Mayor Brandon Johnson’s plan to ask voters about raising the real estate transfer tax to combat homelessness cleared the City Council on Tuesday, officially placing the referendum question on the March 2024 ballot and advancing a key campaign promise of the progressive mayor.
In a 32-17 vote, aldermen approved the “Bring Chicago Home” measure to create a citywide referendum on implementing a tiered tax rate on all property sales, which advocates have said is a critical strategy to generate much-needed revenue for the city’s homeless population.
The decision to hold the referendum is now expected to open the doors to dueling high-stakes campaigns before the March primary election between the Bring Chicago Home coalition and opponents in the real estate industry, who have warned the tax change would put a further damper on an already-fragile market for offices, retail and apartment buildings and drive up costs for tenants.
But for one day, the vote marked a major victory for Johnson while he grapples with the fallout of his closest ally on City Council facing a scandal over bullying allegations and growing displeasure from other aldermen over the migrant crisis.
Now Chicago voters will get to have their say in the primary about whether to implement the revamped levy structure and funnel the new revenue toward “the purpose of addressing homelessness, including providing permanent affordable housing and the services necessary to obtain and maintain permanent housing in the City of Chicago.”
The legislation was one of Johnson’s 100-day promises during this year’s mayoral race and has been years in the making for progressives. They thought they had found a champion in former Mayor Lori Lightfoot, but she dropped her support for it after taking office.
Johnson and his progressive allies have said his April runoff victory and the burgeoning migrant crisis spell 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, the mayor’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.
Bring Chicago Home advocates have also 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.
The city’s current real estate transfer tax charges a 0.75% flat rate on all property sales in Chicago. Johnson’s plan 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.
Johnson had also hoped Tuesday to pass a measure to double the city’s current paid leave mandate to 10 days.
But opponents used a parliamentary maneuver to delay it until the next council meeting.
Johnson and progressive allies hailed the legislation as a compromise that would make Chicago’s requirements the most expansive in the country, offering accrual of both sick time and paid time off that can be taken for any reason.
But groups like the Chicagoland Chamber of Commerce and Illinois Retail Merchants Association said the change would only toughen the city’s business climate, citing property taxes, rising minimum wages, the impending phaseout of lower tipped wages for restaurant workers and the potential hike in the real estate transfer tax if the Bring Chicago Home proposal passes.
Also Tuesday, Johnson’s first budget, which easily cleared committee votes this week with minor adjustments, was put on track for final approval next week. Aldermen officially “deferred and published” the budget, the last traditional step in the budget before a final vote.