A group of real estate boards in Illinois is opposing plans for a new multiple listing service organization that would combine one of the nation’s largest Realtor association-operated MLSs with a smaller broker-operated MLS that operates in a similar market area.

The group has representatives who are members of the board of directors for Multiple Listing Service of Illinois Inc., a large regional MLS that is considering whether to combine with broker-owned MAP, also known as the MLS of Mount Prospect, Arlington Heights, Palatine and Prospect Heights.

Jim Schaid, the MLSNI representative for the McHenry County Association of Realtors — one of the Realtor groups that is opposing the proposal for a joined MLS, said, “Five of the smaller boards have pretty well taken a unified stand against this whole merger. Nobody can come up with one valid business reason why we should do this.” Schaid is also broker-owner of RE/MAX Plaza in McHenry, Ill.

The opponents of the plan have hired a lawyer and are “trying to do anything we can to forestall (the plan),” Schaid said.

Loretta Alonzo, MLSNI president, said the MLSNI board of directors approved a letter of intent to go forward with the transaction to combine MAP with MLSNI at a meeting held last week, “and MAP has approved this as well. We’re at the due diligence period of the process.”

The proposal for a combined MLS calls for a new corporate structure. A limited liability corporation would be established as a subsidiary corporation of MLSNI, she said. “Members of MAP would become members of MLSNI — the majority of them already belong to MLSNI.” MLSNI has about 51,000 members and MAP has about 14,000 members.

Alonzo added, “The real purposes of this — (members) are paying two MLS dues. We’re trying to get it to one structure. There would be a preferred stock offering to brokers for ownership interest in the LLC.” This LLC would be broker-controlled, she said, with 15 directors. Thirteen of the directors would be brokers, with two additional members representing the 10 shareholders in MLSNI.

“The core corporation of MLSNI would transfer their contracts over to the LLC — all of the operational functions would go into the LLC,” she said. Under its current operating structure, MLSNI has 22 members on its board of directors including 10 shareholders from member associations and 12 broker members.

In addition to fusing two MLSs, Alonzo said the new MLS would give participants the choice to choose between two MLS data systems — the one in use by MLSNI or the one in use by MAP.

Alonzo said she’s aware that there is some opposition from a group of board members, though she said, “I don’t know officially what the five (opposition) boards are. There has been no vote taken from the five shareholders.”

While MLSNI requires its members to be Realtors, MAP does not have this requirement. Alonzo said that the new structure would provide that all members be Realtors. “The new organization would definitely be a Realtor organization,” she said.

Shareholders who purchase stock in the LLC would elect the members of the LLC board, she said. The stock purchases are open to any broker-owner or brokerage corporation, she said, and the LLC will be operated as a not-for-profit company.

While MLSNI announced to its members that the U.S. Justice Department has requested information from the MLS on a variety of subjects, including “information regarding discussions MLSNI and MAP MLS have had and are having regarding (an MLS) consolidation or other transaction,” Alonzo said her understanding is that the investigation has more to do with a lawsuit brought against the National Association of Realtors by the Justice Department than it does with the actual MLSNI-MAP transaction.

“I don’t know that they’re looking into the proposed transaction, per se. We don’t see a problem at this point. Anything (Justice Department officials) have asked … is not individually because of our transaction. They haven’t asked us for any documents that would indicate they’re opposed to this transaction.”

Several large brokerage members of MLSNI had withdrawn all of their Northshore-area listings from the MLS database last year in a dispute over data licensing issues, though those brokers returned their listings to MLSNI earlier this year as discussions progressed in forming a consolidated MLS.

Alonzo said that documents relating to the planned transaction involving MLSNI and MAP will likely be prepared for the board to consider at its Sept. 13 meeting, and a final vote of shareholders has not yet been scheduled.

Schaid said the groups opposing the MLSNI-MAP transaction proposed two motions at the latest MLSNI board meeting. The first motion, which failed, sought to terminate pursuit of the MAP transaction. The second motion sought to mandate that each members of the MLSNI board submit in writing “any financial or other interest” in MAP.

Alonzo said that such disclosure of financial interest would be a part of the process in considering the combined MLSNI-MAP structure.

Mike O’Neill, a member of the Oak Park Board of Realtors — one of the boards that is opposing the MLSNI-MAP transaction, said there are several “purported benefits” to the transaction, though he said many questions persist.

MLSNI, he said, already serves about 99 percent of the market and has a larger geographic footprint than MAP. “I don’t think they’ve demonstrated that MLSNI shareholders are going to be benefiting from the acquisition. We’re not gaining members, we’re not increasing geographic territory and we’re not increasing revenue. In acquiring MAP, (MLSNI) is really acquiring duplicate systems and services,” O’Neill stated.

“The five shareholder groups who at this point in time have not agreed to moving forward with the acquisition have not had demonstrated to them what the benefits to them are in proceeding with a consolidation, merger or acquisition.”

Al Rossell, the Oak Park board’s representative to the MLSNI board, said he also questions the benefits in the proposed MLSNI-MAP transaction. “I’m not sure everybody has really been cognizant of what’s going on. The brokers should inquire with their directors or other people on precisely what this kind of merger would bring about. The issues are going to affect everyone the same. The biggest thing is for brokers to educate themselves on the pros and cons of the transaction.”

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