A Cook County judge ruled Friday that votes on a referendum next month to increase real estate transfer taxes on sales of more than $1 million will not be counted, siding with a coalition of property owners and other real estate advocacy groups that sued early this year to stop the measure.
Judge Kathleen Burke granted a motion to have the citywide ballot measure invalidated just under a month before the March 19 primary election.
It is a major setback for Chicago Mayor Brandon Johnson and progressive aldermen who have backed the Bring Chicago Home initiative, in which taxes on residential and commercial property sales of $1 million or more would be raised to help fund initiatives to address homelessness.
In January, a BOMA/Chicago-led coalition sued Chicago’s election board and its commissioners to strike the measure from the ballot, arguing in their complaint that the bundled, three-part nature of the question was misleading and in violation of Illinois' municipal code and the state constitution.
“We are gratified in the judge’s ruling, which underscores the necessity of presenting policy questions to the public with fairness, detail, and transparency,” BOMA/Chicago Executive Director Farzin Parang said in a statement after the court ruling. “This referendum would be a backdoor property tax on all Chicagoans, and it is important that our elected officials not mislead voters otherwise.”
Because the judge had yet to enter a written order as of late Friday afternoon, Chicago Board of Elections Director of Public Information Max Bever said in a statement that the defendant “has not yet moved to appeal this decision and is still evaluating its options.”
The board “awaits future direction from the Circuit Court of Cook County on this matter,” Bever added.
Since taking office last year, Johnson has placed measures such as Bring Chicago Home among his top priorities.
The City Council last year voted 32-17 in favor of creating the referendum. But key questions, most of all specifics of how the money raised would be used to address homelessness, have lingered as the election approaches.
Opponents of the plan have publicly agreed that new measures are needed to help unhoused Chicagoans, but they have expressed worries that a tax that would affect virtually all commercial property sales would further slow an already weak investment sales market amid rising interest rates and other economic challenges.
Ballot Wording Scrutiny
In the lawsuit, groups such as BOMA/Chicago, a trade association for 240 downtown buildings, took specific exception to what it described as manipulative wording of the ballot measure, which reads: “(1) shall the transfer tax rate be lowered from $3.75 to $3.00 for purchase value of less than $1M?; (2) shall the transfer tax rate be raised from $3.75 to $10.00 for purchase value between $1M and $1.5M?; and (3) shall the transfer tax rate be raised from $3.75 to $15.00 for purchase value above $1.5M?”
The complaint from real estate interests argued that the wording is confusing and would leave voters unable to express which of the three aspects of the question they support or oppose, saying it was an example of legislative log-rolling, or “bundling unpopular legislation with more palatable bills so that the well-received bills will carry the unpopular to passage.”
If the measure eventually were to become law, property sales of more than $1 million would be taxed at a higher rate than they are now, with an additional bump to 3% — quadruple today’s rate for city transfer taxes — on amounts over $1.5 million.
“This transfer tax hike would have resulted in serious ramifications in local neighborhoods,” Michael Glasser, president of the Neighborhood Building Owners Association, said in the statement from the plaintiffs. “Financing housing investments is already challenging in today’s environment, especially when it comes to affordable housing. This measure would have amplified the cost of these types of investments without making housing more accessible, affordable, or improved in any way. It's difficult to understand how this increase would have helped ... homelessness.”
Initiatives similar to Bring Chicago Home in other cities, such as Los Angeles, have encountered legal challenges and other hurdles to achieving their goal of reducing homelessness.
“We need all stakeholders in the room if we want to effectively support those who are unhoused,” Parang said in the statement. “It’s time to come together to develop a viable solution for our most vulnerable residents.”