Karin Housley, a Minnesota State Senator who is seeking to be the Republican nominee in Minnesota’s upcoming U.S. Senate special election, is a prominent realtor who does brisk trade selling million dollar homes in the suburbs outside Minneapolis. And since 2014, she has worked nearly as hard at creating numerous bills affecting her real estate business.
As a member of the Minnesota State Senate, Housley authored bills that literally crafted the definition of her very profession and established “designated agency” during real estate transactions. She authored an act that established a first-time home buyer savings account, which was touted by the state’s real estate political action committee as a major legislative success. And she wrote bills benefiting the real estate appraisers that set the prices of the homes she sells, including new protections against civil action lawsuits and shielding minor disciplinary action against them from the public record.
While Housley’s activity is likely legal under Minnesota law, since those measures benefit the industry as a whole as opposed to her business in particular, it is nonetheless unethical and precisely meets the definition of a conflict of interest, according to David Schultz, a political ethics and election law professor at Hamline University.
In fact, Schultz says, every bill Housley authored that impacts the real estate industry potentially poses an ethical conflict. “Collectively, they are furthering her interest in the real estate area,” Schultz said. “At some point you would hope that legislators would serve the public. But here it looks like she is serving her own interest or acting as a conduit for the real estate industry.”
“We don’t know if she is acting in the interest of the State of Minnesota or something else,” he added.
Housley’s campaign did not respond to requests seeking comment on Monday and Tuesday.
Housley, a staunch supporter of the Trump administration and its anti-abortion policies, is running against Democratic incumbent Tina Smith, who Minnesota Governor Mark Dayton appointed to the U.S. Senate seat that Al Franken vacated in January following allegations of sexual harassment. Richard Painter, a former White House Ethics attorney under the Bush administration, recently announced that he will switch political parties and challenge Smith as a Democrat in the upcoming special election to complete the remainder of Franken’s term that ends in 2020.
If elected, Housley would be one of many members of Congress, from both parties, who come to the office with an evident conflict of interest. According to the Harvard Business Review, over half of Congress own portfolios of stock, many of which include large holdings with firms directly affected by their legislative actions. One such legislator is the incumbent Smith, who in January voted for the short-term spending bill, which included a two-year moratorium on an Obama-era medical device tax. Smith’s disclosure forms reveal that her husband holds a substantial amount of medical industry stocks.
“Senator Smith’s number one priority is the people of Minnesota,” Smith campaign spokesman Ryan Furlong said in an email statement. “The medical device industry supports nearly 30,000 jobs in Minnesota and the repeal of the medical device tax is a common-sense measure that supports jobs and innovation, is backed by every Republican and Democrat in Minnesota’s congressional delegation, and is supported by other Senators who have medical device industries in their state.”
Furlong declined to comment on Housley’s conflicts of interest.
Conflicts of interest, such as Housley’s, are not a rarity for Minnesota legislators — who work part-time at the State House and thus often have outside careers — nor is it against the law. Each year, state legislators file a statement of economic interest, outlining all of their personal income and securities. On her filing, Housley marked herself down as a small business owner and member of Keller Williams Premier Realty, in addition to listing a number of mutual funds in which she is invested.
Whenever they arise during a legislative session, legislators are required to send a written statement describing such conflicts to the president of the state Senate. The law considers a conflict as taking an action or making a decision that would “substantially” affect an official’s financial interests or associated business, unless the decision doesn’t affect them any more than others in the profession. Legislators have the ability to request to be recused from any discussion or vote when a conflict arises, but there is no enforcement mechanism that can compel them to do so.
As the Center for Public Integrity explained, state legislators in Minnesota, more often than not, failed to recuse themselves from legislative actions in which a conflict may have arisen, which has led to a number of high profile ethics issues among legislators from both political parties in the past.
It is an issue that occurs at State Houses across the country, according to Gordon Witkin, the Center for Public Integrity’s executive director. “Virtually everybody has another job and there will be legislation that comes before them that affects their job,” Witkin said. “It’s depressingly and alarmingly common.”
