Coalition says hike in Chicago transfer tax could drive property owners elsewhere

[January 10, 2024]  By Kevin Bessler | The Center Square

(The Center Square) – The opposition is growing against a proposal to raise taxes on certain property owners in Illinois.

The so-called “Bring Chicago Home” resolution would hike transfer taxes to address homelessness. The question asks voters to allow a decrease of the real estate transfer tax to 0.6% for properties under $1 million, a rate hike to 2% for transactions between $1 million and $1.5 million, and a rate hike to 3% for property transfers above $1.5 million.

Now a coalition of business groups have filed a lawsuit attempting to prevent the referendum from ever happening because they say the language lists all three of those potential tax adjustments under the umbrella of a single question.

The group said writers of the referendum question are trying to confuse voters with a tactic called “logrolling.” According to the lawsuit, the referendum question violates a provision of state law that prohibits the practice of bundling favorable and unfavorable legislation together so that the favorable piece will allow the unfavorable piece to pass.

As for the resolution itself, Mike Glasser, president of the Neighborhood Building Owner's Alliance, said if the referendum passes, property owners may choose to invest outside of Illinois.

“The 3% tax on a purchase of a 20-unit courtyard building, that's 40- to 50-thousand dollars,” said Glaser. “The buyer needs that to improve the property, and without that $40,000 available, there’s really little incentive to purchase."

Glasses added that he recognizes that there is a homelessness issue that all cities around the world have to figure out, but there needs to be more thoughtful approaches instead of being taxed for it.

Amy Masters, director of Government and External Affairs with the Building Owners and Managers Association of Chicago, said an increase in the transfer tax would be another burden on property and business owners in the Chicago area.

“Chicago already has the highest commercial property taxes in the nation, and so our big concern with this is if we increase our transfer tax, that would be one of the highest in the country as well, and that would only worsen the problem, and not just for downtown office buildings, but for homeowners and businesses alike,” Masters said.

Chicago Mayor Brandon Johnson’s office is not impressed with the lawsuit.

“From the City's perspective, Bring Chicago Home will be on the ballot in March 2024, and Mayor Johnson believes it would create even more much-needed resources to address homelessness in our city and provide support for tens of thousands of our unhoused neighbors," the mayor's office said in a statement.