News

By COLE LAUTERBACH

Illinois News Network

Some municipalities have approved, or are considering, charging a “transfer tax” on homes of a certain value.

A proponent of the additional fee is on incoming Gov. J.B. Pritzker’s transition committee, but there’s no plan to implement a statewide tax. Supporters say it generates revenue to fund needed programs, but the real estate community says it’s likely to backfire, costing renters more and ultimately depressing property values.

The city of Evanston now charges a higher transfer tax, sometimes referred to as an “exit tax,” on property sold for more than $1.5 million. Properties that sell for more than $1.5 million come with a transfer tax of $5 per $1,000 of sale price. A referendum voters approved raises that to $7 per $1,000 of sale price. For properties that sell for more than $5 million, the transfer tax will now be $9 per $1,000 of sale price.

The seller of a $2 million home, storefront, or apartment complex, for instance, would be charged an additional $3,500 on top of the other taxes and fees already in place.

Chicago aldermen have tried to do the same, but Mayor Rahm Emanuel shot down the proposal, saying the transfer tax would “treat homeowners like an ATM machine.”

Marisa Novara, vice president of the Metropolitan Planning Council, said the money is needed more than ever in a time of decreasing federal help for programs to fight homelessness.

“We are in an era of declining federal resources for things like affordable housing,” she said. “This is a way that a city can take action locally.”

Daniel Kay Hertz, research director with the Center for Budget and Tax Accountability, said this type of tax could produce a good amount of revenue for cities like Evanston, Chicago, or any of the 215 home-rule municipalities in Illinois.

“That’s a power that they already have,” he said. “[Middle-class homeowners] either aren’t going to feel anything from this or they’re actually going to have their taxes lowered, which is more likely.”

A home-rule municipality would have to make the change with approval from voters via a referendum. Voters in Evanston approved the increased transfer tax at the ballot box earlier this month.

Ralph Martire, executive director of the CBTA, sits on incoming governor J.B. Pritzker’s transition committee. Hertz said he hasn’t heard of any plans for a statewide progressive transfer tax. Pritzker’s campaign didn’t respond to a request for comment.

Critics say the tax would hurt businesses and rental property owners, potentially depressing property values once investors start looking to areas without the higher fees.

“There’s nothing progressive about this tax. It will hit everyone, not just property investors,” Jon Broadbooks, vice president of Illinois Realtors, said. “If you do the math, an investor in even a modest apartment building might have to come up with tens of thousands of dollars more to close a transaction. For a seller, that means increasing the price of a property to account for the new taxes. For a buyer, that would mean raising rents to cover the increased costs of purchasing the property.”

By Daniel Kay Hertz and Marisa Novara

Daniel Kay Hertz is the Research Director at the Center for Tax and Budget Accountability and Marisa Novara is Vice President of Metropolitan Planning Council.

Last week, Mayor Rahm Emanuel shot down several proposals for creating a graduated real estate transfer tax,  claiming it would treat “homeowners as an ATM machine.”

Here’s how such a tax would work and why the mayor got it wrong.

First, consider today’s reality: Chicago has a real estate transfer tax of $5.25 per $500 of property value. This tax is not graduated, meaning someone who buys or sells a home for $150,000 pays the same rate as someone who buys or sells a home for $1.5 million. The current tax generates $160 million annually, a third of which goes to the Chicago Transit Authority.

Next, consider the vision: In the Metropolitan Planning Council’s “roadmap to a more equitable future,” a document released last spring, the MPC and the Center for Tax and Budget Accountability recommend a graduated real estate transfer tax to generate desperately needed funds for affordable housing. Because the tax is pegged to property values, only the highest-value transactions would cost more. In most cases, the buyer and the seller would pay less than they do now.

What’s actually needed: Most Chicagoans may be surprised to learn just how little of the city’s budget is allocated for affordable housing. Take a guess: Ten percent? Five? One? Try just about three-tenths of one percent in 2017, or $24.5 million out of $8.3 billion.

Tax increment financing revenue — local funds that get spent outside the normal budget process — contributed another $16.9 million in 2017 toward affordable housing. But even that represented less than three percent of the $660 million raised by TIF districts.

Rather than spend its own money on affordable housing, Chicago has depended overwhelmingly on resources passed down by the state and federal governments through programs such as public housing and the Low Income Housing Tax Credit. In 2017, Chicago spent 36 times more of its own money on policing than on affordable housing, and three times more on legal settlements.

