To reach the elusive goal of raising the real estate transfer tax on high-end home sales to create a dedicated funding source to combat homelessness, advocates must clear several hurdles.
First, 26 City Council members must agree to put the question on the March primary ballot. Then, a majority of Chicago voters must approve the referendum. After that, the Council must vote again to actually impose the tax.
That uphill battle started Thursday, when the “Bring Chicago Home” Coalition and its Council allies introduced a binding referendum that reflects the compromise authorized by Mayor Brandon Johnson.
Johnson was joined by homeless advocates for a celebratory news conference after Thursday’s meeting,
“This is very much personal for all of us. My older brother Leon died addicted and unhoused. The time to act is now,” the mayor said, adding that he’s “very confident” of getting the binding referendum on the ballot.
Ald. Carlos Ramirez-Rosa (35th), the zoning committee chair who doubles as Johnson’s floor leader, said he hopes the $100 million in additional annual revenue generated by the revised tax will ease the “What about us?” debate triggered by the migrant crisis.
“There are over 64,000 Chicagoans doubled up or tripled up. That includes people who are living on the street as well,” Ramirez-Rosa said Thursday.
“For my colleagues and people in the public who are saying, ‘What are we doing to take care of Chicagoans who are experiencing homelessness for a very long time?’ — this is the solution.”
Far North Side Ald. Maria Hadden (49th) said she would be “lying if I didn’t say I have some doubt” about clearing all the hurdles, especially “in this time of tension, competing needs and demands for competing resources.”
But, she added: “The one I’m most confident about is actually taking it to the voters. … There’s not a community that’s not touched by homelessness. We get a lot of demands from our constituents to find solutions. This compromise … has minimal impact on most Chicagoans and will provide that solution.”
Cristina Pacione-Zayas, Johnson’s deputy chief of staff and a former Illinois state senator, said Johnson’s support is pivotal.
“We finally have an administration where you don’t have to beg to even consider it. We’re letting the people of Chicago decide. That is a game-changer,” she said.
“This is not to placate people. This is to deliver on a long-standing commitment and campaign that has been driven by the people of Chicago.”
The original proposal from the Bring Chicago Home Coalition called for tripling the transfer tax on Chicago homes sold for $1 million and above. That would have generated $160 million a year.
Johnson, instead, OK’d a tiered approach:
- Properties sold for under $1 million — 94% of all sales — will have a lower real estate transaction tax rate. It would be 0.60%, down from the current 0.75% rate.
- Sales of $1 million or over, but under $1.5 million, will pay a 2% tax — more than 21⁄2 times what they pay now.
- And sales of $1.5 million and higher will pay 3%, four times the current rate.
Jack Lavin, president of the Chicagoland Chamber of Commerce, has argued the increase would leave Chicago with “the second-highest real estate transfer tax compared to competitive cities.”
“This will deter global investors. It will impede development, union job creation, tax-base growth and small businesses,” Lavin said.
“It will come at a time when vacancy rates are high, sub-lease space available is at a high, foreclosures, return to office is still recovering. Property tax rates are up. All of this adds to the burden for the business community.”
Lincoln Park Ald. Brian Hopkins (2nd) is not on board, either. Neither is the Building Owners and Managers Association, a group that includes owners of large office buildings.
Farzin Parang, the organization’s executive director, has warned raising the real estate 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%.
Pacione-Zayas expects business leaders in general and the real estate industry in particular to mount a big-bucks campaign against the binding referendum. Still, she expects it to prevail — with a giant push from Johnson.
“He was at 2% [in the polls] and look at him now. That is a testament to his organizing. That’s when you have somebody who puts in the work, who hits the doors to make sure that you stay anchored in the values and the mandate that the people who voted for you expect,” Pacione-Zayas said.
