Lawyers for the city of Chicago and the city’s elections board have vowed to appeal a judge’s ruling last week that votes on a referendum to raise real estate taxes on sales of more than $1 million should not be counted, continuing a legal battle over the Bring Chicago Home initiative to combat homelessness just weeks before a primary election.
The Chicago Board of Election Commissioners met Tuesday and decided to appeal Cook County Judge Kathleen Burke’s ruling last week in favor of real estate industry groups, including BOMA/Chicago, which filed the lawsuit in January arguing the three-part referendum question was illegally worded.
That agency’s decision came a day after city of Chicago lawyers separately filed a notice of appeal seeking to be named as a defendant in the case and have the judge’s ruling overturned.
Decisions by separate city agencies to try to overturn the ruling in court add a layer of confusion less than a month from the March 19 primary date, with early and mail-in ballots already printed.
Barring a successful appeal, the referendum will remain on ballots, but votes on the issue will not be tallied.
Chicago’s legal limbo is the latest twist in efforts throughout the country, including in Los Angeles, to use increased real estate transfer taxes to raise dollars to combat homelessness.
The Bring Chicago Home initiative, backed by progressive aldermen, stalled under the previous mayor, Lori Lightfoot. Current Mayor Brandon Johnson made it a top priority when he took office last year, and the City Council voted in November to create the referendum question.
If approved by voters and again by the City Council, the measure would decrease transfer taxes on residential and commercial sales of less than $1 million, while increasing taxes on amounts above $1 million and further increasing them on amounts above $1.5 million.
Opponents of the measure have argued that it comes as property sales throughout the country have slowed significantly and as business centers and other economic engines struggle to fully bounce back from the effects of the pandemic. They also point to a lack of specific details on how the money raised would be spent.
Foes have said that although the measure is well-intended, it could have unintended consequences, such as pushing up rents and slowing construction of new residential units.
Focus on Wording
However, the lawsuit, filed by real estate trade organizations such as BOMA/Chicago, centered specifically around the wording of the referendum, which they said is confusing and illegal.
The referendum 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?”
At the highest level, city transfer taxes would be 3% of the purchase price, quadruple the current level.
Real estate groups said that the three-part question is confusing, and it doesn’t allow voters to specify which aspects they support or oppose. The lawsuit described it as a form of legislative log-rolling, or “bundling unpopular legislation with more palatable bills so that the well-received bills will carry the unpopular to passage.”
The complaint also alleged that the proposed reduction in taxes on sales below $1 million is illegal because Illinois statutes only allow for a referendum to create a tax or increase an existing one.
When the lawsuit was filed, the elections board said it should not have been named as the defendant. The elections board said it is an independent agency that had nothing to do with the creation of the referendum and it is not a department of the city of Chicago.
After city attorneys moved to be added to the case this week, the elections board reiterated its previous stance.
“The Chicago Board of Election Commissioners will appeal the decision of the Circuit Court of Cook County to deny its motion to dismiss the lawsuit concerning the citywide referendum question,” Max Bever, director of public information for the Chicago Board of Elections, said in an emailed statement to CoStar News. “The Board maintains that it is not a proper defendant in this case, and that the City of Chicago is a necessary party. The Board will request an expedited review by the Illinois Appellate Court.”
Lawsuit Criticized
In a statement on the Bring Chicago Home website, Maxica Williams, chair of the End Homelessness Ballot Initiative Committee and board president of the Chicago Coalition of Homelessness, criticized the lawsuit by real estate groups. She described it as “yet another example from the right-wing playbook of how a politically powerful donor class will stop at nothing to deny us housing, healthcare and the right to vote.”
Supporters and opponents of Bring Chicago Home are being encouraged to vote on the ballot measure in case of a later court reversal that allows votes to be counted retroactively.
Early and mail-in voting will continue with ballots unchanged “until the Board is directed otherwise,” Bever said in an email.
He said that votes on the issue will be sequestered. Unless a court order is issued to count the votes by election night on March 19, votes would not be counted and made public along with other results, Bever said.
“We would comply with any future court order post March 19th regarding counting and reporting the results,” Bever said.
The elections board has until April 7 to proclaim official election results after an audit of votes is completed.