Senate leader’s housing deal exposes a big election law loophole. Let’s close it.

Senate President Pro Tempore Phil Berger
Senate President Pro Tempore Phil Berger The News & Observer

If you’re an elected official in North Carolina, you know it’s going to be a bad day when Bob Hall is outside your home talking to reporters.

Wednesday was a bad day for state Senate Leader Phil Berger.

Hall, the retired director of Democracy NC and an expert on North Carolina election law, held a news conference outside the Raleigh townhome owned by Berger and his wife. Hall said Berger is using a company he owns to effectively buy the home with campaign funds.

“It’s one thing to just rent an apartment while you’re in Raleigh as a legislator, but he’s actually accumulating an asset that he’s going to walk away with that his campaign has paid for. I think that’s illegal,” Hall said. He filed a formal complaint with the State Board of Elections on Wednesday.

Hall also questioned what Berger’s campaign is paying toward his Eden law office even though Berger often spends more than 200 days a year in Raleigh. As of June 30, 2019, Hall said in his complaint, “the Berger campaign has sent the Berger Law Firm a total of $109,800 in 80 monthly payments. I believe these transactions deserve more scrutiny by the State Board of Elections.”

Dylan Watts, the Republican Senate caucus director, said the house payment arrangement had been approved twice by the previous director of the State Board of Elections, Kim Strach.

Berger does appear to be caught in an awkward position. He may not have broken the law, but he is pressing against the edge of it. That’s why his lawyer twice asked Strach to confirm that the house payment arrangement is legal.

The arrangement is this: Berger created a property management company and uses campaign funds to pay “rent” to the company, which ultimately pays the mortgage on his Raleigh residence. Hall rightly objects that Berger isn’t paying rent — an allowable expense; he is making an investment by paying down the mortgage on a home he purchased in 2016 for $250,000.

In an email to Berger’s attorney, Strach said Berger’s arrangement of paying rent to himself is fine not because it’s permitted by the law, but because it’s not forbidden. In other words, Berger found a legal loophole.

She wrote: “There are no statutes in Chapter 163 that define the type of entity that may act as a landlord for a candidate or other political committee. Therefore, there is no prohibition against paying the [property management company] even if the property owners are Senator and Mrs. Berger.”

Hall said Berger is using “trickery and cleverness” to get around the law. If the state board doesn’t reverse Strach’s interpretation, other lawmakers may see an opportunity to use campaign funds to acquire personal assets.

The law barring such enrichment was passed in 2006. Before that, lawmakers were using campaign funds to buy cars or pay tuition and other expenses not directly related to their campaigns or their legislative service.

“It’s a fairly recent statute and it would be a shame for it to be undermined by this interpretation. It needs to be overturned by the current staff, the current board, or the legislature, or by a court,” Hall said.

Watts said Berger is “widely considered the cleanest politician in the state.” Now he just looks like the cleverest.

If Berger wants to be more than that, he should end the payment arrangement and return to his campaign fund the $55,000 paid to his company. Meanwhile, the State Board of Elections or the legislature needs to close the loophole.