A referendum to restructure the real estate transfer tax to fund affordable housing construction, subsidize rentals and provide other services for homeless people throughout the city was on the ballot for the March 19 primary, but the measure was blocked Friday by the Circuit Court of Cook County.
The City of Chicago and Board of Elections can appeal the ruling. Because ballots have already been printed, the referendum will remain on the ballot while the appeal of the ruling makes its way through the court system.
While real estate and development groups who opposed the referendum won big, the decision was another strike against Mayor Brandon Johnson, who supported the referendum. It had been a last-ditch effort to try to get the idea to move forward after aldermen couldn’t get enough votes to get it before City Council.
The Southland Black Chamber of Commerce and Industry and other industry groups filed a lawsuit with the Circuit Court of Cook County last month to strike the referendum from the ballot. On Friday, the circuit court ruled that the referendum violated Illinois law that prohibits log-rolling or combining a favorable proposal with an unpopular one so that both pass.
“The victory was something that we expected and anticipated as the ballot question had several issues, namely the log-rolling issue,” said Cornel Darden Jr., chairman of the Board of the Southland Black Chamber of Commerce and Industry, in a statement. “We also believed that the proposed ordinance would hurt both the business climate and rental market for obvious reasons.”
“State law doesn’t allow for taxes to be lowered via a referendum,” Darden told the Austin Weekly News. Other plaintiffs include the Building Owners & Managers Association of Chicago, the Chicagoland Apartment Association, and the Neighborhood Building Owners Alliance.
Today, anyone who buys a property in Chicago has to pay a real estate transfer tax of 0.75%. The referendum, called Bring Chicago Home, would have changed it so properties sold for $1 million to $1.5 million have a 2% tax, and those sold for more than $1.5 million have a 3% tax. The real estate transfer tax would also have decreased to 0.6% for all properties sold for under $1 million.
The restructuring was estimated to bring in at least $100 million for housing and other services for the unhoused community, which would be managed by an advisory board created by the ordinance.
According to Bring Chicago Home, about 93% of properties sold yearly would have a decreased real estate transfer tax.
“If you are buying a million-dollar property, you can afford to pay a tax that will address homelessness or prevent homelessness, versus the working families that have had the tax burden on them for decades,” said Crystal Gardner, deputy political director at SEIU Local 73, which represents over 30,000 workers in the public sector throughout Illinois. The union endorsed Bring Chicago Home.
The restructuring would have affected individual homebuyers and corporations buying properties over $1 million. Plus, the transfer tax would have pushed the cost to customers and renters, Darden said.
“When you increase the transfer tax, it’s going to make it harder for that owner to sell the business,” Darden said. “Then someone that buys it, they’re going to raise rent because now the cost of buying the building went up.” The same goes for businesses who raise the cost for customers.
Despite the lawsuit, those for Bring Chicago Home have campaigned for the referendum to gain traction. Gardner, who’s lived in Austin for 38 years, and her mother, Mary Russell Gardner, are founding members of the 290 IPO, an independent political organization that organizes weekly canvassing efforts for Bring Chicago Home on Chicago’s West Side.
“Many of the working families, especially on the West Side and throughout Black Chicago, are experiencing potential displacement and risk of homelessness, thanks to corporate real estate interest and their behaviors,” Gardner said. “They are the history of disinvestment. They are the history of displacement.”
Bring Chicago Home’s definition of homelessness includes the more than 68,000 people living on the street, but also those who have housing instability, which includes fleeing gender-based violence, living doubled up or having recently been released from prison. Over another 1,000 individuals were estimated to be living on the street in suburban Cook County last year.
“We have paid half of our earnings to real estate corporations through rent, and nothing has stopped them from raising rent on our working families,” Gardner said. “This is an opportunity that we have to demand the shift.”
