Travesty in Tennessee: Fourteen Days in May
May 25, 2007-Anti-Rebate Laws,Rebates,Anti-Competition
In a dramatic display of the power of interest group money in politics at its worst, theTennessee legislature has passed SB 1160 as amended on to Governor Phil Bredesen of Tennessee either for veto or for active or passive approval.The Government must now decide whether to act on behalf of the Tennessee Association of Realtors and its PAC money or to do the right thing for the people of Tennessee.
Also at stake: the integrity of the democratic process in Tennessee. The cynical machinations employed by the bill’s sponsors to hide the real intent of the legislation from public view until its blatantly anti-competitive effects could become a fait accompli is the most disturbing part of this story.
SB1160 (and its House companion, HB2095, a Tennessee Association of Realtors initiative, prohibits Tennessee real estate agents from rebating portions of their commissions to their clients – home buyers and sellers, the consumers of their services.
The bill is notable in the first instance as a reactionary move against the national trend toward opening up the real estate industry to competition. But the process – or lack of process – used to get this piece of anti-consumer legislation passed in order to pay back the TAR for its campaign contributions is absolutely shocking.
TAR proudly announces on its Web site that:
“In the election cycle, RPAC disbursed over $216,000 indirect
contributions to state candidates, making RPAC the number one trade
association PAC in Tennessee.
RPAC helped to elect seven REALTORS to the 105th General
Assembly. They (include) Lt. Governor and Speaker of the Senate Ron
Ramsey (R-Blountville),…)
Now for the quid pro quo.
On February 8th and 15th of 2007 bills bearing the numbers 1160 and 2095 (the “Bills” were introduced into the Senate and House respectively. The bills as filed read:
Be IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE
OF TENNESSEE.
SECTION 1. Tennessee Code Annotated,Title 62, Chapter 13, Part2, is
amended by deleting s. 62-13-204 in its entirety and by substituting
instead the following:
Section 62-13-204. Nothing herein shall permit the commission to set fees
or commissions for real estate contracts or transactions.
Section 2. This shall take effect July 1, 2007, the public welfare requiring
it.
The Bill as filed would have amended the Tennessee statute (Section 62-13-204) that prohibits the real estate commission from price-fixing. As stated in the legislative description posted on the official Tennessee legislative Web Site.
Commissioners violating this law would no longer have their licenses to practice real estate brokerage taken away:
SB1160 by Black, Kyle, Finney L. (HB2095 by Maddox, Casada,
Sargent, Colemann, Briley, Litz.)
Real Estate Agents and Brokers – Eliminates loss of license as
punishment for real estate commissioners setting fees for
contracts or transactions. – Amends TCA Title 62, Chapter 13
While the Bill as filed is not exactly in the public interest, there is nothing in it that would seriously alarm consumers or consumer groups or alert reporters that a more serious issue of public interest had been raised. And so it remained for almost three months as the Bill behaved normally to all appearances.
On May 1, 2007, SB1160 went to the Senate committee on Commerce, Labor and Agriculture. On that day the CC,L&A “amended” the bill and recommended it for passage, The “amendment” was in fact an etirely new piece of legislation. It deleted the substance of the original SB1160 in its entirety and substituted a new act directed at amending a completely different section of the real estate licensing law :
Amendment No. 1 to SB1160 Southerland, Sponsor Amend Senate Bill No. 1160 House Bill No. 2095 by deleting all of the language after the enacting clause and by substituting instead the following: SECTION 1. Tennessee Code Annotated, Section 62-13-302, is amended by designating the existing language subsection (a) and by adding a new subsection thereto, as follows:
(b) A real estate licensee shall not give or pay cash rebates, cash gifts or cash prizes in conjunction with any real estate transaction……
(My emphasis.)
Eight of the nine members of the Senate Committee that replaced the Bill (that had been publicly pending for three months) with this new legislation had received TAR PAC contributions in the last two election cycles.
Six days later, on May 7th, with no further consideration on record, the Senate adopted the “amendment” and unanimously passed the Bill. Twenty-six of the 31 senators voting (that’s about 84%) had received TAR PAC money, directly or through PAC-toPAC contributions, in the last two eletion cycles.
The following day, May 8th, the House Commerce Committee considered the Bill for the first time and recommended passage if amended as in the Senate. All 27 of the 27 members of the House Committee (that would be 100%) had received TAR PAC money as had their Senate counterparts in the last two election cycles.
On May 12th, the United States Department of Justice sent a letter to the Tennessee House Speaker Naifeh strongly urging the Tennessee House to reject the legislation because it will “cause serious harm to the competitive process and home buyers and sellers in Tennessee.” nevertheless, when the new legislation was presented to the House for a vote on May14th, it was passed after a “swift…debate/”
Four members were concerned enough to abstain, with Representative Lynn expressing concern over the DOJ’s letter. Of the remaining 94 who voted in favor of prohibiting rebates to consumers, 89 had received TAR PAC or PAC-derived contributions in the last two election cycles (95%).
The now-anti-rebate law returned to the Senate where, on May 16th, Lt. Governor and Senate Speaker Ron Ramsey, A REALTOR and TAR candidate, promptly signed it.
A total of 14 days from May 1st to May 14th for passage. It was not the Bill that was publicly filed.
Why this strategy of deliberately sneaking legislation through, of misleading the public as to the content of legislation? To avoid public scrutiny and debate; to avoid reasoned deliberation by fellow lawmakers who are not knowledgeable about the industry seeking protection: to cheat the consumer.
Why avoid scrutiny and public debate? Because the reasons put forth by the TAR in support of the measure cannot withstand any amount of responsible investigation and consideration.
Governor Bredeson: veto this bill and send it back to the House and Senate for an open and public debate. Let the people of Tennessee – the consumers who stand to lose and have not been paid by the TAR PAC in compensation – to be heard.
Article by LittlePinkHouses.com
NOTE: GOVERNOR BREDESON SIGNED THE BILL INTO LAW: PLEASE READ