Proposal Would Fulfill Mayor’s Campaign Promise by Increasing One-Time Tax on Sales of Properties Worth More Than $1 Million to Curb Homelessness, Expand Affordable Housing
Comprising a majority of the Chicago City Council, 27 aldermen* Wednesday joined in support of a proposal championed by the Bring Chicago Home (BCH) campaign that would reduce homelessness in Chicago with funds generated from a one-time tax increase on the small fraction of city property sales sold for more than $1 million.
Under the legislation, more than 94% of all property sales in Chicago would be exempt from a proposed increase in the city’s Real Estate Transfer Tax (RETT), closely echoing a concept that Lightfoot, herself, repeatedly prescribed during her campaign for mayor.
In a June letter addressed to Lightfoot, 24 Chicago aldermen who characterized themselves as “strong supporters of a solution to dramatically reduce homelessness in Chicago” asked the mayor to back the proposal, which would fund services and housing opportunities benefiting the more than 86,000 city residents experiencing homelessness.
“We understand that you are balancing many priorities, but your shared interest in reducing homelessness gives us hope that a plan that would finally achieve this long-sought goal is within reach,” the aldermanic letter states.
The measure to be introduced Wednesday would increase the RETT on properties purchased for more than $1 million by 1.2 percentage points, with 70% of the resulting revenues allocated to programs that mitigate homelessness and the remaining 30% to the expansion of affordable housing opportunities for households earning up to 60% of the Area Median Income (AMI), or $54,600.
Only 5.2% of Chicago’s average annual real estate sales would be subject to the tax, including only 3.6% of residential purchases. The tax increase would be assessed on the buyer of the property.
A similar concept first surfaced in the City Council last fall under the administration of former Mayor Rahm Emanuel, who sought to thwart the bill. Unlike her predecessor, Lightfoot embraced the idea during her campaign – even advocating for a larger RETT increase that would boost the tax rate to 2% on transactions between $1 million and $5 million and to 3% on those surpassing $5 million. Under Lightfoot’s proposal, revenues reaped from the increase would fund a combination of homelessness-relief and affordable housing for low- and moderate-income households.
Under Illinois law, Chicago voters must approve any amendments to the Real Estate Transfer Tax by a ballot referendum, which, in turn, must be authorized by a resolution adopted by the City Council. If a simple majority of voters approve the referendum question, the City Council must then adopt a corresponding ordinance to institute the proposal into law.
Wednesday’s City Council action initiates this three-step process, in a bid to add a referendum question to the ballot for the Illinois Primary election next March.
In a public opinion poll conducted last year by Anzalone Liszt Grove Research, 66% of Chicago’s likely voters said they would vote in favor of the referendum question.
If adopted into law, the measure will remedy a gross shortage of funds that Chicago assigns to combatting homelessness. Its current $15.5 million annual expenditure relief ranks near the bottom of the 10 U.S. cities with the largest homeless populations.
*Aldermen who signed their support to the resolution are: La Spata (1st Ward), King (4th Ward), Sawyer (6th Ward), Harris (8th Ward), Sadlowski-Garza (10th Ward), Moore (17th Ward), Taylor – Chief Sponsor (20th Ward), Brookins (21st Ward), M. Rodriguez – Chief Sponsor (22nd Ward), Sigcho-Lopez (25th Ward), Maldonado – Chief Sponsor (26th Ward), Burnett (27th Ward), Taliaferro (29th Ward), Reboyras (30th Ward), Cardona (31st Ward), Rodriguez Sanchez (33rd Ward), Ramirez-Rosa (35th Ward), Villegas (36th Ward), Mitts (37th Ward), Vasquez (40th Ward), Napolitano (41st Ward), Gardiner (45th Ward), Cappleman (46th Ward), Martin (47th Ward), Osterman – Chief Sponsor (48th Ward), Hadden (49th Ward), Silverstein (50th Ward)