2016 POLITICAL ADVOCACY FUND

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1 2016 POLITICAL ADVOCACY FUND BACKGROUND Ohio has proven to be a national leader in statehouse legislative lobbying and, more recently, as a frontrunner in local issues advocacy. This ever-increasing local involvement -- coupled with changes to NAR s REALTOR Party impacting the accessibility of issues mobilization dollars -- has created the need to increase our Issues Mobilization Fund and expand it to also provide funding not only for issues and ballot initiatives, but also independent candidate expenditures, informational brochures for members, and select statewide issue research and analysis, such as the Sales Tax on Services Expansion. The world of political activity was redirected in 2010 by the United States Supreme Court decision in the Citizens United v. the Federal Election Commission case. In a nutshell, Citizens United allows corporations and unions to spend unlimited funds on ads and other political communications that expressly advocate the election or defeat of a specifically identified federal, state or local candidate, as long as those funds are expended independent of the candidate s campaign. The Citizens ruling does not impact the need for RPAC since these funds are direct contributions to candidates and are governed by the Federal Election Commission, the Ohio Secretary of State, and in some instances by local election laws. Therefore, the continued importance and funding of RPAC is critical, however, the unbridled funding in the form of independent expenditures is the crux of the impact of the Citizens United case. It should be noted that even with the Court s ruling being in 2010 the full impact of independent expenditures evolved and continues to reach historic levels of funding in 2012 and Nationally, NAR has and continues to be a leader in candidate contributions through RPAC. When PACs were the only source of funding for candidates RPAC was near the top of influence makers. However, the quick and well-conceived REALTOR Party national assessment provided NAR, states, and locals to be an early responder to the political funding of candidates through independent expenditures. The REALTOR Party assessment became effective in 2012.

2 A quick primer an independent expenditure is by name, definition and action totally independent of the candidate s knowledge, involvement or direction. Given this independent action, RPAC may and does participate through PAC contributions to the same candidate who is also benefiting from the independent expenditure, however the RPAC Trustees are like the candidate, unaware of the independent expenditure campaign for the candidate. To date, OAR s funding for independent expenditures has been restricted to the funds allocated by NAR to OAR. NAR allocates, based upon state membership totals, $4.73 per member. In turn, the funding is by our trustees to support state candidates such as Representatives, Senators, and Statewide positions; as well as at the local level candidates such as county commission, mayors, council members and even township trustees. OAR has used every dollar allocated by NAR in each year since REALTOR Party funds were made available. To put this in perspective, the NAR total allocations to Ohio including local shares have been $260,000. While this may seem like a significant dollar amount the number of races which may be funded with this allocation is surprisingly low. Typically, state races the total funding only provides minimal support to 3-4 candidates and a similar number has been utilized each cycle for local candidates. The impact of conducting an independent expenditure program has a wider impact than just the winning of the race, albeit winning is the ultimate desire. The mere presence of the independent expenditure has a profound impact on the political parties involved, meaning they may decide based upon the independent expenditure if they are going to continue to engage in funding and forces an early and often discussion about key races. Knowledge of an OAR independent expenditure can be greatly beneficial or conversely elevate the race into an arena which they do not wish to go. An obvious result: an OAR independent expenditure winner understands the role and pure political impact REALTORS play while continuing to foster a keen awareness of REALTOR issues

