industry worked as a team. First, it tried unsuccessfully to prevent lawmakers from giving counties the extra taxing authority. Then it tried to sway voters.

Kent said the industry emphasized housing affordability and property rights.

"When you put a tax on someone who's trying to sell their homes, we think that's an attack on those two principles," he told an audience of corporate lobbyists.

The industry hired two Raleigh-based consultants, Democrat Brad Crone and Republican Chris Sinclair. It used the Web site www.itsabadidea.org. It also started an advertising campaign that encouraged tax opponents to e-mail lawmakers -- and 60,000 did so, Kent said.

They also coined the term "home tax," though the tax also would have applied to commercial and industrial properties.

"We represent organizations that have great will and determination, as well as resources," Kent said. "If you're going to get involved in an effort like this, you've got to play to win."

No one has compiled a final, public tally of how much the real estate industry spent to defeat the taxes, which failed in Union County 83 percent to 17 percent. An Observer analysis in November found at least $441,000 spent in local elections alone, not including money spent on advertising to influence lawmakers.

John Davis, president of N.C. FREE, praised the real estate industry's efforts as a model for other businesses involved in public policy debates.

"They hired the best people they could hire," Davis said, "and that made a difference in winning and losing, in a big way."