Parade of Homes group emerges as important Republican donor

The Builders Association of the Twin Cities is best known for putting on Parade of Homes, a showcase of some of the most luxurious, innovative and environmentally friendly homes in the Twin Cities.

But in recent years, the organization has emerged as a powerhouse in state Republican politics, giving money to candidates and attempting to gain influence at the State Capitol.

The Builders Association, or BATC, "works hard to serve our members by encouraging legislators and local leaders to better understand the importance of building neighborhoods that are safe, healthy and affordable," said executive director David Siegel, who declined an interview but answered questions via e-mail.

The Parade of Homes, which recently featured more than 200 new and remodeled properties for its fall show, sells advertising and sponsorships based on robust attendance of an estimated 225,000.

The money — at least $3.8 million earned during 2014 on the various shows — goes to the association, a trade group that lobbies on behalf of the building industry at the Capitol and tries to elect legislators friendly to their cause.

The tax-exempt group spent $647,000 on political activities in 2014, according to its most recent IRS documents. The money went toward successfully helping Republicans regain the House majority they had lost in 2012.

Siegel said the money spent on politics comes from dues and other revenue, not from Parade of Homes or the group's "general fund dollars." According to IRS records, Parade of Homes proceeds comprised more than half of BATC total revenue.

The homebuilders' political contributions illustrate the new world of campaign finance spending: Recent federal court decisions loosening campaign finance laws have heightened the importance of outside groups that can raise and spend large sums to help their political friends.

On the DFL side, labor unions like the American Federation of State County and Municipal Employees (AFSCME), which contributed $450,000 to each the House and Senate DFL, serve a similar function to the builders group.

The outside groups can also collect money from wealthy individuals. Alida Messinger, the ex-wife of Gov. Mark Dayton, gave a single donation of $815,000 to a group that funds the Alliance for a Better Minnesota, which supports DFL candidates.

The money spent reflects the huge stakes: If the DFL can pick up seven House seats and retain control of the Senate, the party would control all levers of power in the Capitol and allow Dayton to move forward with an aggressive agenda of universal prekindergarten and a major transportation package funded by a gas tax increase.

The builders' Housing First Fund has taken in more than $250,000, according to the newest campaign finance reports. Of that, $145,000 came from a group that shares an address with the builders called the Housing First Network, which is a "social welfare organization" that in this case advances the message of "housing affordability and the importance of a robust housing industry," Siegel said.

Housing First is one of the top 10 political contributors in the state this year, behind both political parties, unions, Alliance for a Better Minnesota and some GOP groups, according to the latest campaign finance records.

As a "social welfare" organization, Housing First Network does not have to reveal its donors, allowing corporations and individuals to push their agenda while avoiding disclosure and the scrutiny it might bring.

Although not a registered political group, the Housing First Network has engaged in efforts to promote policies helpful to the industry, going so far as to release ads for friendly candidates, singling out Rep. Roz Peterson, R-Lakeville, as "a leader who thinks local in the Burnsville and Lakeville area." Peterson, who is in her first term, is considered one of the most endangered GOP incumbents in the House. Another recipient of a favorable ad by the Housing First Network is Randy Jessup, who is challenging Rep. Barb Yarusso, a vulnerable DFLer from Shoreview.

BATC has yet to file its 2015 tax information, and Siegel declined to discuss their political strategy but said the group backs candidates in both parties who support the housing industry.

In August, the group endorsed 16 legislative candidates, including three DFLers.

The builders' 2014 political spending came with mixed results.

Housing First spent $100,000 trying to defeat two-term DFLer Dayton, to no avail.

But investments in Peterson, as well as Reps. Jim Knob­lach, R-St. Cloud; Jeff Backer, R-Browns Valley; and Jason Rarick, R-Pine City, all paid off, vaulting the GOP into the majority.

At the Legislature, the builders want a friendlier regulatory environment that will lower home prices, as well as lower taxes. After the 2016 legislative session, the trade group told members in a newsletter that they successfully prevented any damaging legislation while deepening key relationships at the Capitol. "We are now sought out regularly by legislative leaders from both sides of the aisle on major issues," read the report.

All of this politicking comes with added scrutiny.

Tom Brever, who early in his career was an IRS lawyer before becoming a tax attorney and adjunct instructor at the University of Minnesota Law School, said the homebuilders' tax documents could catch the attention of IRS examiners — most likely for "the lack of specificity regarding their revenue and the significant amount of political spending."

Several people attending Parade of Homes' final weekend of showings were ambivalent about the builders' political activity.

Cooper Butler, there with his wife to check out renovating ideas, said he fully expected the housing industry to advance its interests. Otherwise, it wouldn't be following very good business practices, he said.

Of seven people interviewed, none of them were aware of the group's political activity.

"You just tainted our thing," joked Marjorie Grevious. She and her spouse, Lisa Robinson, who are raising a teenager, said they try to be mindful of their consumer choices, like buying American-made goods, supporting LGBT businesses and avoiding products or services that don't represent their values. They are not Republicans.

Still, they left the interview and walked toward the Uptown house, eager to see what was inside.

J. Patrick Coolican • 651-925-5042