Supporters of an initiative to more than triple Chicago’s real estate transfer tax on deals for $1 million or more to fund initiatives to battle homelessness hit a setback Monday as a special meeting on the proposal fell one alderman short of a quorum.
A group of advocates, including city council progressives, are pushing to significantly hike real estate transfer taxes on property sales of $1 million or more, for both commercial and residential trades. The additional tax revenue, which the group estimated at $163 million annually, would go toward city programs providing housing for Chicago’s homeless population.
The campaign, called Bring Chicago Home, would put the question to voters in February’s municipal election, if it can garner enough support from council members for the measure to be sent to the ballot.
That looks less likely to happen unless the proposal undergoes some tweaks, though, after aldermen declined to show up for the meeting, indicating some were hesitant to express either support or opposition for it as written.
Ald. Daniel La Spata of the First Ward said in a tweet the campaign “would be a transformative measure to end homelessness in the city, yet 25 alders couldn’t even come to a City Council meeting to discuss it.”
Mayor Lori Lightfoot attended the initial meeting at 9 a.m., but missed the session when the council reconvened later in the day in another unsuccessful attempt to get a quorum to discuss the transfer tax hike proposal. Lightfoot has said she opposes sending the measure to voters.
A spokeswoman for the Chicago Coalition for the Homeless, which supports the measure, told The Real Deal that proponents of the proposal were “regrouping” after the hearing’s cancellation.
Both commercial and residential real estate associations in Chicago oppose the idea. Leadership at BOMA/Chicago, a trade association for 240 commercial buildings in the city, has said the proposal was made at a bad time, with inflation and rising interest rates slowing or evaporating commercial real estate deals. Neighborhood Building Owners Alliance member Sean Easton said the tax hike would stymie growth and hurt small to medium-sized housing providers.
“They’re working to run businesses that are affordable for these tenants and there’s always some new policy being thrown at them that makes it harder for them to do their job,” Easton said.
A Los Angeles voters referendum to increase real estate transfer taxes to fight homelessness was on track to pass last week as election results rolled in, though that initiative would only impact sales of residential properties valued at $5 million or more with a 4 percent tax that would increase to 5.5 percent on deals of $10 million or more.
Chicago’s current transfer tax rate charges buyers $3.75 for every $500 of a deal’s value and seller’s pay $1.50 for every $500. The city enacted a transfer tax in 1974 and it comes on top of a state of Illinois transfer tax of 50 cents for every $500 of a deal’s value and a Cook County tax of 25 cents for every $500.
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