3 NEED Simply stated it takes money to influence and cultivate political allies. Ohio ranks 7 th nationally with nearly 3,800 units of local government. Given the importance of REALTOR participation in local elections and issues providing additional resources is paramount. OAR elected leaders and staff continually have advocated that political influence begins at the local level. This is evident in a multitude of ways, such as many taxing initiatives begin locally, home rule ballot initiatives origins begin locally, and restrictive or onerous ordinances begin locally. Local elected officials often urge their state legislators to pursue state legislation which gives locals more power to tax and regulate. Politically, local elected leaders are a leading source for future state representative and senate candidates. Therefore, with the recruitment, support, and impact that local associations have, through OAR financial and political advice, they can and will develop an elected base which will have our issues and private property mantra engrained in their core political values. It would be naïve to suggest that we would only support REALTOR candidates but it is a goal to encourage our members to seek elected positions locally. Nevertheless, our local GADs and local leaders have or can cultivate relationships with potential local candidates in the local interview vetting process to recommend support for those non-realtor candidates who clearly understand and support private property rights. The potential need for issues involvement is nowhere more evident that at the state level with the issues OAR has faced last several years. We have weathered challenges to our political activities, challenges to private property rights and repeated attempts to expand Ohio s sales tax. Through years of hard work, cultivating relationships locally and OAR s successfully lobbying efforts in each of these instance we were able to be successful with using only the limited resources we currently have available. However, if we had failed in any of these instances we are not prepared to defend ourselves. The costs of running a statewide campaign, exceeds not only the capacity of RPAC, but also the capacity of the Association as a whole. Initiating a statewide initiative beginning with signature collection costs can quickly can exceed $3 million. Simply put -- we could not even get out of the starting gate. In the past our current issues mobilization fund, RPAC and resources from the national level, have sufficed in defending and promoting our positions. Because of term limits, the changing economy, exponential cost associated with running a campaign and the proliferation of outside resources, that is no longer the case and as such we leave ourselves in a vulnerable position.

4 The second part of the need equation is RPAC at the state and local level. OAR, under the agreement with NAR, is their RPAC partner. Local associations may have a local PAC but all RPAC receipts and disbursements to state candidates done through RPAC in order to maintain our affiliated relationship. Local Boards are free to request their entitlement dollars to spend however their board leadership sees fit, increasingly these RPAC hard dollars are being used to support or in opposition to issues or ballot proposals such as local ordinances or school board levies. Thus taking resources that are best utilized as direct contributions to candidates. Additionally, the recent changes to the Ohio s Campaign Finance Laws have had the impact of raising the amount of PAC money requested from state candidates, with the candidate eyeing the caps which have increased four-fold what they were just a few years ago. So the unintended consequences of Ohio s enacted PAC contribution limits ratcheted up candidates perceived and actual need. This, combined with the overall increase in money in elections due to Citizens United, has greatly increased the level of spending needed to be among the top groups in campaign influence. As evidenced in local elections, the need for RPAC funds at the local level is also ever growing. The independent expenditure program funding and RPAC are not mutually exclusive. The two in tandem, but not coordinated, provide the REALTOR organization a unique opportunity to move upward and forward as the political player we once were when operating singularly as a RPAC contributor.

5 SUMMARY The Political Advocacy Fund (PAF) is: An annual member assessment of $25 for a period of 5 years. Assessment will be utilized by both the state and local boards and further supplemented by OAR s allocation from the states NAR allocation. OAR expenditures will be for Independent expenditures to state candidates and ballot issues affecting private property rights and the real estate industry. Local association may use the funds local independent expenditures to candidates and issue advocacy campaigns. Supports the movement for all political activity to become needs based. The Political Advocacy Fund (PAF) is a necessary compliment to RPAC. Our Local Boards have and continue to have tremendous results with local issues and in the process spends considerable time in trying to cultivate local elected officials support. The PAF program moves the relationship building and private property rights understanding to the forefront or before the issues arise. Early involvement and intervention at the candidate identification and subsequent campaign stage allows for an open and more meaningful dialogue while minimizing an elected official s retreat from an issue or ordinance already in play. The plan as conceived further defines the partnership between OAR and our local boards and the support needed at the local level to further enhance our political activity. The use of the funding which directly supports local elections and local costs may also be further augmented with additional RPAC. The creation of the PAF allows for the expansion of the current NAR local independent expenditures funds, and positions local associations to balance an early positive relationship with their elected officials. As one of our former past presidents stated, Our threat is to not have enough resources to continue to respond and participate in our advocacy arena. The PAF program is one more step which not only allows us to continue to participate, but truly moves political advocacy to the local political area, where all political activity begins.

