A Chicago City Council committee advanced an ordinance Tuesday that would ask voters about raising the real estate transfer tax to combat homelessness, bringing a key plank of Mayor Brandon Johnson’s progressive agenda just one step from facing a citywide referendum vote next March.
In a 32-16 vote, the rules committee approved the revamped “Bring Chicago Home” measure, which offers a tiered tax rate on all property sales. Advocates say it would generate much-needed revenue for the city’s homeless population, but opponents in the real estate industry have warned that it would put a further damper on an already-fragile market for offices, retail and apartment buildings and drive up costs for tenants.
The legislation, one of Johnson’s hallmark 100-day promises during this year’s mayoral race, now heads to a final vote in City Council on Wednesday.
Assuming Tuesday’s votes hold, the package should sail through and head to the March ballot. Johnson himself spiked the ball on his initiative, appearing at a City Hall news conference immediately after the meeting to tout the milestone.
“Whenever there are individuals asking, what are we doing for Black people? Well, they don’t have to look any further,” Johnson said at the news conference, where he did not take questions. “That is why my administration is committed to passing Bring Chicago Home. We are going to do what other administrations failed to do. We actually take our initiatives to the voters.”
The preliminary passage only came after a lengthy debate that frustrated supporters. Frequent mayoral critic Ald. Raymond Lopez, 15th, attempted to substitute the Bring Chicago Home ballot question with another referendum on repealing Chicago’s sanctuary city status, which had been blocked by Johnson allies.
After that move failed, lead Bring Chicago Home co-sponsor Ald. Maria Hadden, 49th, said Lopez’s motion was “wrong” and politically motivated. She then turned to address the business owners in council chambers who spoke out against the measure.
“Our commercial real estate is facing a lot of challenges. Bring Chicago Home is not one of those challenges,” Hadden said. “Our economies are connected, whether we like it or not.”
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Lopez and others also forced a special City Council meeting scheduled for Thursday, when they are slated to take up the sanctuary city question and two other referendums.
Only three referendums are allowed per Chicago election, so Bring Chicago Home opponents are attempting to crowd out the ballot with their own measures. They face an uphill battle to get enough votes to do that, given the solid support the Johnson-backed real estate transfer tax question appears to enjoy on the council.
Aldermen against Bring Chicago Home also sought to question the referendum’s language, saying its stated “purpose of addressing homelessness” was too vague. But Hadden said voters would merely approve or reject the tax hike, and it would be up to the City Council to then hammer out specifics.
“I am not a fan of the ‘trust us and we’ll get through it later,’” Lopez countered. “We’ve seen where it got us from one administration to another. … I want to know what the factual use of that fund is specifically. That is a very valid question.”
Downtown Ald. Brendan Reilly, 42nd, also complained that city representatives could not directly answer his question on how much of this year’s $200 million allocated toward homelessness services remains. He cited an August investigation from the Illinois Answers Project that found the city had only spent 15% of its $52 million in federal pandemic relief dollars set aside for homelessness over the past two years.
Ald. Daniel La Spata, 1st, retorted that Reilly has had months to get those answers but now he just appears to be “stalling.”
“For folks in our line of work, that’s a little bit embarrassing,” La Spata said.
The Bring Chicago Home movement has been a yearslong endeavor by homeless advocates who believed they found a champion in Johnson’s predecessor, Lori Lightfoot, until she reneged on her support after taking office and growing reluctant to raise a levy while governing through a pandemic.
But Johnson and his progressive allies have said his April runoff victory as well as the burgeoning migrant crisis spells new momentum for the measure, even as the real estate transfer tax has offered unreliable revenue hauls in recent years.
To make the prospect of a tax increase more palatable to voters, Johnson’s team this summer hammered out a new version that offers a tiered tax rate system designed to hit the most expensive property sales hardest.
Chicago’s persistent homelessness crisis has been exacerbated over the past 14 months by an influx of asylum-seekers, and advocates have argued that, even with the volatility of past transfer tax collections, the city needs a dedicated revenue stream to fund programs like emergency rental assistance, buying and rehabbing shelter space and direct housing help.
They hope to raise an average of $100 million annually by changing the city’s real estate transfer tax: switching from a flat rate to a three-tiered, progressive structure.
The city’s current real estate transfer tax charges a 0.75% flat rate on all property sales in Chicago. Bring Chicago Home calls for slightly reducing the tax charged on the first $1 million in value — to 0.6% — while increasing the rate on properties valued between $1 million and $1.5 million to 2%, and boosting the rate even more on properties valued above $1.5 million, to 3%.
The charge is levied on buyers during all real estate sales. Because the tax would be implemented using a so-called marginal rate, only the additional dollars above the lower bracket would be subject to the higher tax rate. Those rates would be adjusted for inflation every five years and, if passed by voters, would take effect on Jan. 1, 2025.
But even putting the issue to voters has drawn organized resistance from real estate interests. Groups like the Building Owners and Managers Association of Greater Chicago, Realtors associations at the city and state level, the Neighborhood Building Owners Alliance, and the Illinois Hotel & Lodging Association are all opposed to the measure, arguing the change would put a disproportionate burden on commercial property owners when the real estate market is already fragile.
A ballot initiative committee, Realtors in Opposition to Real Estate Transfer Tax, has already spent more than $125,000 on campaign mailers, online ads, texts and calls, according to state records. The Bring Chicago Home coalition began a series of counterprotests late last week.
The only ways to change the city’s real estate transfer tax rate are through the Illinois General Assembly or a citywide referendum. Johnson’s team opted for the referendum route, with a timeline of passing the resolution through the City Council this fall and placing the referendum question on the March primary ballot. The deadline to get the resolution on that ballot is Jan. 2.
Bring Chicago Home advocates attempted to get the question to voters on this year’s Feb. 28 ballot, but their efforts failed after months of stonewalling from Lightfoot and her allies, who said their proposal was flawed.
At the time, its City Council champions admitted they were “out of runway” — until Johnson took office this spring.
Even now, opponents have hinted at further attempts to block the legislation in upcoming City Council meetings. But the mayor’s floor leader, Ald. Carlos Ramirez-Rosa, 35th, said Johnson’s coalition has plenty of chances before the deadline, especially given that Tuesday’s vote had a “clear majority.”
“Last term, the real estate lobby worked around the clock with our prior mayor to block this vote,” Ramirez-Rosa said. “But we came together in a powerful coalition with our mayor … to say we’re gonna give the people of the city of Chicago a real choice.”