But, Schultz says, Minnesota’s laws in particular “really stink in terms of conflicts of interests.” While Housley broke no law, that doesn’t mean that she didn’t act in a way that benefited her personally — thus making it impossible to discern whose interests she had at heart: the people’s or her own. Considering she had a hand in writing several of the bills at issue, it would seem that Housley took few, if any, steps to avoid such a conflict.
“If I were Karin Housley, I think I would have recused myself from any vote that affects the real estate industry,” said Painter, her political opponent. “I don’t think it was really smart to run a real estate business and then go to the legislature and vote on bills that affect the real estate industry.”
A realtor regulating real estate
Karin and her husband Phil Housley have enjoyed high-paying and high-profile jobs over the years. Phil, a retired hall-of-fame hockey player, is now coach of the National Hockey League’s Buffalo Sabres. Karin wrote a 2001 book called “Chicks Laying Nest Eggs, How 10 Skirts Beat the Pants Off Wall Street… And How You Can Too,” which aimed to teach women how to trade stocks while doing laundry and cooking dinner for their families. According to her website, she started Karin Housley Homes about 15 years ago, and was elected a state senator in 2012 — which has allowed her to implement her anti-abortion, hard-line conservative agenda.
Housley is an industry heavyweight on both the homebuyers’ market and in the State Senate. The Minnesota Realtors Political Action Committee has given $6,500 to Housley’s campaign since 2012 and endorsed her in 2015, 2016, and 2017 — one of just a handful of state senators to receive such a nod. According to the PAC’s website, such endorsements go to politicians that are committed to realtor issues, serving in positions that are important to realtors, and incumbents that have “demonstrated their commitment to working with and for REALTORS.”
More specifically, when deciding what candidates it will support, the PAC scores them based on metrics such as authoring or co-authoring legislation, supporting and advocating for Minnesota Realtor legislative positions, chairing a leadership position, and being “generally supportive” of the organizations priorities, according to the organization’s 2017- 2020 strategic plan.
Housley authored at least one of the bills the PAC listed on its website as a state-level legislative success, a first-time homebuyers savings account act that was tucked away in an omnibus tax bill that passed during a special session in 2017. The bill, which was proposed by the PAC and the Twin Cities Builders Association, gives tax deductions to Minnesota residents saving up for a new home. The PAC’s CEO Chris Galler told the TV station KARE 11, enticing first time homebuyers are essential for people who currently own homes, to sell them.
“Nobody else who has a home can sell if that first home buyer… doesn’t enter the market,” Galler told the news station.
Housley also co-wrote legislation that changed state regulations surrounding real estate brokers and salespersons. Those changes defined a “buyer’s broker” and “seller’s broker.” It also inserted language allowing the broker to receive compensation after the buyer’s representation agreement had expired, removed language surrounding continuing education requirements and special licenses for brokers involved in rental or management, and set two-year limits on a so-called “override clause” within a buyer’s agreement, among other changes.
In 2014, she co-wrote another bill that would have defined and regulated “designated agency,” which is when two or more salespersons that are licensed to the same broker, each represent a different party involved in a real estate transaction. (The bill failed to get out of committee.)
She has also helped craft a number of pieces of legislation that have affected real estate appraisers, the very people that assess the cost of the homes she and her business sells.
These include the re-creation of a previously defunct real estate advisory board, which makes recommendations to the state on issues surrounding appraiser licenses, continuing education, disciplinary action, and industry-related trends. It also includes legislation that allows appraisers to opt-out of reporting unsubstantiated allegations or complaints against them to state regulators, which are disclosed to clients when requested. It also changes the background check process during license renewal, establishes a six-year statute of limitations on civil actions against appraisers, and keeps minor disciplinary actions against appraisers from being part of the public record after five years.
Housley introduced the bill alongside Byron Miller of the Appraisers Institute North Star chapter during a March 7, 2017 legislative committee hearing.