While all cities are struggling with a decline in federal support for affordable housing, there’s more Chicago can and must do to support this need locally.

Finally, here’s what is possible: Chicago Coalition for the Homeless and other groups have proposed a plan to generate $150 million a year for affordable housing and services for some 80,000 homeless people. The plan calls for increasing the city’s real estate transfer tax on high-value property. An ordinance seeking to put this proposal on the Feb. 26 election ballot, as a referendum question, has been presented by Ald. Walter Burnett.

This is one of many versions of a proposed progressive real estate transfer tax that could get us over the finish line.

Chicago suffers from a shortfall of 120,000 affordable housing units. That alone is reason enough to consider a progressive real estate transfer tax, just as there is in San Francisco, Baltimore and New York City. Such a tax was approved in Evanston on Tuesday.

A graduated real estate transfer tax to cover some of Chicago’s most pressing affordable housing needs would not be breaking new ground. Chicago would simply be catching up — both to other cities and to our own profound shortfalls.

Read more about CCH’s Bring Chicago Home campaign!

By Kristen Thometz

A Chicago nonprofit seeking to end homelessness is proposing a substantial increase in the real estate transfer tax on high-end properties to fund services for some of the city’s most vulnerable residents.

As part of its Bring Chicago Home campaign, the Chicago Coalition for the Homeless is proposing a transfer tax of $9.75 per $500 on residential and commercial properties that cost $1 million and up. (The current rate is $3.75 per $500.) The extra funds generated from the tax increase – $12,000 per property, at minimum – would go toward support services for the homeless, according to Julie Dworkin, the group’s policy director.

CCH estimates the plan could generate $150 million per year and would impact just 5 percent of real estate transactions in the city and 3 percent of homeowners. That extra revenue “could decrease the number of people experiencing homelessness by 9,000. In 10 years, it could decrease by 36,000 people,” said Dworkin.

“In the city, more than 80,000 people are homeless, and one in four who are homeless are children,” she said. “A lot of people don’t know about that. They think of the person on the street. They don’t think of children living doubled up.”

CCH is seeking to get a referendum placed on next year’s Feb. 26 ballot asking voters if they would support the measure. Dworkin said 31 of the city’s 50 aldermen are in support of putting the question on the ballot. CCH plans to present its proposal before the City Council on Wednesday.

City officials declined to comment on the proposal.

According to a CCH-commissioned poll, two-thirds of 600 would-be voters in the February election said they would support the proposal. Nearly 80 percent of those polled said homelessness should be a top priority for the mayor and City Council, and that not enough has been done to address the issue.

On Tuesday, Mayor Rahm Emanuel’s administration announced a $1.1 million investment in the 2019 budget to support homeless residents, including $705,000 for the continuation of a pilot program to assist those living in encampments.

Chicago Department of Family and Support Services Commissioner Lisa Morrison Butler said the pilot program is not a cure for homelessness in Chicago, but a tool. “In a city this size where we do have encampments, it makes sense to have some special effort for them,” she said.

In April, city officials began making frequent visits to encampments in the downtown business district, which they say house about 200 people. Rather than visiting an encampment once every few weeks, “we tried to be really intensive and consistently be there every day for two weeks,” Butler said. Not only did officials conduct outreach during the day, but they also piloted overnight outreach. “If you don’t have dedicated efforts overnight, you’re often missing people when they come back,” she said.

DFSS worked alongside the Chicago Police Department, Department of Streets and Sanitation and Department of Public Health during the pilot. Butler says that after learning why some people resist going to shelters, they opened their own low-barrier shelter that allowed people to bring their pets, partners and belongings with them. The city will increase the capacity of the low-barrier shelter from 30 to 40 beds in next year’s budget.

Officials move on after each two-week period, even when residents reject city services and opt to stay put. “That is their right and we respect that,” she said. “We’re trying to achieve the right balance between respecting the rights of the individuals and at the same time … doing everything we can when we engage them to hopefully make taking services the choice that they would make.”

Tents set up in a homeless encampment along DesPlaines Street north of Roosevelt Road. (Kristen Thometz / Chicago Tonight)

By Mark Brown, columnist

Chicago voters could soon be asked to more than double the tax on sales of million-dollar-plus real estate to pay for an ambitious new effort to reduce homelessness.

