It’s now up to Chicago voters to decide whether to authorize the City Council to raise the real estate transfer tax on high-end property sales to confront the burgeoning problem of homelessness.
The binding referendum known as “Bring Chicago Home” will appear on the March ballot, thanks to Tuesday’s 32-to-17 Council vote.
Ald. Ray Lopez (15th), who voted “no,” argued the Council has no business asking those involved in high-end property transactions to dig deeper when hundreds of millions of dollars Chicago has already received to house and serve the homeless has gone unspent.
“Before we ask for more, we have to show Chicago that we know how to spend what we have. We’re asking for more when we don’t know how to use what we already have,” Lopez said.
“Hundreds of millions of dollars have never gone out the door. Yet, we want more. ... The issue isn’t the money. The issue is the execution. The execution falls on the chief executive, which would be you,” Lopez told Mayor Brandon Johnson.
North Side Ald. Maria Hadden (49th) tried to poke holes in the claim the city isn’t spending all available funds already.
“I feel like a good 25% of this body has been very active in actually making sure that we’re spending that money. We’ve been making people work so hard. … We’ve got every department in this city working overtime to solve this city’s issues. And to sit in this body and talk about how we’re not doing anything is a slap in the face to every single city servant that is doing their job.”
Tuesday’s approval — one year after allies of then-Mayor Lori Lightfoot thwarted a similar City Council vote — is a major political victory for Johnson.
It sets the stage for a high-stakes, high-cost political donnybrook pitting Johnson’s progressive coalition, which includes advocates for the homeless, against the business community in general and the real estate industry in particular.
During a news conference after Tuesday’s meeting, Johnson was somewhat defiant when asked how confident he is the binding referendum will pass.
“Everybody agrees that 70% of those who are unhoused are Black. .. .The people that elected me gave me the confidence to move an agenda that they knew I was committed to. It’s not like I just sprung this on them. When I ran, I said this was what we were going to do,” Johnson said.
“The people of Chicago had an opportunity to vote for someone else who wasn’t supporting this initiative. So if you’re asking me my confidence — my confidence is as strong as the people who sent me to do the work.”
Johnson said the progressive movement behind Bring Chicago Home is “bigger than an office.”
“We’re gonna knock doors. We’re gonna talk to people. We’re gonna hold community meetings. And we’re gonna tell the story that one in four Black children who experience homelessness — that ain’t right. ... We’re gonna right the wrong,” the mayor said.
The Chicagoland Chamber of Commerce and the Building Owners and Managers Association, a group including owners of large office buildings, plan a big-bucks campaign to defeat the binding referendum at the polls after failing to defeat it in the Council.
BOMA’s executive director Farzin Parang has warned raising the transfer tax would have a devastating impact on office buildings that may never fully recover from the pandemic, which dropped their valuations by 40% to 80%.
Like Johnson, Lightfoot also once promised to raise the transfer tax and use the money to fight homelessness. But she broke that promise, alienating the progressive voters who put her in office.
Johnson wasn’t going to make that mistake but also wanted to build bridges to the business community and burnish his image as a “collaborator” willing to compromise on policy specifics without compromising his progressive “values.”
To appease business and minimize Council opposition, Johnson accepted a three-tiered approach in place of the current flat rate of 0.75%. The rate on sales under $1 million would be reduced to 0.60%. Sales of $1 million or over, but under $1.5 million, will pay a 2% tax, more than 2.5 times what they pay now. And sales of $1.5 million and higher will pay 3%.
Ald. David Moore (17th) supported the binding referendum but did not agree with the concessions Johnson made.
“I am still a little not happy that we made a decrease in this and put that into the ordinance,” Moore said, referring to the decline in revenue from an initial projection of $160 million.
“If our focus is on getting money for the homeless, we shouldn’t be decreasing anything.”
