Rep. Jim Merrill faces ethics questions over work with Realtors

Jim Merrill, a six-term state representative from Daniel Island, has taken in nearly $160,000 consulting for one of South Carolina's biggest special interests: Realtors. At the same time, he sponsored legislation that benefits them financially, served as the bill's loudest supporter and helped it become law, a Post and Courier review has found.

And all of this is legal, according to staff of the legislative committee that oversees House ethics. Merrill said he considers it ethical too.

But some attorneys and government ethics experts are challenging the propriety of such deals, saying the brazenness of the transactions undercuts the already fragile public trust in elected officials.

If Merrill's deals are legal, they said, then South Carolina law is flawed.

The criticism comes against the backdrop of an ongoing ethics complaint involving alleged lobbying work performed by Gov. Nikki Haley during her time in the Legislature.

Haley's attorneys have said special interests commonly pay state lawmakers, and they will release a list of legislators who have received income from organizations that lobby in the Statehouse.

The watchdogs say those close relationships highlight the level of complacency in South Carolina government.

Merrill, a Republican, has been the primary sponsor and leading voice on legislation championed by the S.C. Association of Realtors. The Realtors paid his one-man public relations firm $158,000 in contracts between 2008 and 2011, according to data analyzed by the newspaper.

The group paid him more money in 2012, but the payments have not yet been reported, Realtors spokesman Nick Kremydas said.

Those amounts, combined with an additional $123,000 from a different political action committee, are more than triple the pay Merrill earned as a legislator during that time.

In addition to handling direct mail, Merrill gave the Realtors an insider's view of his legislative colleagues, Kremydas said. Some of Merrill's work included advising the Realtors as to which legislators would fall in line with their priorities so the group could back those lawmakers' campaigns, Kremydas said.

“These guys are in a position to know more about elections around the state than their peers,” Kremydas said. He noted that Merrill and S.C. Rep. Rick Quinn, R-Lexington, whose family business also has gotten contracts from the Realtors, both formerly held key legislative leadership positions.

“It only makes sense — if you're going to be successful, you hire the experts that do the best job,” Kremydas said. “If you don't have a seat at the table, then you're on the menu.”

In an interview, Merrill provided few details about the nature of the work he performed as a consultant. He said he could not recall the Realtors asking for his opinion about House candidates.

Merrill said he will continue to work for the Realtors and other PACs willing to pay him.

“There's nothing unethical about it whatsoever,” Merrill said, noting that he has asked attorneys from the S.C. House Ethics Committee about the propriety of his business relationships. Last week, committee staff confirmed that those discussions took place.

“I always, always, always approach the ethics attorneys — pretty much every single time,” Merrill said. “It is simply unfair to say or to imply that anyone is doing something wrong when they are in the confines of the law.”

Backlash
A group of political ethicists and attorneys said the close financial relationship between the Realtors and Merrill is an ethical dilemma.

“It doesn't get more bald than that,” said Ed Bender, executive director of the National Institute of Money in State Politics. The national, nonpartisan and nonprofit group tracks, among other things, the influence of campaign donations and lobbying on politics.

“This gives democracy a bad name, and it is the reason there is so little trust in elected officials,” Bender said. “It has all the hallmarks of a legislation-for-sale situation.”

Armand Derfner, a public interest attorney in Charleston who has argued and won cases before the U.S. Supreme Court, said in other states the behavior is “unethical and criminal, but here in South Carolina, it's the norm.”

The State Ethics Commission would not address Merrill's business with the Realtors, general counsel Cathy Hazelwood said. The House has its own Ethics Committee, made up of legislators, to handle complaints involving its own.

Ethics Committee staff acknowledged that the prevalence of the deals, which it considers legitimate, could be cast as “a deficiency in state ethics laws.”

Bob Stern, a national expert in government ethics, said legislator-special interest business relationships like the one between Merrill and the Realtors are rare in other states. Stern, a former administrator of the Council on Governmental Ethics Laws, a national association of ethics officials and experts, said S.C. lawmakers must confront several key questions.

“Should you be receiving direct income from people lobbying you? Should you be paid to help their lobbying efforts?” he said. “The answer is you shouldn't.”

Reform legislation
Yet that is what Merrill did while working in lockstep with the Realtors.

Last year, the Realtors' association gave the lawmaker an award for “his unwavering support of real estate legislation,” according to a release on its website.

“Merrill was the primary sponsor of the recently enacted Point of Sale Reform legislation, and worked tirelessly along side the Realtors to keep the issue at the forefront while leading the debate on the House floor,” the group said in the release.

“Point-of-sale” refers to the practice of reassessing a property's taxable value when ownership changes. Realtors strongly oppose point-of-sale reassessments because they can result in sharp tax increases that could discourage property sales.

Merrill's reform legislation — a lobbying priority for the Realtors, according to disclosures filed with the state — ultimately resulted in a property tax discount for commercial properties, including apartments and second homes.

Opponents of the reform said it would result in less revenue for local governments and schools that rely on property taxes.

The Realtors generally outline a framework for legislation they want passed, said Kremydas, the association spokesman. Merrill said the Realtors did not draft the legislation for him.

'Jaded'
However the deliberations went, Merrill got paid and got results.

Stern, the government ethicist, said the “Realtors obviously are not wasting their money.”

“Hiring this guy seems to be paying off,” he said. “Legislators don't care about the perception. They think the public thinks badly about them anyway, so why not do it?”

When he's not in Columbia, Merrill works from what Berkeley County property records show is a 4,200-square-foot, $800,000 home near the Wando River. He said he and his family have been living in a hotel recently because the house flooded after a pipe burst.