A proposal backed by the Chicago Coalition for the Homeless, community groups and other advocates anticipates generating $150 million a year that would be dedicated to providing affordable housing and services for homeless individuals.

An ordinance seeking to place a referendum on the Feb. 26 election ballot is expected to be introduced at next week’s City Council meeting.

The referendum would ask voters to increase the city’s real estate transfer tax by 160 percent on properties that sell for more than $1 million; that would make the tax $9.75 per $500 of sales price, up from the current $3.75 per $500.

For a home selling for $1,000,001, the increase would require the buyer to pay the city an additional $12,000 in transfer taxes. On the purchase of a $100 million downtown office building, the buyer would owe the city an extra $1.2 million.

By targeting the tax increase at more expensive properties, organizers of the Bring Chicago Home campaign are hoping to win the support of average Chicagoans who would not be charged the additional amount.

But the effort is expected to face major political opposition from real estate and business groups who see transfer taxes as a barrier to property sales and an added disincentive to business.

Instead of arguing self-interest, however, the Chicago Association of Realtors will oppose the tax hike on the basis that wide fluctuations in annual transfer tax collections make it an unpredictable — and therefore unreliable — funding source for homeless services, said Brian Bernardoni, the group’s senior director of government affairs.

Bernardoni also argued there is no guarantee the city won’t just take the money that now pays for homeless services and use it to pay for other expenses.

Julie Dworkin, director of policy for the Chicago Coalition for the Homeless, said a reserve fund will be created to guard against revenue fluctuations.

A provision in the ordinance will also seek to prohibit the city from using the new funds to supplant current funding, she said.

If approved, the added funding would allow the city to launch a much more aggressive effort to stem homelessness. By comparison, Mayor Rahm Emanuel’s current city budget touts his commitment to invest an extra $1.1 million on programs for the homeless in 2019.

The primary focus of the Bring Chicago Home effort will be to create permanent housing with support services to meet a goal of reducing homelessness by 36,000 households in 10 years, Dworkin said.

Advocates say they have commitments from 31 of Chicago’s 50 aldermen to support the measure. The Emanuel Administration has not taken a position.

The lead sponsor is Ald. Walter Burnett (27th), who has been at the forefront of most of the city’s major affordable housing initiatives over the past decade.

Burnett said the dedicated tax would help bring Chicago’s efforts to fight homelessness more in line with other major U.S. cities at a time when the state and federal governments are pulling back support.

“Homelessness is not going away. Poor people are not going away,” Burnett said. “It’s our duty to help these people.”

Another supporter, Ald. Joe Moore (49th), said he likes the proposal because “you’re not hitting the little guy.”

Based on sales data from previous years, supporters of the tax say it will impact about 5 percent of all real estate transactions in the city.

Under state law, voters must give advance approval to any increase in the real estate transfer tax.

The requirement grew out of an aborted attempt in 1996 by the late Cook County Board President John Stroger to increase the county’s transfer tax by 15-fold. Stroger withdrew the proposal after a buzzsaw of opposition from home buyers and sellers.

If voters approve the referendum, aldermen would still need to pass an ordinance to enact the tax increase, which would take effect July 1, 2019.

The city pegs the local homeless population at 5,450 individuals based on an annual count of people living in shelters or on the street on one night in January. That’s down from 5,657 in 2017.

The coalition argues the true picture of homelessness in Chicago is closer to 80,000 people over the course of a year, counting those who live doubled up with family or friends because they can’t afford a home of their own.

By Steve Schering

Amid pressure from numerous organizations, the village of Oak Park has officially repealed its seldom-enforced panhandling ordinance.

Ordinance 17-1-26 had been in effect in Oak Park since at least 1981. It was officially repealed by the village board during a unanimous vote Oct. 1. With the vote, the line “it shall be unlawful to beg” has been officially removed from the village code.

“For about 30 years, the village has had this language, but it has been consistently determined by the courts that it really isn’t the right way to handle begging and panhandling,” Village Manager Cara Pavlicek said. “The American Civil Liberties Union has been consistently working with municipalities to remove the language.”

In late August, the ACLU, the Chicago Coalition for the Homeless and the National Law Center on Homelessness and Poverty sent letters challenging ordinances against panhandling to 15 Illinois municipalities, including Oak Park.

“No one wants to see poor people have to beg for money,” National Law Center attorney Eric Tars said in August. “But until all their basic needs, food, healthcare and housing, are met, they have a right to ask for help.”

