CHICAGO (CN) — A coalition of landlords, real estate agencies and property investment firms sued the Chicago Board of Election Commissioners in Cook County on Friday, hoping to kill a planned tax referendum on the state's March 19 primary ballot.
The referendum, which the City Council approved 32-17 in November, asks voters if the city should increase the local property tax transfer rate for properties worth over $1 million. Championed by Mayor Brandon Johnson and other city progressives as "Bring Chicago Home," the additional revenue generated by the tax increase would be used to fund homelessness alleviation efforts.
According to the city's January 2023 Point-In-Time survey, about 6,139 people in Chicago experience homelessness on any given day. An August 2023 report from the local advocacy group Chicago Coalition for the Homeless further estimated that 68,440 people were homeless in Chicago as of 2021. The Coalition for the Homeless is also a major backer of the referendum, openly urging for more city funding to combat homelessness in its 2023 report.
"A city-generated revenue stream is necessary to house people experiencing all forms of homelessness — people living on the streets, in shelters, and doubling up," the group said in the report.
Currently, Chicago's real estate transfer tax is set at $3.75 per $500 for the entire value of the property, a flat rate of 0.75%. Like the failed Illinois tax reform referendum from 2020, the proposed Bring Chicago Home rules would introduce tiers to the taxation. The transfer tax for properties worth less than $1 million would decrease to 0.6%, while it would increase to 2% for properties sold for between $1 million and $1.5 million. Properties sold for over $1.5 million would be subject to a 3% transfer tax, or $15 per every $500 of the transfer price, almost quadruple the current rate.
According to the coalition of labor unions and advocacy groups behind Bring Chicago Home, such an adjustment could generate up to $100 million per year in additional funding for homelessness alleviation.
But the plaintiffs in Friday's suit against the election commissioners, led by the Building Owners and Managers Association of Chicago, argue that such a change to the transfer tax rate violate the city's municipal code and Article III of the Illinois Constitution.
The arguments stem from the position that the planned referendum asks voters not one question, but three: one for each proposed change to the current flat rate. Given that one of those changes is actually a tax decrease, the plaintiffs accuse the city of "logrolling," or combining what they say is an unpopular suggestion — raising taxes — with a more palatable proposal — to reduce them. In this way, the plaintiffs argue, the more popular proposal can provide electoral coverage for a change of law that voters may not otherwise desire. This violates the city code, they say, as well as the state constitution's guarantee of "free and equal" elections.
The plaintiffs say the referendum "violates voters’ rights to vote on each of the three questions separately. For example, and most obviously, many voters likely support the first question (lowering taxes), but oppose the second and third questions (raising taxes). However, they cannot express their support for the first proposition without also expressing support for the second and third propositions that they oppose."
The plaintiffs also argue that the language of the referendum is overly vague. It states the additional revenue would be used for "addressing homelessness" and providing Chicagoans with "permanent affordable housing." But it leaves the mechanisms of doing so to additional city council action, vis-a-vis the creation of a dedicated transfer tax fund and a mayor-appointed advisory board to oversee it.
"None of this is included in the proposition to be put to the voters," the plaintiffs say.
News of the filing incensed many of the city's progressive voices, some of whom — like the Chicago Coalition for the Homeless — have fought for years to enact funding changes like the kind the Bring Chicago Home referendum could authorize.
“This lawsuit is a political maneuver, orchestrated to protect the interests of greedy landlords and multi-national real estate corporations at the expense of Black, Brown, working class and homeless Chicagoans,” Doug Schenkelberg, executive director of Chicago Coalition for the Homeless said in a statement Friday.
Mayor Johnson put out his own statement on the issue, saying "From the city's perspective, Bring Chicago Home will be on the ballot in March 2024." He added that he believes Bring Chicago Home "would create even more much-needed resources to address homelessness in our city and provide support for tens of thousands of our unhoused neighbors."
City Councilor Carlos Ramirez-Rosa, one of Johnson's closest allies in city hall, told local public news outlet WBEZ that the complaint was the real estate industry's "Hail Mary" with only a little over two months until the primary.
Farzin Parang, executive director of the Building Owners and Managers Association of Chicago, defended the lawsuit as an attempt to defeat what he called a "bait and switch" of a referendum that would raise taxes on local property owners and investors.
He also defended the suit's plaintiffs as "Chicago boosters" and "investors looking to put money into the city," rather than greedy landlords seeking to "hoard their wealth."
"I don't buy the premise that the majority of the city ... buys into this divisive, class-based rhetoric," Parang said.
Nevertheless, he acknowledged that there were many influential progressive factions in the city, and that there was little time before the March primary. He said that his organization would begin media and public outreach efforts in the lead-up to the ballot, in case the suit couldn't work its way through the court before then.
"It's incumbent on us to educate the voters," Parang said.
But Schenkelberg argued just the opposite in his statement — that the suit's plaintiffs were trying to stifle legitimate support for change which could benefit thousands of vulnerable people.
“Those opposing Bring Chicago Home are aware of the strong support for the measure and how it will provide housing and support to end homelessness, including assistance for children, veterans, and those fleeing gender-based violence," he said.
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