6 2016 POLITICAL ADVOCACY FUND (PAF) FREQUENTLY ASKED QUESTIONS 1. Why not borrow money from RPAC? A. The principal reason is the level of funding needed for the PAF activities, such as local Independent Expenditures and related political costs would not sustain the PAF and the RPAC activities beyond one or maybe two elections. This would also be counter to the goal of curbing the use of RPAC dollars for issues that are best supported by these soft dollar contributions. 2. How does the PAF replace local association RPAC entitlement funds? A. The intent of the program is to assist local associations, not penalize them. The PAF will have a grant process whereby local associations can request funds which are currently covered by their RPAC entitlement allocation. It is the aim and goal to have the PAF assessment be a complement to the current entitlement dollars and free up more RPAC dollars for direct candidate contributions. 3. Why doesn t OAR allocate the funds based upon a prorated amount per member for the local associations? A. The IE funds will be allocated based upon the requests by local associations similar to the REALTOR Party fundraising grants. Additionally, the allocated amount must have a degree of separation to comply with Ohio campaign finance laws and Internal Revenue tax laws. As OAR moves into this new arena, it is prudent to allocate funds based upon need and having the greatest political impact, regardless of where the candidate resides or issue originates. There will be moneys set aside within the Issues mobilization account specifically to support RPAC fundraising events at the local level. This too is in reaction to reductions in NAR s past levels of support. 4. Is the PAF assessment mandatory or is there a mechanism for a member to opt out? A. The PAF assessment of $25 will be added to the annual dues statement. It is mandatory, not prorated and there is not a capacity to opt out.

7 5. Collectively Ohio RPAC raised $763,000 in Will this assessment negatively impact RPAC fundraising? A. We do not believe so, and the key will be our education and information program which will delineate the difference between RPAC needs and uses and PAF needs and uses. Following upon the many success OAR and our local boards have experienced with utilizing NAR REALTOR Party funds, and the quick acknowledgement that in this new world these funds insufficient, we believe that our members understand these differences and will continue to support RPAC. The PAF assessment clearly assists local associations to comply with the Advocacy and Consumer Outreach components of the Core Standards as required by NAR. 6. Why is participating in an independent expenditure program necessary? A. The United States Supreme Court case of Citizens United v. The Federal Election Commission resulted in the ability to use funds, such as PAF, for support or opposition of candidates. OAR and NAR have historically been leaders in RPAC funding but that model has remained static for almost five decades. Coupled with the Citizens case it is a virtual necessity to move into the independent expenditure program or continue to lag behind in our political advocacy. Furthermore, taxing, zoning, and regulatory efforts at the local level have and continue to present onerous results. The best way to attack these actions is to elect candidates who fully understand the importance and impact of real estate and private property rights, before the imposition of taxes and ordinances. 7. How much control does the Local Association have in the selection of local candidates for Independent Expenditures? A. The local association has absolute control in recommending candidates for support, however, the legal requirements in Ohio prevent a coordinated campaign, thus the decision whether to support and the level of support must be independent and reside with the OAR committee. Similarly, to NAR s process, the OAR committee will strongly rely upon local knowledge, interest and importance when considering recommendations.

8 8. Are there levels or limits for a local independent expenditure? A. There are no levels or limits per se. However, Independent Expenditure Committees should use such factors as competitiveness of the race, electability, the candidate s record on issues, and local association jurisdictional concerns and differing opinions, such as two local associations within a county and differing opinions on a county board seat. 9. Once a Local Association makes a recommendation to OAR and OAR agrees to support the candidate, what is the process for notification to the local association? A. OAR will follow the same procedure as NAR. The local association will be notified just prior to the release of the first Independent Expenditure activity, e.g. robo-calls, mailer, phone, etc. That will be the only communication to the Local Association. OAR will not initiate any conversation with the local candidate or the local candidate s campaign. 10. Describe the components and costs for an average independent expenditure campaign. A. The costs vary depending on the size of the voter population and the usual and customary marketing costs in the area. The typical expenses, using past Independent Expenditures as an example, include: Polling (Candidate/Issues) Data Strategies Robo-call(s) First and second mailers Walking piece Social media/website GOTV Signature collection TV ads Radio Ads