Shortly after receiving the letter, Oak Park spokesman David Powers said the village attorney began reviewing the ordinance in preparation for a revision.

Pavlicek said the ordinance was rarely enforced by police in recent years, with officers choosing to deal with panhandling cases in a more sympathetic way.

“As staff, we are happy to recommend to the board that we repeal the language,” Pavlicek said. “The police department has really not enforced this in a number of years because of concerns of free speech. They really work to provide services and approach the situation much differently in a proactive way.”

In voting to repeal the ordinance, Oak Park Trustee Dan Moroney offered a suggestion to help potential donors ensure their money is going to a reputable cause. He noted some towns have installed “giving meters” in their downtown areas.

“One line of thinking is money given to the homeless is better given to an organization like Housing Forward or Pads,” Moroney said. “It provides services to the homeless, and there’s a lot of people who want to give but want to give to the right source.”

A message left with Housing Forward seeking comment about Moroney’s suggestion was not immediately returned.

Other trustees appeared to favor Moroney’s idea, which he felt could be a win for local charitable organizations and people looking to get rid of their spare change.

“These are parking meters that would be converted to something that delineates them from a normal parking meter and [people] can put money directly into the meter,” Moroney said. “Those meters can be given over to [those organizations] and that organization is in charge of collecting the money and seeing what is best to do with the money they collect. It could be as easy as the village drilling a little hole in the ground and the arts commission making it look fancy.”

The village board approved the repeal of the village’s begging ordinance by a 6-0 vote. Trustee Andrea Button was absent.

EDITOR’S NOTE: An increase in TANF assistance for impoverished Illinois families was secured through advocacy by CCH, The Shriver Center, and Heartland Alliance.

By Maureen Foertsch McKinney

Illinois recipients of Temporary Aid for Needy Families – also known as TANF – will see an increase in the amount of their monthly grants in October. A $22 million boost was negotiated in the budget this year. Advocates for the poor say the difference may mean more families will be off the streets.

Maxica Williams was  struggling to make ends meet as she juggled two part-time jobs. Then, three years ago, the Chicago resident was diagnosed with breast cancer.  She endured chemotherapy and other treatments that left her unable to work.

Her family ended up homeless for eight months because she couldn’t meet the costs related to raising her four children – even though she had aid, known as TANF. She says she was appreciative of the assistance.

“I don’t want to sound bad and negative. But the amount was just not enough to survive and be able to take care of every basic need that I had with the family,” the 40-year-old said.

LINK to hear the radio report

The approximately $400 TANF grant she received for herself and her three minor daughters wasn’t enough to rent a modest apartment because she couldn’t meet the landlords’ rental guidelines. Williams also has an 18-year-old son for whom she no longer receives assistance.

Niya Kelly, state legislative director for the Chicago Coalition for the Homeless, said it’s not uncommon for TANF recipients like Williams to become homeless. Families have had to make really difficult decisions about what is paid and what is sacrificed, she said. Do they buy shoes and clothes? Pay for transportation? Or buy diapers and formula?

“In talking to families, they’re saying that this means that they may be able to pay another bill this month, making sure that they keep the lights on, making sure they can pay their rent – things that other folks take for granted,” she said.

This year, in Illinois, the amount of money set aside for grants was the smallest in all states but Arkansas.

The last increase in Illinois grants was a decade ago. The previous boost was 22 years back. A family with a single parent and two children will get about $100 more a month, raising the grant to $520. Families with four to six members will get as much as $250 more a month.

State Sen. Mattie Hunter, a Chicago Democrat, says the bipartisan agreement was negotiated in the budget. A Senate measure that drew votes from Democrats and Republicans would have had increases over three years.

“I’m happy that folks decided that they wanted to make a difference in poor people’s lives and try to address the poverty issue here in the state of Illinois,’’ Hunter said. “Everybody decided to work together to negotiate this issue and, as a result, our families have a few more dollars on the table that they can work with.”

One of the opponents to the increase was state Sen. Dave Syverson, a Rockford Republican. He said, “It wasn’t the biggest priority compared to others. …  I thought would it would those dollars would get served better.

Maxica Williams testified before lawmakers in Springfield this spring. She says she tried hard to convince legislators of the need for a TANF hike.

“It meant a lot for me to get out there and let legislature know what was going on with us,” said. “You need TANF because of real serious issues.’’