The former House majority leader shepherded some important legislation this session, including his influential House subcommittee writing a bill to help rein in costs in the state's troubled public pension system. But he said he is tired of being a lawmaker, even though he recently filed for a seventh term.

“The General Assembly doesn't mean that much to me,” Merrill said. “I'm to the point that I've been there long enough to be jaded now, so my 'I-don't-give-a-damn meter' is way off the charts.”

Merrill, who has had no primary or general-election challengers since 2002, continued, “I guess they think I'm doing a decent job because I haven't had opposition.”

Last week, Berkeley County GOP Chairman Tim Callanan said Merrill's constituents know how the game is played — and they approve. Callanan stood by Merrill, a friend and professional acquaintance he has known for a decade.

Voters “trust him to know when there is a clear conflict of interest and make that decision on his own,” said Callanan, who also is a county councilman.

“My view is that people know what his occupation is, that he is on the political consulting end,” Callanan said. “If there was a conflict, they would've brought it up prior to the election.”

The laws
John Crangle, executive director of the government watchdog group Common Cause South Carolina, said Merrill should have recused himself on votes involving the Realtors.

State law requires elected officials to disclose possible conflicts of interest in writing and abstain from deliberations and votes involving those issues.

“But instead, he's the one who introduces and supports their legislation,” Crangle said.

Merrill dismissed the criticism.

“The inference that I would be swayed by a political group is almost laughable,” Merrill said. “I've got basic things that I believe in. I think we're taxed too much. ... Property tax is a hideous, heinous tax on people. The Realtors, I guess they just happen to be in line with that.”

Callanan, the county GOP chairman, said Merrill “supports the pro-business end of things anyway, so it's something he would've supported to begin with.”

The Realtors paid Merrill's Geechie Communications from its political action committee, according to reports filed with the Ethics Commission. Separately, the PAC has given Merrill a $1,000 campaign contribution, records show.

In addition to advising the Realtors about which lawmakers to endorse, Merrill handled advertising work, Kremydas said. Last month, the group paid Merrill to design an ad, published in newspapers statewide, supporting further tax reform efforts the S.C. House is pursuing.

“He's being paid to actually craft the message about an issue he'll vote on,” Stern said. The business should have been reported as lobbying, he said.

The state's legal definition of “lobbying” is up for debate, and the House Ethics Committee, as part of its investigation of Haley, eventually might issue an opinion to clarify it.

One South Carolina law prohibits members of the General Assembly and other elected officials from lobbying on behalf of a special interest.

Another says “no public official ... may knowingly use his official office, membership, or employment to obtain an economic interest for himself, a member of his immediate family, an individual with whom he is associated, or a business with which he is associated.”

Merrill has requested legal advice on whether his work violates those specific statutes, according to House Ethics Committee staff, which finds no conflict. Part of the justification involves the fact that the Realtors' group paid Merrill through its PAC and not directly through its registered lobbying association.

Crangle said the interpretation is not surprising since the House votes on the budget of the ethics staff. He rejected the committee's distinctions between the Realtors' association and its PAC.

Some lawmakers are “using the public office as a way of obtaining personal financial benefits,” Crangle said.

Last week, Merrill could name no current clients beyond those he has secured through his political connections.

Quinn, the representative whose family business Richard Quinn & Associates took more than $63,000 in contracts from the Realtors in 2007, left the S.C. Senate in 2004 and returned to the S.C. House in 2011.

Although Quinn was not a lawmaker when the transactions took place, he called them “totally legal and ethically appropriate” for anyone.

“It's a part-time General Assembly — you've got to make a living,” Quinn said. “Everyone does something.”

Crangle gave his own view of lawmakers' relationships with special interests.

“You think free drinks, free food and campaign donations makes things happen, but what really matters are these business relationships legislators have with special interests,” he said. “They cut key legislators in on sweetheart business in order to buy them.”

Haley comparison
Crangle likened Merrill's deals to the ongoing ethics complaint involving Haley's business with the Lexington Medical Center Foundation and with Wilbur Smith engineering firm while she was a House member representing Lexington County before becoming governor in 2010.

The two organizations paid Haley hundreds of thousands of dollars to do fundraising and other unspecified work, although she had little expertise in those fields, according to the complaint.

At issue is whether Haley lobbied a state agency on behalf of the Lexington Medical Center, whether she failed to properly disclose her pay and whether she failed to abstain from votes that would benefit the firm.

In response to the complaint, Haley's attorneys said the governor's “activities and conduct are commonplace in the Legislature and were always consistent with the law. ... To find otherwise would not only impugn the integrity of many other members of the General Assembly, but also that of many of South Carolina's best corporate partners.”

Merrill wrote off any similarities between his situation and Haley's, saying his work was for the benefit of the real estate industry as a whole and of people who pay property taxes. The Ethics Committee staff pointed to a law that says conflict-of-interest rules do not apply when a “large class” instead of a specific entity stands to gain from a decision.

“If you do something for the industry, that is dramatically different than saying I'm going to do work that's going to benefit” a specific Realtor or real estate group, Merrill said. “That would be a fair comparison, but I would never do that.”

The critics of Merrill's business deals didn't buy it.

“Who is he representing — the public or the Realtors?” Stern said.

Crangle noted the part-time legislator's $22,400 annual salary and stipend: “Realtors pay him a whole lot more than the public.”

J. Michael Bitzer, who has followed South Carolina politics for two decades and now teaches political science at Catawba College in Salisbury, N.C., said the public should worry about how deep the deals go.

Reach Renee Dudley at 937-5550 or on Twitter @renee_dudley.